THE Central Bank of Nigeria (CBN) has said the ten microfinance banks account for 40 percent of total loans in the subsector.
Director, Other Financial Institution and Supervisory Department (OFISD) Central Bank of Nigeria (CBN) Mrs. Tokunbo Martins, disclosed this at the just concluded second annual two-day professional seminar organized by the National Association of Microfinance Banks, Lagos State Chapter (NAMBLag) in conjunction with CA Compuconsult &Associates with the theme: ‘Strategic Options for Sustainability of Microfinance Operations in a Challenging Environment.’
The underlying objective behind the seminar theme is the low adoption of the Nigerian Sustainable Banking Principle by the MfBs compared to the Deposit Money Bank who have fully embraced the principle.
Tokunbo added that a recent in-house report point to a sub-optimal performance of the different players in the Other Financial Institutions, OFIs, subsector relative to their potential, expectedly their impact had been muted and below par.
Martins who was represented by Deputy Director, OFISD, Mr. Bassey Ekpo, pointed out that total industry credit and asset of MfBs stood at a meager N214.32 billion and N365.51 billion respectively as at 31st December 2016, adding that this is considered grossly inadequate given Nigeria’s population of 170 million which largely comprises of people at the bottom of the social pyramid who constitute a veritable target market for MfBs.
“The industry is highly concentrated and unevenly distributed with the top ten out of the existing 991 MfBs accounting for 40 percent, 37 percent and 39 percent of the industry total loans, deposits and assets respectively as at 31st March 2017.
The subsector is also dominated by a high spate of distress and failures with many institutions, particularly unit MfBs, technically insolvent or inactive resulting in business closure.
She advised MfBs to consider the provision of digital financial services through the use of Fintechs as a possible strategic options adding that embracing technology must be preceded by identifying and understanding the risks and followed by adequately managing the risks.