Zwinkels: Tough Regulation Required to Sanitise MFBs

James Emejo in Abuja

The Chairman, Baobab Microfinance Bank, Mr. Bernardus Zwinkels, has said the Central Bank of Nigeria (CBN) needs to apply tougher rules and regulations to the microfinance sub-sector for its sustainability and integrity.
He said microfinance institutions must deploy depositors’ funds in a prudent manner to sectors where “you can really produce and develop businesses.”

Speaking in an exclusive chat with THISDAY, Zwinkels while commending the central bank’s recent moves to sanitise the sector, called for more vigilance in ensuring microfinance banks comply to regulations- and not to breach guidelines in order to enrich themselves.

He said integrity was crucial for sustaining the microfinance business.
The CBN recently announced that it planned to revoke the operating licences of 182 other financial institutions (OFIs) including 154 microfinance banks, six primary mortgage banks and 22 finance companies.
The apex bank also directed the operators to shore up their capital, saying the move became necessary following evidence that 62 microfinance banks had already “closed shop” while 74 other were “insolvent”, 12 were “terminally distressed” and six others “voluntarily liquidated”.

To this end, the Baobab Microfinance Chairman, commended the CBN for being “on top of the game”, and “really playing an important role in bringing sound financial institutions on a higher level.”
He said: “You know it’s not easy running a financial institution, using the money of depositors but also using the money of international development finance institutions.”

Backing the move to revoke their licences, he added: “You need to control yourself, you need to be very professional and efficient to run an organisation and to lend money to people who can comply with using the money in a correct way by bringing business into the country, developing the business but and also rate cash flow to repay the money in a correct way because of course that is integrity.

“Integrity is the most important thing needed to sustain a business. Now, the CBN is stimulating it, controlling it and being very tough; but you know even in my organisation, I am demanding to be very tough in order to comply with our targets and our ambitions.”

He, also tied the success and sustainability of major deposit money banks operating in the country to compliance with extant regulations and encourage other finance institutions to follow suit.