MFBs Seek Conducive Environment for SMEs to Thrive

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Microfinance institutions in Nigeria have bemoaned the current economic situation in the country, saying it has affected the growth of small and medium enterprises (SMEs).

To this end, the operators of microfinance banks have called on the federal government to quickly introduce measures that will remove the wedge and allow free growth of micro, small and medium scale businesses.

The microfinance banks also saw the forex unpredictable trend as hindering operators of micro and small scale businesses from approaching the microfinance institutions for access to funds to do or sustain their businesses, thus adversely affecting the performance of the microfinance banks in Nigeria.

The Chairman of the National Association of Microfinance Banks (NAMB), Enugu State chapter and Managing Director of Umuchinemere Pro-credit Micro Finance Bank (UPMFB) Enugu, Mrs. Nnenna Maria Ekete, made the remarks in Enugu, shortly after a preparatory meeting at her office for a larger meeting of the South-east zone of the association.

The UPMFB managing director said that the multiplier effect of negative impact of the bad economic situation and the lingering of the unstable forex regime could be observed for instance in the substantial shortfall in the amount of funds’ disbursements recorded by many microfinance institutions in the first quarter of the year, as against what was the experience in the immediate financial year and the target in the first quarter of the current year.

Ekete cited the example that in the first quarter of 2016 her bank, Umuchinemere Pro-credit Micro Finance Bank, disbursed a total micro credit fund of N247,719,959 to active poor people for their micro and small scale businesses, but in the first quarter of 2017, the bank could only disburse a total micro credit fund of N216, 604, 700, which was a shortfall of N31,115,259 from that of the previous year.

According to her, “It was the recession and the unpredictable trend of the foreign exchange performance that were responsible for the drop in disbursement because the real core customers were scared of borrowing to do business and at the end not making any gain and being unable to repay the borrowed funds, a development that is now compelling microfinance banks to develop other products, such as engaging in permissible investments and other businesses, so as to remain in business and shield themselves from becoming distressed.”