James Emejo, Bamidele Famoofo and Nume Ekeghe in Gombe
The Governor of the Central Bank of Nigeria (CBN), Mr. Godwin Emefiele, yesterday disclosed that total aggregate loans granted by Microfinance Banks (MFBs) to micro small and medium enterprises (MSMEs) in the country stood at N482.896 billion as at December 2018.
He added that the CBN was working to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020.
Speaking at the opening of the CBN 27th seminar for finance correspondents and business editors in Gombe State, themed: “Repositioning Microfinance Banks for Real Sector Growth”, Emefiele noted that small businesses had been more successful in securing credit from the microfinance institutions rather than conventional deposit money banks (DMBs).
He noted that data from the licensed credit bureaus indicated that the operations of micro finance banks had helped to improve financial inclusion among smallholder peasant farmers, artisans and other small business operators.
Emefiele, nevertheless, bemoaned the inadequate spread in the location of the MFBs in relation to their target beneficiaries, demand for immovable collaterals for loans, high interest rate, and absence of a credit reporting system.
He added that the apex bank is currently working assiduously to address identified challenges.
He emphasised the fact that microfinance institutions exist to provide financial services to the economically active operators of the base of the income pyramid who are either undeserved or not served at all by conventional financial institutions.
Represented by CBN Deputy Governor, Corporate Services, Mr. Edward Adamu, the governor noted that the CBN had in 2005 formulated the Microfinance Policy Regulatory and Supervisory Framework in line with its developmental role.
“The policy was aimed among other at bringing microfinance institutions and activities into greater focus in order to deepen financial inclusion and alleviate the financing needs of micro, small and medium enterprises (MSMES),” he said.
According to him, “The bank has since then worked towards increasing access to financial services for the economically active poor in order to enhance job creation and poverty reduction.
“The bank remains committed to the economic empowerment of disadvantaged groups including women and actively seeks to achieve this through the instrumentality of microfinance amongst other initiatives.”
He further added: “Only recently, the bank took some actions including a thorough review of the subsector, increased surveillance and revocation, where necessary. These measures were intended to revitalise the sector to ensure the institutions remain mission-focused and to grow public confidence in sub-sector.
“In a developing economy like ours, the link between microfinance and the real sector is quite strong. Microfinance banks are conceived to serve as critical financial lubricants for the real sector, which is the pillar of sustained economic growth.
“At the moment, economic policy in Nigeria faces a major challenge of reviving growth which is the (only) sure path to ending pervasive poverty. Microfinance has worked in this regard in many climes and promises to work in Nigeria, if we get it right.”
The CBN governor added that by increasing access to credit and related services to the economically active segment of the low income population, microfinance directly contributes to expanding the production base and serves as credible strategy for increasing financial inclusion and reducing unemployment.
He added that the CBN, in collaboration with other agencies of government is currently implementing various intervention schemes in addition to promoting microfinance.
Emefiele, however, noted that the theme of the seminar was appropriate considering its recent efforts to prime the MFBs as catalysts for financial inclusion and poverty reduction.
He stressed that the meeting was aimed at deepening the interactions between
the CBN and the media for the benefit of the society, which both institutions serve.
