Risk Management Vital for MFBs’ Growth, Says Accion Boss

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Ugo Aliogo

The Managing Director, Accion Microfinance Bank, Mr. Taiwo Joda, has stated that effective risk management and succession planning are two key factors that can enhance the growth and development of Microfinance Banks (MFBs) in Nigeria.
Joda, stated this during a capacity building seminar for Chief Executive Officers/Managing Directors and Deputy Chief Executive Officers of all MFBs in Lagos recently.

Speaking on the theme: ‘Effective Risk Management and Succession Planning for Microfinance Banks’, Joda said there was need for all MFBs to be resilient so as to drive profitability, attract the confidence of Nigerians and achieve financial inclusion.

He noted that in the microfinance banking space, the Central Bank of Nigeria (CBN), working in partnership with microfinance banks had set a lot of risk parameters and ratios, from liquidity risk to portfolio risk management and a number of that based on the Basel III accord.

According to him: “We have looked at what the Basel III accord wants and they have built a risk framework that is very strong and the one we are working with was done in 2012 and the CBN has also said they will come up with a fresh policy this year, so you see a regulatory body that is up to speed in trying to ensure that we strengthen risk management and so this capacity training is to ensure that all microfinance banks are doing exactly what the regulators want them to do in their various organisations. 

“Risk management is evolving and succession planning is critical to the growth and development of microfinance banks and so this is aimed at us applying the template of what the CBN wants us to do.”

In her opening address, the Chairman, National Association of Microfinance Banks (NAMB), Lagos State Chapter, Mojisola Garber, said the theme of the conference was aimed at impacting the financial industry and would give MFBs access to more information to aid its growth and development.

“The recaptialisation policy by CBN is confronting most MFBs as we speak now and thus this training will give us the MFBs access to more information that can aid our growth. You may agree with me that there are so many risks that affect the microfinance business as such, it is important to be armed with thorough knowledge to mitigate risk and broaden succession plans in our banks,” she said.

On his part, the Registrar, Chartered Institute of Bankers of Nigeria (CIBN), Seye Awojobi, said, risk management is the universal requirement for every financial institution and there is need to mitigate risk regularly and if one takes that to the level of succession, it is all about keeping an institution running profitably on regular basis at any point in time.”