Microfinance or ‘micro-corrupt bank,’ CBN urged to differentiate

Judging by growing allegations of illegal microfinance banks in the country, the regulatory body of the microfinance sub-sector, which is the Central Bank of Nigeria (CBN), had been called upon to act fast in order to checkmate the activities of these operators. According to reported cases, illegal microfinance banks are on the rise, and innocent people meant to benefit from the services of these microfinance banks are now victims of fraud.
In addition, there are cases of other licensed banks closing down due to mismanagement of funds. For instance, PS Microfinance Bank, located at Ayo-Alabi Street, Oke-Ira, Ogba, was one of the illegal microfinance banks discovered to have embezzled millions of naira belonging to traders in Akute area of Lagos.
The victims include, Helen Eboh, Abdul hammed, a woman named Anifowose, and an old who claimed to have contributed over N100, 000 in the said bank, all described the experience as a painful one.
Another incidence occurred at the Almond Microfinance Bank Limited, located at Ijaniki area of Lagos, which closed down recently due to ‘insider-related abuses and poor corporate governance,’ which also embezzled millions of naira contributed by the downtrodden.
Some operators have however attributed the crisis to high profile lending, poor management, and corporate governance.
Nwankwo Martin, managing director and chief executive officer, Ikorodu Division Microfinance Bank Limited, Lagos, admitted that microfinance scheme should be the vehicle for developmental enhancement as seen in other countries, but in Nigeria, some individuals who consider themselves as smart always look for ways of turning things around in a negative way, which he said ought not to be.
“That is why we are witnessing some MFBs getting into problems today, even some big ones that are least expected. Some engage in high profile lending to make quick money. They live flamboyant lifestyles, with big buildings, and attractive vehicles. So that is where they missed it, and are having problems today,” he said.
However, Olufemi Fabamwo, acting director, Other Financial Institutions Department, CBN, proved ignorant of the closure of these microfinance banks, but made it clear to journalists during a meeting of the Committee Of Microfinance Banks in Nigeria (COMBIN), Lagos zone, which held recently that the regulatory body had already given out circulars to microfinance banks to display their licence in their various banking premises, so that members of the public would be able to know those that are licensed.
“We have already given out circulars to microfinance banks to display their licences in their banking premises, so that members of the public, who might want to do business with them would be able to discern and see. This would serve as notice to members of the public also to always ensure that they see a CBN licence or a letter granting final licence to MFBs before they transact any business with them. I think that is very important.”
For other illegal operators, however, Fabamwo stressed that as soon as information gets to them, they would be apprehended and handed over to appropriate law enforcement agency.
“It is a concerted effort; we need members of the public to help us to identify them. We are only a few hundreds of people, so members of the public can also help in fishing them out. Once they see any bank practising without licence, or did not display it, they should alert us immediately, so that we can hand them over to law enforcement agents.”
To further substantiate its intention, the CBN promised to publish names of licensed microfinance banks in order for the public to know those who are genuine and being supervised by CBN.
“Again, we also want to publish the list of licensed microfinance banks, so that members of public will be aware that these are being supervised by the central bank. But some of them are not literate enough or are not well to do enough to buy newspapers; hopefully, we will also do some jingles to advise them on what to do,” he said.