The Central Bank of Nigeria (CBN) governor, Mr. Godwin Emefiele has revealed that Micro Finance Banks in the country have given out loans to the tune of N482.896 billion to small business owners as at December 2019.
Emefiele made this known, weekend, during his keynote address at the 27th Seminar for Finance Correspondents and Business Editors, in Gombe, where he said, of this amount, loan sizes below N 1.4 million accounted for 72%.
The governor who lauded the CBN corporate Communications department for the seminar, said the FICAN Seminar has continued to deepen the knowledge and understanding of CBN’s policies and initiatives among Business Editors and Financial Correspondents and availed the bank an opportunity to receive periodic feedback from the media.
He averred that the theme of the seminar: “Repositioning Microfinance Banks for Real Sector Growth” was apt considering the bank’s recent efforts to prime the MFBs as catalysts for financial inclusion and poverty reduction.
“This gathering, like previous ones, aims to deepen the interactions between the CBN and the media for the benefit of the society which both institutions serve,” he said.
Mr. Emefiele shed light on some of the activities of the CBN in repositioning the MFB to serve Nigerians better and grow the economy.
“As you may be aware, microfinance is about providing 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. Consistent with its developmental role, the CBN in 2005 formulated the Microfinance Policy Regulatory and Supervisory Framework.
“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).
“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 target is to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020.
“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.
“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, ensure the institutions remain mission-focused and to grow public confidence in sub-sector.
“Data from the licensed credit bureaus indicate that the operations of micro finance banks have helped to improve financial inclusion amongst smallholder peasant farmers, artisans and other small business operators.
“As at December 2018, aggregate loans granted by MFBs was N482.896 billion. Of this amount, loan sizes below N 1.4 million accounted for 72%. We equally observed that small businesses have been more successful in securing credit from the microfinance institutions rather than from the conventional deposit money banks (DMBs),” Emefiele said.
The governor listed some of the challenges of the MFBs operation in Nigeria to include; inadequate spread in the location of the MFBs in relation to their target beneficiaries, demand for immoveable collaterals for loans, high interest rate, and absence of a credit reporting system.