NAMB urges govt to stop ministries from establishing microfinance banks

THELagos Chapter of National Association of Microfinance Banks (NAMB) on Wednesdaycalled on the Federal Government to prevent its agencies from establishing microfinance banks.Mr. Olufemi Babajide, the Chairman of the chapter, told the News Agency of Nigeria (NAN) in Lagos that plans by some government agencies to establish microfinance banks would be counterproductive.According to Babajide,regulators and practitioners in the sub-sector are currently planningto revive the sub-sectorand so such planswouldrubbish the current development.'I read in some national dailies recently that Bank of Agriculture and the Ministry of Transport, among others, are planning to establish microfinance banks in all local government areas.'We are all aware of similar institutions that were set up to support the poor in the past and had failed. A good example is the Peoples Bank.'In that era, tax payers' money was diverted into structures that failed partly due to the belief that theywere national cake.'If these microfinance banks are set up and they failed, it will have spillover effects on the existing ones that are now vibrant,' he saidBabajide said that what the sub sector needed now was a maximum support from the government through funding.He urged the Central Bank of Nigeria (CBN) to encourage the growth ofcurrent reforms inthe sub-sector,Babajide said that operators in the sub sector had learnt from theirmistakes and would work hard to sustain the sub sector.He said that NAMB would ensure that the sub-sector did not witness a recurrenceof what happened in September 2010 when licences of 103 microfinance banks were revoked.Babajide saidthat it took competence and the 'Grace of God' to win back investors' confidence in the sub-sector.'As at now, we have over 900 microfinance banks in the country and out of which 198 are in Lagos State.'Microfinance banks in Lagos State have been able to disburse N29 billion to 1.2 million customers as at September 2011'Our total deposit is also in the neighbourhood of N36 billion and we plan to give out N100 billion to 4 million customers in 2012.'So we are pleading withgovernment agencies that want to establish microfinance banks not to disrupt the sub sector but support the banks with funds,' he said.
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