It is my pleasure to deliver this goodwill message at this 5th Annual General Meeting of NAMB. I consider it necessary to make a brief remark on the interest of the Corporation in the Microfinance Banks (MFBs) in view of the role they play in poverty alleviation, financial inclusion, employment generation, wealth creation and economic development in developing countries.
Microfinance institutions are increasingly gaining international attention. The Basel Committee on Banking Supervision (BCBS) is placing microfinance institutions in its proper position in global economic development. The Committee is currently focusing on MFBs as a tool for building inclusive financial systems. In view of this development, the Corporation considers it necessary to up-grade the capacity of its staff through training and re-training in order to equip them to effectively conduct their supervisory roles in the subsector.
The latest EFInA Survey Report on Financial Inclusion indicates that 56.6 million or 60.5% of adult Nigerian population had access to financial services, while 36.9 million or 39.5% were financially excluded. There is need for MFBs to develop innovative savings products that would improve services to the financially included and at the same time attract those that are excluded. Along this line, MFBs should extend their services beyond brick and mortar branches using technology such as mobile phones and POS devices.
Considering the number of MFBs totalling 936 categorised into National (5), State (89) and Unit (842) MFBs, the Corporation in collaboration with CBN continued to supervise and monitor these institutions in order to safeguard the depositors’ fund.
The Corporation’s interest in microfinance banks is enormous in view of the quantum of depositors’ funds totalling N157 billion used in creating loans of N199.72 billion as at 30th June, 2015 and the alarming Portfolio-At-Risk (PAR) averaging 46.08% in the sub-sector. The rapid failure of Microfinance banks barely few years after commencement of operations have brought to the fore the need to strengthen the sector through improved offsite and on-site surveillance. The fundamentals of strong Enterprise Risk Management Framework in assisting risk mitigation is therefore core for operators.
The NDIC is the sole agency empowered to Guarantee Depositors’ Funds in Deposit-taking Financial Institutions in Nigeria, including MFBs. NDIC, as an insurer, reimburses depositors of MFBs up to a maximum limit of N200,000 as insured amount per depositor in the event of failure of such MFB. The new coverage level represents an increase of 100% over the earlier coverage level of N100,000.00. The NDIC has developed and deployed a framework for Financial Assistance for MFBs so as to promptly intervene and assist the MFBs to overcome temporary liquidity challenges. Surprisingly, MFBs with liquidity challenges do not request for funding assistance.
Supervision of MFBs is jointly conducted by CBN and NDIC. As a bank Supervisor, the Corporation protects Depositors by ensuring that banks’ affairs are conducted in a safe and sound manner. In addition to having the powers to prosecute erring Directors and Management of banks, the Corporation has also put in place a robust Customer Complaint Resolution Mechanism. Therefore, depositors and stakeholders of MFBs have the confidence that their deposits and interests in the banks are protected at all times.
To underscore the critical role of Risk Management, the Corporation in the shortest possible time will deploy Differential Premium Assessment System (DPAS) in determining Deposit Insurance Premium for MFBs.
The DPAS is weighted in favour of strong risk management culture. Recently, one day sensitisation programme on Enterprise Risk Management was organised for operators in Lagos, Kaduna and Enugu. Most of you were beneficiary of the workshop.
I wish you a fruitful annual general meeting
Thank you for your attention.