Meanwhile the apex bank said it aims to increase the share of micro credit as percentage of total credit to at least 20 percent by 2020 from the current ratio of five percent. CBN Governor, Mr. Godwin Emefiele, disclosed this in a keynote address delivered at the just concluded seminar organised by the apex bank for finance correspondents and business editors held in Gombe State.
Emefiele said that while the apex bank recognises the challenges of the MFBs, it is also aware of their contributions to extending credit to the economically active poor.
He said: “Data from the licensed credit bureaus indicate that the operations of microfinance 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 percent. We equally observed that small businesses have been more successful in securing credit from the microfinance institutions rather than conventional deposit money banks (DMBs).
“There are challenges, nevertheless. They 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. We are committed and working assiduously to address these limitations.”
Reiterating the apex bank commitment to increasing access to financial services for the economically active poor, Emefiele said: “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.”
Speaking earlier in a presentation on entitled, “Appraisal of the new microfinance policy framework,” Director, Other Financial Institutions Supervision Department, CBN, Mrs. Tokunbo Martins disclosed that the apex bank has introduced a special intervention fund for MFBs adding that the CBN is currently reviewing the microfinance bank policy with the aim of releasing the third edition of the policy which was first introduced in 2005.
Lamenting the poor performance of MFBs in deposit mobilisation, Martins said: “The CBN has approved a special intervention framework for qualified micro finance banks and our hope is that it will incentivise other microfinance banks to get their house in order so they can also qualify to access these funds.
The CBN is working tirelessly so that the banks that are doing well can grow and multiply.” Speaking further, Martins said that, “The SMEs are making great contributions to the gross domestic product (GDP) but they don’t have access to credit such that would boost their operations in the massive way needed by the economy.
“We have had two earlier Microfinance Policy Frameworks: in 2005, 2011 and the current one.”
The post Microfinance Banks receives special intervention fund from CBN appeared first on Breaking Times.
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