The National President of the National Association of Microfinance Banks (NAMB), Mr. Rogers Nwoke, has said that the establishment of the Microfinance Development Company Limited (MDCL) is the association’s response to solving the problem of lack of wholesale funds to meet the working capital needs of the microfinance sub-sector.
Nwoke, who gave the hint in his welcome address as the Chairman, Steering Committee of the Microfinance Development Company Limited at the Inaugural Shareholders Meeting of the company in Lagos.
He lamented that over the past few years, the MFBs operators’ expectations that a sub-sector-specific fund would be created by the monetary authorities had not been met, hence the need by the leadership of the association to come up with a new company that will help MFBs to address the challenge.
To justify his views, the chartered banker recalled that although the National Microfinance Policy Framework in December 2005, by the provisions of its Section 11.9 required the CBN to set up a Microfinance Sector Development Fund to provide necessary support for the development of the subsector, this requirement had not be met by the monetary authorities 14 years after.
The NAMB President, who pointed out that Central Bank of Nigeria’s (CBN’s) N220 billion Micro Small and Medium Enterprises Development Fund (MSMEDF) would have provided some funding relief to most MFBs in dire need of wholesale funds to optimize their operations, said the new company would be appraising member-MFBs’ capital needs and help to support the banks.
He explained: “As a private sector, industry led initiative, the company MDCL is focused at addressing the funding gaps of the subsector. With an authorised share capital of N500m and ownership structure that spans the entire strata of microfinance banks in Nigeria, the company is ready to commence operations.”
The Managing Director of HASAL Microfinance Bank Limited, however commended the monetary authorities, especially the CBN Director OFISD, Mrs. Tokunbo Martins, for continued support to the association, particularly the encouragement to continue with the MCDL project.
On the purpose of the stakeholders’ meeting and its implications for the future of MFBs in the country, the NAMB President said: “What we have come here to do today is to lay the foundation for growth of this company. It is of utmost importance to the survival of the company that we elect its first directors today so we can have a Board of Directors to drive the strategic direction of the company for profitability and for growth and sustainability.
“Let us do it with utmost good faith and in the interest of the company and the microfinance subsector in general. The Board will have overall responsibility to manage this company to achieve the very purpose for which we have set it up.
“As we all are aware, our national economy is going through very tough times and our subsector, even worse as we operate through the most challenging economic environment to do business”, the seasoned banker added.