By now, professional in the sub-financial system of the microfinance banks would be speculating what might happen when the deadline given for the first and second phase of microfinance bank recapitalization elapse. As instructed by the Central Bank of Nigeria (CBN), the recapitalization policy is due to take effect in April 2020 and April 2021 respectively.
Recall that Last year, Kevin N. Amugo, CBN’s Director, Financial Policy and Regulation Department announce the increment in the minimum capital base of microfinance banks.
Read more about the policy here.
The policy is absolute and is expected to take effect from the specified time-frame. The microfinance industry in a growing one, hence the need to frequently change policies to suit the needs and aspiration of concerns players in the industry.
The policy review will one way or the order take its toll on these set of active players;
Some microfinance banks are presently running on a N100, 000.000 capital base even before the first face for recapitalization elapse. Some are still grasping with the realities of how to mop up liquidity required, while some have been able to recapitalize by foreign direct investment. While Nigerians are not utilizing the opportunity at their disposal, foreigner investor see opportunities in the sector by investing their funds. The likes of Mr. Promise Nwankwo President/CEO of Financial Inclusion Platform Ltd, who has continually made calls for mergers and acquisition through various medium and the MD/CEO of Rigo Microfinance Bank who has continued to educate and promote microfinance activities and trends, also have continually on media stress the possible ways to manage the recapitalization process.
Should the recapitalization process be a problem to microfinance professionals? I’ll leave the answer to you. Have you ever tough of the changes that would take place if your MFB is unable to meet up? The loss of job, the change in management, the reputational loss to your MFB and the likes of it.
The time to act is now. Lace your boots and get ready to be a change maker in the microfinance industry. It’s more than just resuming to work and looking for customers who will receive your loan. The likes of Ameen Ajibola and notable microfinance professionals has made the industry proud with their innovative articles and initiatives towards promoting microfinance value chain. You have to be part of the change process. This you would achieve by gaining adequate exposure to the microfinance trends while seeking the passion to excel in your chosen career.
Customers are so micro-conscious in this present day, that they become more interested in the changes that takes place in the industry. A lot of microfinance depositors has got their fingers burnt by merely depositing their funds with the set of recently liquidated MFBs. This has made them to be more focus to partnering with recognized microfinance institutions with strong capital background. The choice of MFBs/MFIs is at their disposal that they have a hard time deciding who to transact with. This is why you and your MFB must be among the top microfinance to do business with. The help of the mobile lending loan sharks are not helping. Ameen Ajibola in his article stresses more on this. Read Here
The solutions to cushion the biting effect of the proposed recapitalization would include strategies such as;
- Mergers and acquisitions
- Sale to strategic partners,
- Cutting back on excessive expansion and developing programs, amongst others.
- Partnership (Funds injection from foreign investors)
Foreign Direct Investment (FDI) seems to be the most favorable among the strategies to recapitalize.
What ways or strategies do you think would help promote sanity in the microfinance industry to further curb the menace of continuous injection of fund to ensure stability for sustainability?