LAPO boss backs CBN over restructuring of microfinance banks
By Lazarus IBEABUCHI
Mr.Godwin Ehigiamusoe, Managing Director of Lift Above Poverty Organisation (LAPO), Micro finance Bank, has commended the Central Bank of Nigeria (CBN) on the on-going reform of the sub-sector.
Mr. Ehigiamusoe gave the commendation in an interview with the News Agency of Nigeria (NAN) in Benin on Tuesday.
He said that the on-going reform and policy review of the micro finance sub- sector was necessary in addressing emerging and unanticipated issues and developments in the operating environment.
He also said that the proposed establishment of special courts by the CBN to hear cases on loan default by customers of micro finance banks was a welcome development.
Mr. Ehigiamusoe said that this would help micro finance banks to recover their bad loans. He also extolled the CBN on the creation of a Micro finance development fund called the Micro finance Small and Medium Enterprises Development (MSMEs) Fund. “Most of the micro finance banks are faced with the challenges of inadequate funds for on-lending; the Fund is expected to provide funds to micro finance banks on affordable terms.
“The other benefit is that loans to clients will obviously be cheaper as micro finance banks will access low cost funds from the MSME Fund”, he said.
Mr. Ehigiamusoe, however, urged the CBN to put adequate measures on ground to make the plan work effectively.“As in other countries, where similar Fund has worked well, there will be a number of factors that will be required for success.
“Sources of funds for the Fund should be diversified to include private sector contributors, development agencies and government”, he said.
He also advised that the governance structure of the MSMEs fund should be shielded from political influence and there should be strict adherence to their operational guidelines to guarantee that only deserving micro finance banks access it.
Ehigiamusoe said that the adoption of the International Financial Reporting Standards (IFRS) by micro finance banks would place additional costs on them
“Transition to IFRS by micro finance banks and indeed by any business enterprise will require some form of technical assistance and this comes with a cost. Most micro finance banks will find it difficult to cover the cost”, he said.