Despite the harsh operating environment in the Microfinance sub sector of the economy, the total assets of (MfBs) across the country, has rose to N356 billion.
This was an increase of 18.39 per cent, when compared with N300.73billion, posted in December 2014, meaning the microfinance industry might not have been badly affected by the sorry state of the Nigerian economy.
The Central Bank of Nigeria (CBN), in its Financial Stability Report for the first half of the year, noted that MfBs’ paid-up capital decreased by 0.61 per cent to N81.94 billion from N82.44 billion at end of December 2014, while shareholders’ funds increased by 6.61 per cent to N97.03 billion at end of June 2015, from N91.01 billion, at end of December 2014.
The apex bank, however, attributed the decline in the industry’s paid-up capital to the non-rendition of returns by some MfBs operating in the North East.
In addition, the CBN said the subsector’s total deposit liabilities and net loans & advances increased by 9.31 and 9.34per cent to N159.40billion and N178.12billion in June 2015, compared with N145.83 billion and N162.91 billion at December 2014, respectively.
Also, the regulatory body said MfBs’ reserves increased by N6.52billion to N15.09billion at the end of June 2015 from N8.57billion at the end of December 2014.
According to the CBN, the continued improvement in the operations of functional MfBs was due to the ‘sustained regulatory oversight and improved compliance by operators.
On the other hand, Managing Director, Nigerian Deposit Insurance Corporation (NDIC), Alhaji Umaru Ibrahim, said, as at June 2015, a total of 936 MfBs in Nigeria could only mobilise total deposits, in the region of N173.3 billion.
This low level of performance in deposits mobilisation by these institutions, he said, suggests a low level of micro banking penetration in the country and requires to be looked into for immediate action and improvements. The NDIC boss was unhappy with the state of affairs in the industry, stating that microfinance banks should be financially solid to be able to increase microfinance adoption and penetration level.
Taking a cursory look at the industry generally, the NDIC boss listed factors such as drop in crude oil price by 50 per cent since 2014, increasing supply of shale oil and impact of treasury single account as being probable causes of low performances of those operating in the microfinance industry.
The Managing Director, Ospoly Microfinance Bank, Mr. Femi Fapohunda, said for proactive board and management of microfinance banks, this economic challenge would rather be an impetus for higher performance. Such MfB, he said, will have to go to the drawing board once again, plan new strategy and re-engineer all their policies for enhanced performance, which will also lead to higher profitability and productivity.
According to him, “For proactive MfBs, they will even do better during economic recession. But for those who are not creative, who don’t want to be innovative in designing problem-solving products and services, but want to be competing with deposit money banks, they are going to regret it. The banks that fall within this cadre are likely to have problems under the current economic recession. The creative ones among them will have better liquidity and profitability.”