Hard Times Await Troubled MFBs
- By Saka Khaliq
- Published May 24th, 2010
- News
- Unrated
Hard Times Await Troubled MFBs
By Zaka Khaliq
THE quest of the troubled microfinance banks to reopen their shop for businesses may have been dealt a major blow, BusinessWorld Imtelligence can now reveal.
This development is due to “image problem” which the industry is currently suffering from as the public no longer has confidence in their services.
Investigations show that at least two microfinance banks that collapse last year had tried to launch a come-back into the market, but within three to four months of their operations, they were forced to close shop due to lack of patronage.
Bristol Microfinance Bank, who had closed last year January for illiquidity, later re-opened shop last year December, but re-closed around February 2010. This was due to constant check-in of the aggrieved customers who want to withdraw their savings at all cost. And as if this is not enough, new businesses are not forthcoming, as micro clients are not willing to do business with it, for fear that it may collapse soon.
TouchStone Microfinance Bank located along Association Avenue, Ilupeju, Lagos had earlier closed shops in April 2009 but re-opened in August of the same year. But when our reporter visited the bank last week, no activity was noticed as the building was under lock and key. The bank was said to have re-closed business in January 2010 for what they regarded as their inability to survive in the microfinance industry.
Meanwhile, depositors of the two banks may have to forfeit their savings, or wait for government’s intervention before they could approach Nigeria Deposit Insurance Corporation (NDIC) for refund of their money. The two institutions are expected to cough out several millions of naira to the aggrieved depositors who are not less than 15,000 customers.
A credible source said the other troubled MF banks are making frantic steps to reopen, but are afraid of what could be the reaction of the publics towards their operations. Experts said it would be difficult for the already closed microfinance institutions to manage their image if at all they want to come back to the market.
Mr. Ola Emmanuel, finance analyst and publisher, Oak Magazine, said it would be impossible for them to come back especially at this period of financial crisis in the industry. “Immediately they reopen, what their customers would be after is how to get their money out of the banks,” he said.
Mr. Matthias Omeh, chairman, National Association of Microfinance Banks (NAMB), attributed the failure of these institutions to non-adherence to the Central Bank of Nigeria’s (CBN) guidelines, bad management, mismanagement of depositors’ fund, lack of good corporate governance, embezzlement of fund, lack of vision, among others.
“We are seriously working to address the challenges in the sub sector and one of the bold steps we are taking is sensitisation campaign on microfinance market,” he said. “This would help us to change public perception about microfinance banks in the country.”
By Zaka Khaliq
THE quest of the troubled microfinance banks to reopen their shop for businesses may have been dealt a major blow, BusinessWorld Imtelligence can now reveal.
This development is due to “image problem” which the industry is currently suffering from as the public no longer has confidence in their services.
Investigations show that at least two microfinance banks that collapse last year had tried to launch a come-back into the market, but within three to four months of their operations, they were forced to close shop due to lack of patronage.
Bristol Microfinance Bank, who had closed last year January for illiquidity, later re-opened shop last year December, but re-closed around February 2010. This was due to constant check-in of the aggrieved customers who want to withdraw their savings at all cost. And as if this is not enough, new businesses are not forthcoming, as micro clients are not willing to do business with it, for fear that it may collapse soon.
TouchStone Microfinance Bank located along Association Avenue, Ilupeju, Lagos had earlier closed shops in April 2009 but re-opened in August of the same year. But when our reporter visited the bank last week, no activity was noticed as the building was under lock and key. The bank was said to have re-closed business in January 2010 for what they regarded as their inability to survive in the microfinance industry.
Meanwhile, depositors of the two banks may have to forfeit their savings, or wait for government’s intervention before they could approach Nigeria Deposit Insurance Corporation (NDIC) for refund of their money. The two institutions are expected to cough out several millions of naira to the aggrieved depositors who are not less than 15,000 customers.
A credible source said the other troubled MF banks are making frantic steps to reopen, but are afraid of what could be the reaction of the publics towards their operations. Experts said it would be difficult for the already closed microfinance institutions to manage their image if at all they want to come back to the market.
Mr. Ola Emmanuel, finance analyst and publisher, Oak Magazine, said it would be impossible for them to come back especially at this period of financial crisis in the industry. “Immediately they reopen, what their customers would be after is how to get their money out of the banks,” he said.
Mr. Matthias Omeh, chairman, National Association of Microfinance Banks (NAMB), attributed the failure of these institutions to non-adherence to the Central Bank of Nigeria’s (CBN) guidelines, bad management, mismanagement of depositors’ fund, lack of good corporate governance, embezzlement of fund, lack of vision, among others.
“We are seriously working to address the challenges in the sub sector and one of the bold steps we are taking is sensitisation campaign on microfinance market,” he said. “This would help us to change public perception about microfinance banks in the country.”
