NAN-H-27
Finance
By Lucy Nwachukwu
Abuja, Oct.22,2017(NAN)Mr Tiko Okoye, Managing Director, Fortis Micro Finance Bank (MFB), has advised the Federal Government to ensure infrastructure development and provide tax holidays to MFBs in the country.
Okoye told the News Agency of Nigeria (NAN) on Sunday in Abuja that such government interventions would grow the microfinance subsector in the country.
According to him, the MFBs provide services to people at the bottom of the pyramid and need support and encouragement to ensure all are included and thus contribute to economic development.
He said the MFBs were faced with the challenge of paucity of funds to meet the demands of the people at the bottom of the pyramid.
“In the subsector, it is a known fact that the people basically provide their generators, water, security, infrastructure and the like.
“Their operating cost is usually far higher (10 to15 times higher) than that of the commercial banks.
When you add up all these, that is enormous pressure.
“So if government can do infrastructure development or give microfinance banks some incentives like tax holidays or rebate, it will go a long way.
“It will ensure that what ever infrastructure programme you embark on the governmmet will give you rebate of up to a certain percentage just to encourage you (MFB).
“The market is there, the demand is there but where is the money to satisfy that demand? So, the supply of funds is what is very critical in this subsector.
“Government should supply funds at the rates that are affordable and conditions that can easily be met by the microfinance banks,”he said.
He commended the N220 billion MSMEDF by the CBN but,however, stated that the requirement for accessing the fund was stringent for people in the subsector.
He said,” by the time you are asking the banks to get a bank guarantee and the like , it becomes very difficult for most microfinance banks.
He urged the government to be more creative; rather than asking for ” belt and suspenders”, they should make accessing of funds in more liberal terms.
He further said the governmmet could also make funds available to the people through the apex organisation (NAMB) which would disburse the money to its members and be responsible for getting it back, instead of them asking for all kinds of collateral.
He reiterated that the microfinance banks lent money without collateral and it would be difficult for them to access funds with the kind of collateral demanded of them.
Fortis bank recently celebrated its 10th anniversary with a week long programme were it rewarded some of its endearing customers.
According to Okoye, the bank and it’s staff are excited for the height it attained in the last 10 years of its operation as most it’s expectations are met beyond measures.
“Our expectations have largely been met. That is why I said we are very excited.
“We came in as a unit microfinance bank; we said that by this time around we should have graduated to a national microfinance bank, that we got in 2015.
“We had said we were going to set the pace by being listed on the stock exchange, and we are one of the two micro finance banks listed on the Nigerian Stock Exchange today.
“And then we said we were going to be the first MFB to receive the internationally recognised Customer Certification Principle award by micro rate,and we became the first in Feb.2016.
“We are also almost being the first microfinance bank in the entire African continent to go to the capital market and raise capital through the corporate bond issuance.
He explained that many MFBs in the subsector charged their clients interest rates that were as high as what was charged in commercial banks which was unreasonable.
He said the bank certification ensured MFBs collected rates of about 2.5 per cent per month which amounted to a reasonable sum of 30 per cent per annum.
He, however, stated that for a bank to be able to afford the rates, it had to operate efficiently and also reduce its cost of operations.
He noted that Fortis had invested a lot on IT to minimise transaction cost, thereby increasing its profit margin to cover its cost.
He said that the financial institution with the certification was mandated to abide by the set rules, and failure to abide would result to being di-certified immediately.
Okoye explained that the five year strategic plan of the bank would task the bank even more to double its performance than what it had done in the past 10 years.
On the bank’s roadmap for the next five years, he said it planned to expanf its branch locations (16) to about 500 by 2021.
“We have about 200,000 customers; we are thinking that by 2021, we will have about 5 million customers.
Our loan portfolios which stand at 20 billion will increase to about 100 billion.
“And so these are some of the things we are anticipating, the fundamental’s which the strategic plan will bring,” Okoye said.(NAN)
LCN/IA