MFBs must not delay till last minute to recapitalise –Nwoke

[Mirror]

Mr Rogers Nwoke is one of the leading players in the nation's banking sector and a strong supporter of Nigeria's agenda of promoting financial inclusion in the grassroots. In this interview with Tola Akinmutimi and Seyi Anjorin, the seasoned banker and Managing Director of HASAL Microfinance Bank Limited, spoke on a number of issues as they relate to micro financing and how to move the sub-sector of the financial services sector forward.

How would you rate the performance of the micro finance sub-sector of the financial services sector in the last six months of this year?

I would say it is getting better. It has always been a problem getting the best out of the subsector but I guess, like the CBN did make it clear to Nigerians then that they needed to sanitise the industry and then take one or two steps to move the industry forward. After the unfortunate incident of the revocation of the licenses of the 224 MFBs and all that, I believe that a lot has happened in terms of the regulatory measures put in place and a lot of positive developments within the sub-sector that today you have micro finance banks which are more focused and that understand a lot more clearly what the business is all about. I will typically rate the sector by saying that a lot of improvement has been done both in the area of capacity building, in the area of customer capacity-building and the amount of credit that has been granted which has increased significantly, awareness and the visibility of the sector and many other positive performance indices which show clearly that the MFBs that we have now are healthier than before.

Recent re-capitalisation policy guidelines issued by the CBN have raised a lot of dust. As a seasoned player in the financial services sector, what is your view on the policy?

Well, I think the re-capitalisation was needed given the fact that the MFBs that took off at initially were not well capitalised and the model of micro finance that was introduced in Nigeria is one that requires that several thousands, if possible, could be licensed with minimal capital base and can then draw on the Microfinance Development Fund to run their business. Unfortunately, eight years after the launch of the micro finance policy, the fund is not in place yet. You find out that many MFBs came into existence but lacked the liquidity to operate. One of the major issues in the industry today is not having significant liquidity. The decision, when the policy was reviewed asking micro finance banks to re capitalise, was a welcome development and I don't think that operators resisted it. Members of the micro finance association welcomed it. Where we had issues was the time frame given for people to recapitalise. Many people felt it was too short and emissaries were sent and pressures were put in the right places and today we are excited that the Central Bank Governor listened and shifted the deadline to 31st December, 2013.

However, like I told a few of my colleagues, Nigerians like the attitude of last minute. I hope that we are working very hard to meet that deadline because it is not by December now that it will suddenly dawn on us that we still need more extension. The only way we can show gratitude to the Central Bank is to take all those steps necessary to ensure that we take advantage of the time frame that has now been given to meet up with the capital base. But generally speaking, the industry needs the re-capitalisation because we are micro finance institutions or banks as we are called but the traditional banking theory where you have an intermediary between excess/surplus side of fund and the deficit side is not typical for micro finance banks. In Nigeria, more than 95 per cent of the MFBs are people who need credit. No Nigerian gets money and prefers to go and put it in a micro finance bank, that pressure is always there and re capitalisation is one way to survive and move forward.

Given the fact that HASAL MFB was the only microfinance institution visited by the United Nations Special Envoy on Financial Inclusion, Princess Maxima of Netherlands, as part of her on the spot assessment of financial inclusion drive in the country, one year after the launch of the National Financial Inclusion Strategy, what is your assessment of the implementation of the strategy so far?

Since the launch of the strategy, a lot of sensitisation has been done and every stakeholder now understands why you must advance the course of financial inclusion in the country. In terms of practical action, actions are being taken but they probably are not showing the results yet. As you are aware, the Bankers Committee met some time ago and said they were going to take the financial inclusion initiative to start in Borno and few other states where it is lowest based on reports of surveys and all that. I am also aware that other stakeholders, including non governmental institutions, have been doing a lot in this area of sensitisation, letting people know what they need to do. And in our own sector, the micro finance, a lot has also been happening.

As you are aware, HASAL Microfinance Bank has a radio programme every week, we run jingles, and organise road shows amongst other sensitisation programme of the bank. Positive changes are taking place across the subsector, things are beginning to happen. That is what makes the difference. Before the launch of the strategy then, everybody just do anything he likes, today there is a well articulated strategy to drive financial inclusion and I think that it is a good effort in the right direction.

Knowledgeable workforce is crucial to competitiveness in any industry today. What are you doing to develop your employees' skills to enable them offer world class services to customers and by implication, ensure good returns on shareholders' investments?

As you know, we have the HASAL Institute for Microfinance Studies which since 2009 has been providing capacity building services to the industry. Just last week, we trained micro finance practitioners under the platform of micro finance association where every micro finance bank in Abuja sent at least three of their staff and we have been doing this over the past few years. So, capacity building has been a major project for our bank, and even in-house at that. We have also been sending our staff to acquire global best practices. For instance, two of them were out recently to Italy and Frankfurt School of Finance and Management to do a nine-day summer programme on micro finance and risk management. From time to time we expose our people and when they come back they do a training to pass on what they have learnt to people who could not go. Our core strategy relies on our people. We emphasise using people and technology to deliver world class services. If you put it the other way, you say people, using technology to provide services. We invest a lot in people so that we can get the best quality, we invest in technology and we are always upgrading our systems.

National Mirror