Managing Director, Layelu Microfinance Bank, MfB, Limited, Ondo State, Mr. Akinbinu Charles, in this interview, said that the MfBs have not failed in their responsibility of empowering the Micro Small and Medium Enterprises, MSMEs. He also expressed optimism that the sub-sector would come out of the many challenges it is facing at present.
HOW is the MfB business fairing in your state?
The microfinance bank business in Ondo and Nigeria generally, has not really come on stage because of various challenges befalling the sector. With time, I believe we would get out of these challenges and these challenges have to do with policy somersault from the regulators. By and large, there is prospect in microfinance bank activities and business in the country because of what it is meant to achieve, to impact on the lives of the down trodden.
Is it true that the MfBs have failed in their responsibility to lift people out of poverty?
I don’t agree with that statement. Quote me anywhere. What they want to do and what they want to achieve, let us watch and see what will happen to that scheme they are about to pilot in the next two years. Those that they supposed to empower to do the work, those that are on ground to do the work are not being empowered to do it. We have been clamouring that they should give us funds to use for our businesses. It would not be easy for you to ask someone that has never been in the terrain to go there. MfB has peculiarity as regards environment as what happened in Lagos may not happen in Ondo state, it is not possible, I know that is why they want to pilot in about four or five state to see what will happen. I want to tell you that nothing would happen, it would fail.
It is true that the MfBs performance has been poor?
If our performance is as poor as described, by now, most of us would not be in business. What they fail to understand is that the economic activity of the people we deal with, which is the people at the bottom of pyramid is not in line with what they said we should do. For instance, if I give N50,000 to a petty trader in my village, I can tell you that N20,000 out of that would go into household maintenance because the economy is not good. N30,000 would be spent on the business.
We don’t have enough funds and cost of funds is high making some MfBs to charge higher interest rate. These are the challenges I mentioned that are affecting the MfB business, we don’t have enough funds to do business. Assuming we have a good and interest free fund from government, we can offer our service at a very low interest rate that would impact meaningfully on the customers.
Does it mean loan default is still high with all the new initiative to mitigate it?
All these initiatives are paper theories but in practice, it is not realistic. Coupled with the economy we are running, things are just too high, so people that are trading are fighting tooth and nail to break-even. A lot of my customers now sell on credit to civil servants because salaries are not paid as at when due. Some have even closed shop because they have sold all their product on credit and there is nothing to replenish the shops. Do you expect such person to meet obligation? It’s not possible. The microfinance thing is more of practical than the theory that the regulators are bringing in. They are talking of Bangladesh, when our government cannot do a lot of the things that their government is doing to alleviate their suffering.
Don’t you think NIRSAL MfB is a threat to existing MfBs?
I do not see it as a threat, we are in the same market, let us see how it goes.