THE Nigeria Deposit Insurance Corporation has urged microfinance bank operators to rise up to their challenge of poverty alleviation by playing the role of a catalyst for economic development.
The NDIC Managing Director/Chief Executive Officer, Alhaji Umaru Ibrahim, gave the advice on Monday at the beginning of a two-day workshop for operators in the microfinance banking sub-sector organised by the corporation in Port Harcourt.
Ibrahim stressed the need for microfinance operators in Nigeria to practise microfinance banking in such a way that it would alleviate poverty by creating millions of jobs and providing resources to finance small businesses.
He expressed worry that while 15 per cent of the over 880 microfinance banks currently operating in the country failed to render returns to supervisory authorities as and when due, many of the institutions had been unable to pay their annual premium as required by law.
Ibrahim said, “Since the extension of deposit insurance to MFBs in 2008 to date, the sum N1.1bn only has been collected as premium. This is a far cry to the amount of insured deposits in the subsector.
“You will recall that in September, 2010, 103 MFBs were closed by regulatory authorities. So far, the sum of N2.5bn has been paid to depositors of N4.5bn.
“To arrest the failure to pay premium by some MFBs, the corporation has proposed a tripartite agreement wherein the correspondent banks of the MFBs will be required to debit their accounts and credit the corporation with the premium due.”
The NDIC boss also pointed out that the corporation was aware of the challenges of undercapitalisation, illiquidity, high operating costs and poor infrastructure facing the subsector.
He disclosed that measures were being put in place by regulatory authorities to provide relief for MFBs.
Ibrahim, however, expressed the hope that participants would avail themselves of the opportunity presented by the workshop to address the challenges confronting the subsector and sharpen their skills for improved performance.