The Managing Director of Lift Above Poverty Organisation (LAPO) microfinance Bank, Mr. Godwin Ehigiamusoe, has commended the Central Bank of Nigeria (CBN) on the on-going reform of the sub-sector.
Ehigiamusoe, who gave the commendation in an interview with LEADERSHIP in Lagos, said that theon-going reform and policy review of the microfinance sub- sector was necessary in addressing emerging and unanticipated issues and developments in the operating environment.
He also said that the proposed establishment of special courts by the CBN to hear cases on loan default by customers of microfinance banks was a welcome development.
Ehigiamusoe said that this would help microfinance banks to recover their bad loans.
He also extolled the CBN on the creation of a Microfinance development fund called the Microfinance Small and Medium Enterprises Development (MSME) Fund.
"Most of the microfinance banks are faced with the challenges of inadequate funds for on-lending; the Fund is expected to provide funds to microfinance banks on affordable terms.
"The other benefit is that loans to clients will obviously be cheaper as microfinance banks will access low cost funds from the MSME's Fund", he said.
Ehigiamusoe, however, urged the CBN to put adequate measures on ground to make the plan work effectively.
"As in other countries, where similar Fund has worked well, there will be a number of factors that will be required for success.
"Sources of funds for the Fund should be diversified to include private sector contributors, development agencies and government", he said.
Ehigiamusoe also advised that the governance structure of the MSME's fund should be shielded from political influence and they should strictly adhere to their operational guidelines to guarantee that only deserving microfinance banks access it.
Ehigiamusoe said that the adoption of the International Financial Reporting Standards (IFRS) by microfinance banks would place additional costs on them. Transition to IFRS by microfinance banks and indeed by any business enterprise will require some form of technical assistance and this comes at a cost.