The National President of National Association of Microfinance Banks (NAMB) Yusuf Ahmed Gyallesu has revealed that over 60% of the current 874 microfinance banks operating in Nigeria will close down because of the recapitalization policy of the Central Bank of Nigeria (CBN).
According to him there used to be three types of Microfinance bank licenses.
1. Unit Microfinance Bank with the capitalization amount of 20 million naira
2. State Microfinance Bank with capitalization of 100 million naira. These forms of microfinance banks can have branches in the state they are licensed to operate in.
3. National Microfinance Bank with capitalization of 2 billion naira. These category of microfinance banks can open branches in any state of the country.
He says that the new capitalization which Is about 1000% is as follows;
1. The CBN has divided the unit microfinance type into two:
A. Urban Unit Microfinance bank with recapitalization amount of 200 million from 20 million
B. Rural Unit Microfinance bank with recapitalization amount of 50million naira from 20 million naira. It was reduced from 200 million to 50 million when NAMB complained to the regulatory body.
2. State Microfinance banks to recapitalize with one billion naira from 100 million naira.
3. National Microfinance banks to recapitalize with 5 billion naira from 2 billion naira.
He says that each type has to meet up with 50% of the new amount by the end of April 2021 and pay up the remaining 50% by April 2022. For example, the urban type whose capital used to be 20 million will pay 50% of 180 million naira, which is 90 million naira, by April, 2021.
The association is proposing the following;
1A. Rural Unit microfinance banks to recapitalize with 35 million naira, instead of 50 million naira.
1B. Urban unit microfinance bank to recapitalize with 100 million instead of 200 million
2. State Microfinance banks to recapitalize with 500 million naira instead of one billion naira.
3. The National microfinance bank to recapitalize with 3 billion naira instead of 5 billion naira.
The president reveals that the association’s assessment of its members shows that only 30% of 874 microfinance banks in Nigeria will be able to meet up with the new capitalization requirement.
However, he says there are options available for the microfinance banks.
1. Members can go into mergers and acquisition.
2. Those in state capitals or cities can relocate to rural areas or apply for down grading of their licenses.
3. Members can sell their licenses to willing buyers.
The president also reveals that there are about 6400 workforce employed by microfinance banks. By the current calculation a good number of the trained manpower will lose their jobs, on or before April, 2022