NAMB Commences Recapitalisation Appraisal of MFBs

This article discusses NAMB’s review of the recapitalisation status of MFBs following a significant licence revocation by the CBN. It highlights the decisions from NAMB’s emergency meeting and its strategies to mitigate future licence revocations, maintain sector stability, and bolster public trust in MFBs.

Title: Licence Revocation: NAMB Commences Recapitalisation Appraisal of MFBs

the National Association of Microfinance Banks (NAMB) has initiated an evaluation process to assess the recapitalization situation of all the Microfinance Banks (MFBs) that are part of their network.

This initiative aims to proactively prevent future instances of licence revocation and seeks to restore the public’s confidence in MFBs.

As a mandate, all licenced MFBs are to update NAMB on their recapitalisation progress, a move that underscores the organization’s commitment to stability in this critical financial sector.

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Recapitalisation Review by NAMB

Just a week after the Central Bank of Nigeria (CBN) revoked the licences of 179 MFBs, the NAMB, headed by Executive Secretary Mr. Shikir Caleb, announced its initiative to reassess the recapitalisation status of all licensed MFBs in Nigeria.

The decision, a result of an emergency meeting in Abuja, aims to address the ramifications of such extensive licence revocation on the financial inclusion drive.

The Impetus for the Meeting

The meeting, which included the Board of Trustees, former Presidents, and members of the National Working Committee, primarily aimed to address the fallout from the recent wave of licence cancellations.

The gathering aimed to strategise on preventing similar occurrences in the future and uphold the integrity of the MFB sub-sector in the financial system.

Categorisation of Members

A key outcome of the meeting was the categorisation of affected micro-lenders into four groups:

MFBs that have completed the recapitalisation process but are awaiting CBN approval

MFBs in the process of recapitalisation or discussing funding arrangements

MFBs yet to start the recapitalisation process

MFBs that have ceased operations

Recapitalisation Status Submission

NAMB’s leadership advised MFBs that have recapitalised but are yet to receive CBN approval to submit a summary of their recapitalisation status.

The association is set to review these submissions and meet all MFBs for a collation exercise, which will form the basis for engagement with CBN’s management.

The Aftermath of Licence Revocation

Reacting to the licence revocation, NAMB’s National President, Mr. Joshua Ukute, expressed concern about the development and reassured that the association would intensify its self-regulation activities.

He further mandated the NAMB Secretariat to intensify public enlightenment, particularly among stakeholders in the financial inclusion drive, to restore faith in the MFB sub-sector.

The Role of MFBs in Financial Inclusion

MFBs have, over the years, been instrumental in implementing financial inclusion strategies.

Their commitment to delivering financial services, especially in remote communities overlooked by larger financial institutions, underlines their importance in the financial ecosystem.

CBN’s Stance on Licence Revocation

The CBN explained its licence revocation action, citing the MFBs’ failure to fulfil the conditions required for their licences.

The apex bank affirmed that it sanctioned the banks due to their non-compliance with obligations imposed by the bank, adhering to the provisions of Banks.

NAMB’s swift response following the CBN’s licence revocation action signals its commitment to maintaining stability in the MFB sub-sector.

Through recapitalisation appraisal and a renewed focus on self-regulation, the association aims to uphold the MFBs’ vital role in financial inclusion, particularly for remote and underserved communities.

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