Microfinance banks (MFBs) in Nigeria are reporting that borrowers are building up such high levels of debt that they are fleeing their homes and, having given false guarantor names, are essentially untraceable. Unspecified stakeholders are arguing that improved staff training can increase product knowledge and aid MFB growth. Such training could also help MFBs offer a more welcoming program that can attract clients and also defuse the – often unfounded – fears that might provoke a creditor to give up on repaying a loan.
President of the National Association of Microfinance Banks of Nigeria (NAMB), Mathias Omeh, explains that many borrowers work in street kiosks and as a result may have their work blocked by government officials, resulting in an inability to repay. In other instances, infrastructure problems lead to loan defaults, such as when poor electricity service damages equipment purchased with a loan [1].
About The National Association of Microfinance Banks of Nigeria (NAMB): The National Association of Microfinance Banks of Nigeria is a trade group of microfinance institutions that was reformed by merging with the Association of Microfinance Banks in Nigeria (AMBN) in November 2009, under the supervision of the Central Bank of Nigeria (CBN).
About the Central Bank of Nigeria: Central Bank of Nigeria (CBN), established in 1958, is Nigeria’s central banking authority. As defined by the 1958 Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2010, CBN reports total assets of NGN 7.37 trillion (USD 48.6 billion).
By Diana Baide, Research Assistant
Sources and Additional Sources:
[1] Business Day. “How creditors cripple MFB operations” September 20, 2010
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