Expert Wants Micro-Finance Banks Regulated

Dr Ja’afar Sa’ad, a political economist, on Thursday advocated for the re-establishment of an autonomous body to license, supervise and regulate community/micro finance banks in Nigeria for maximum output.

Sa’ad, who is also the traditional tittle holder of Galadiman Ruwan Zazzau, made the call in an interview with the News Agency of Nigeria (NAN) in Zaria, Kaduna State.

The political economist, who retired as a Technical Assistant to the Director, Finance and Administration, Sao Tome and Principe Development Commission, is now a proprietor of a micro-finance bank.

He said: “The community and micro-finance banking system we practice in Nigeria is a very good scheme, they are doing it in Bangladesh, India, Kenya, South Africa and U.S. and it is working well.

“The scheme had actually succeeded in these countries and is contributing to the growth and development of their respective economies.

“In Nigeria, the challenge is the responsibility of licensing and supervising rest with the Central Bank of Nigeria (CBN),” he said.

While describing it as a key fundamental error, Sa’ad observed that cooperative societies, community and micro finance banks should not be licensed and supervised by CBN.

“Government should liberalise the process, create an autonomous government agency to license, supervise and manage these institutions instead of CBN.

“At my last count we have 776 micro finance and community banks operating in Nigeria and a lot of them are doing quite well while others are not.

“Most of them are having issues with CBN regulations which is not supposed to be so, that is not what is happening in India, Kenya, South Africa and host of other countries,” Sa’ad noted.

According to him, in India, where the scheme is operating very well, when people collect loan from a community or micro finance bank and unable to pay-back for one reason or the other, they will commit suicide because of shame.

He described the system as a developmental scheme for people that didn’t have access to finance or access to major banks and get loans “and that is called financial inclusion”.

“So, to be able to reach the target or actualise financial inclusion in Nigeria, we need schemes and smaller banks of whatever name.

“It will help us to achieve economic self-reliance for our women and children and encourage financial inclusion for all,” he said.

He recalled that the system was initially practiced in Nigeria where an independent body called “National Board for Community Banks” was established.

“But because of bureaucratic process it didn’t work well, however, it is still there on paper, since it is not scrapped by an Act of National Assembly,” said Sa’ad.

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