In spite of the challenges confronting microfinance banks in the country, IK Awa, managing director, Good Neighbour Microfinance Bank, in this interview with Hope Moses-Ashike, says the bank has managed to remain strong, even in the face of the harsh operating environment. The MfB he also said, has disbursed N140 million as loans to 150 customers. Excerpt

CBN revocation exercise Good Neighbour was not affected by the Central Bank of Nigeria’s (CBN) revocation exercise because it operates within stipulated guidelines, which lots of other microfinance banks were not following.

One very important matter is in the area of credit. Some banks give loans without considering some salient issues that need more attention, especially in alleviating poverty in the country.

For instance, some microfinance banks give more than the singular obligor requirement, which is giving of loans without adequate collateral.

The second reason is insider abuses, which is why Good Neighbour tries as much as possible to play within the guideline of the CBN for microfinance banks.

Loan disbursement

Good Neighbour has disbursed over N140 million to as many as 150 customers. The customer base is up to 500, while the deposits are well over N40 million.

Issue of collateral

The CBN has a limit for micro lending. The amount is stipulated for micro lending which one can give without collateral. And if you exceed that I think common sense requires that you collatarise the loan.

Non-performing loans

Well, there is no way this can be exempted from banking altogether, that is why it is called risk asset. I will not say Good Neighbour does not have some non-performing loans, we do have, but it is not outrageous. We try as much as possible to manage our credit so as not to incur so much non-performing loans.

Bad loans

When a loan goes bad, it does not preclude you from making up or applying all the necessary tools needed to get back the loan. But when it becomes impossible to collect, you can at times write off such loans.

AMCON intervention

Microfinance banks need help. It is instructive that the CBN come in to help cushion some of the harsh effects the microfinance banks face by providing funding. But I believe with time the CBN will rise to the occasion.

Although there has not been any concrete promise by the CBN, but I believe that with the new policy coming up, it will still carry us along that line soon.

New policy guideline and effect of delay

I will just say that we wait and see what CBN is coming up with. But I think whatever it decides to will be better for operation of microfinance banks in Nigeria.

It is not as if microfinance banks have new operating guidelines they work with, most still depend on the old guideline. But when the new one comes out, we will look at what it portends for us and play along.