Yemisi Izuora
The Managing Director of the Nigeria Deposit Insurance Corporation (NDIC)
Alhaji Umaru Ibrahim has deplored the level of funding of
Medium and Small Scale Enterprises (MSMEs) in Nigeria.
Ibrahim said currently the sector is underfunded to the tune of N9.6 trillion,.
Ibrahim, who spoke at a one-day sensitization workshop for operators of micro finance banks in Kaduna, lamented the low level of deposits mobilized by the 936 micro finance banks, saying that by June 2015, the total deposits stood at only N173.3 billion.
He said that though the micro microfinance scheme was developed in response to the apathy of other banks to serve the low-income segment, certain trends on the global economy requires the MFBs to expand their capacities to absorb risks.
These factors, according to him, include the drop in crude oil price by 50 per cent since 2014, increasing supply of shale oil, impact of treasury single account, loss of N1.8 trillion public sector deposits and the impact of 7.6 million illegal immigrants attempting to enter European countries, as well as the reduction of soft funding to MFBs and NGOs.
“Each MFB faced its own unique set of strategic and operational risks which must be identified, measured, monitored and controlled for the institution to operate as a going concern,” he stressed.
Ibrahim said the NDIC has increased the limit of reimbursement to depositors, including MFBs, to N200,000 and has developed a framework for financial assistance to micro finance banks to assist them in overcoming temporary liquidity challenges.
In addition, the NDIC will, in the shortest time, deploy differential premium assessment systems in determining deposit insurance premiums for MFBs.
Director of the Special Insured Institutions Department, Mr. James Etopidok, said the implication of the raise in the global poverty baseline for 25 years by the World Bank, which raised its poverty level from $1.9 to $1.25 per day, means that a statistical world population of the poor is now in excess of a billion compared to the 800 million previously.
He said micro finance banks, deposit money banks, individuals and governments should evolve ways of attracting and funding the MSMEs’ funding gap of N9.6 trillion.
“It is, therefore, imperative that MFBs and risk owners embrace and implement sound risk management if they will be able to continue operating as a going concern,” he added.