Reason Microfinance banks are few in rural areas, Taiwo Joda

The Managing Director ACCION Microfinance Bank, Mr. Taiwo Joda, has disclosed the reason Microfinance banks are few in rural areas, he said lack of infrastructure is one of the major reason.

Mr Taiwo Joda mentioned this in an interview with the News Agency of Nigeria (NAN) on Friday during the 19th Finance Correspondents Association of Nigeria (FICAN) Workshop in Gombe.

Joda, who chaired a session on the topic, “MFBs Operations in Nigeria: Emerging Issues and Supervisory Challenges.”

The workshop, which was organized by Nigeria Deposit Insurance Corporation (NDIC), was themed: “Enduring Extreme Disruption: Resilience and Reinvention for Banking System Stability Deposit Insurance.”

Joda said there were many reasons why few microfinance banks were operating in rural areas, and that one of them was infrastructure.

“When I talk about infrastructure, I talk about road, technology, access to everything that makes a good living, and also customers’ access to banking services.

“Because most microfinance banks are not allowed to do clearing, they have to have a correspondent commercial bank to do that for them.

“So the proximity to a commercial bank to safeguard cash movement is a bit of a challenge.

“I think this is the area where government needs to come in and help.

“Even with the recently introduced eNaira, if those infrastructures are lacking, especially technology, we are still going to have a challenge with the implementation of the eNaira as it relates to driving financial inclusion in the rural areas,” he said.

On the issue of growing a very strong microfinance sector, Joda advocated recapitalization, saying the initial N20 million capital might not be sustainable.

“I support recapitalization, especially in the face of inflation and the exchange rate volatility.

“You will know that the initial capital of N20 million may not be sustainable so, I support capitalization and I strongly support that banks that are not able to raise the capital can look at the options of the merger.

“But there are other issues that bother me; strong corporate governance, capacity building, and adoption of digital technology to drive efficiency.

“To drive scale and to bring convenience to the customers, these are also other critical areas that I think microfinance banks should focus on,” Joda said.Remove term: ACCION Microfinance Bank ACCION

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