The Micro Finance Banks (MFBs) have been charged to focus on identifying and implementing solutions to counteract the effect of the falling oil prices. So also Governments/Regulators/Supervisors should play stronger role in unleashing renewed dynamism.
Director, Special Institutions Department ((SID), Nigeria Deposit Insurance Corporation, (NDIC), Joshua Etopidiok gave this task at the 2016 NDIC seminar for Business Editors and Finance Correspondents Association of Nigeria (FICAN) in Kaduna, Kaduna State.
He listed the priority areas to include mobilizing more deposits, diversifying the economy, building infrastructure, deepening Regional Integration, creating future talents and ensuring healthy urbanization.
“Survival in then turbulent business environment requires uncommon business model and practices. Operators in the government must constantly scan and define the environment. A strategy that has consumer as focal stakeholders will always design, package and price products acceptable by the market. So MFBs should adopt transformative business model”, he said.
The Micro Finance Banks were not left out among those hard hit by the effect of the crash in the oil prices as it has affected their operation negatively.
“Slow growth of the financial inclusion indicator, dwindling liquidity, declining solvency (capital adequacy ratio), reduction & advances portfolio, declining volume of deposit liabilities, and job losses in the micro finance banks are all effect of the crash in the oil prices”, he said.
He however listed steps taken by monetary/ fiscal authorities to addressing the issue to include pursuing strong microeconomic policies, implementing high impact and priority capital expenditure projects, containing fiscal deficits, and improving tax collection and expanding the tax base.
Others include adopting safe net for the vulnerable, a more forward- looking monetary policy strategy, enhancing vigilance of the financial services sectors and reducing impediment to growth by building physical and social infrastructure.
“Financial and technical support window provided by the NDIC, the creation of the Nigeria Mortgage Refinancing Company (NMRC) to provide a liquidity window, assigning MFBs to composite risk rating ( low, moderate, above average and high) CBN’s provision of soft credits via Micro Small and Medium Enterprises (MSME) N20 billion, promotion of digital finance such as Mobile Money, Agency Banking, Online Banking and Promotion of Deposit Insurance Cover by CBN/NDIC are all steps taken by monetary/fiscal authorities in addressing the issues”, he said.