Why we must look the way of Microfinance Bank today

By Kehinde Oluwatosin Babatunde

One of the challenges of banking in Nigeria is the mismatch of customers to the wrong kind of banks. The implication of this is the over crowding of commercial banks and a corresponding decimation of other kinds of banks.
The mismatch in our banking practice may not be disconnected from our class-centric society that often make us believe that the popular is the correct. I have met folks with less than Hundred Thousand Naira in a month patronizing at least three commercial banks with their automated teller machine cards (ATM cards) stacked in their wallets .
This not only translate into a paucity of funds across the three banks, but also poor administration and maintenance of such bank accounts. That is why you find it difficult to question your bank’s excessive bank charges even when you hardly have activities on such accounts.
Folks who patronizes multiple banks and believe it’s a sign of being upscale are lost on the possibilities other kinds of banks provides , especially the microfinance banks.
The Central Bank Of Nigeria’s (CBN) supervisory and regulatory guideline for microfinance banks in Nigeria defines a microfinance bank thus “A Microfinance Bank (MFB) unless otherwise stated shall be construed to mean any company licensed by the CBN to carry on the business of providing financial services such as savings and deposits, loans, deposit fund transfer, financial and non-financial services to microfinance client. It further describes microfinance client as “The economically active low income earners , low income household, the un-banked and under-served people, in particular, vulnerable groups , such as women, physically challenged, youths, micro-entrepreneurs, informal sector operators, subsistence farmers in urban and rural areas.”
Following the above definition of a microfinance client, one can rightly say that the majority of microfinance clients are wasting as commercial bank customers. Given Nigeria’s economic dilemma, I conservatively put low income earners as those who earn maximum Two hundred thousand naira monthly and below in urban cities in Nigeria .
If you are in this bracket you need to start patronizing a microfinance bank. Recently I was faced with a situation that reinforced my belief that commercial banks are mere deposit haven for low income earners. I needed a loan, I worked into my commercial bank whom I have banked with in the last six years, not only did they start redirecting me from one staff to the other, they were also lost on the procedures of accesing loans in their bank.
I was later told they can only grant group loan if I can get other loan seekers. I do not blame them, they are not used to granting facilities to earners like me, but rather prefer the blue-chips.
While microfinance banks in Nigeria is still riffed with several challenges ranging from over-regulation to poor recruitment and selection procedures of staff to circumvention of internal controls by management, they still remain the best for Nigeria’s low income earners in terms of ease of access and response to needs, also given the object of their establishment,they are dedicated specially to meet the financial needs of low earners in ways commercial banks can’t meet.
Kehinde Oluwatosin Babatunde is a prolific writer and public speaker based in Lagos.