Expert Advocates Autonomous Regulator for Micro Finance Banks

A political economist, Dr Ja’afar Sa’ad, has advocated for the establishment of an autonomous body to regulate community and micro finance banks in Nigeria for maximum output.

Sa’ad, who is also the Galadiman Ruwan Zazzau, stated this in an interview with the News Agency of Nigeria on Thursday in Zaria, Kaduna State.

He said that such an agency should be charged with the responsibility of licensing and regulating community and micro-finance banks in the country.

“The community and micro-finance banking system we practice in Nigeria is a very good scheme; they are doing it in Bangladesh, India, Kenya, South Africa and USA and it is working well.

“The scheme had actually succeeded in these countries and it is contributing to the growth and development of their respective economies.

“In Nigeria, the challenge is that the responsibility of licensing and supervising rest with the Central Bank of Nigeria (CBN),” he said.

He described CBN control over such banks as a key fundamental error that should be corrected.

Sa’ad argued that cooperative societies, community and micro finance banks should not be licensed and supervised by the CBN.

“Government should liberalise the process, create an autonomous government agency to license, supervise and manage these institutions instead of CBN.

“At my last count we have 776 micro finance and community banks operating in Nigeria and a lot of them are doing quite well while others are not.

“Most of them are having issues with CBN regulations which is not supposed to be so, that is not what is happening in India, Kenya, South Africa and host of other countries,” Sa’ad noted.

According to him, in India, where the scheme is operating very well, those who were unable to pay back loans collected from community or micro finance banks, commit suicide because of shame.

He described community banking system as a major avenue of financial inclusion for those not having access to finance from major banks.

“So, to be able to reach the target or actualise financial inclusion in Nigeria, we need schemes and smaller banks of whatever name.

“It will help us to achieve economic self-reliance for our women and children and encourage financial inclusion for all,” he said.

He recalled that the banks were initially regulated by the National Board for Community Banks, “but because of bureaucratic process it didn’t work well, however, it is still there on paper, since it is not scrapped by an Act of National Assembly.”