Banking
Consolidation to Reduce Microfinance Banks in Nigeria by 44%—Agusto
By Modupe Gbadeyanka
There are strong indications that the number of microfinance banks in Nigeria will reduce by 44.4 per cent by the time the recapitalisation exercise of the sector by the Central Bank of Nigeria (CBN) is concluded in April 2022.
This information was contained in a report on the Microfinance Industry in Nigeria released by a foremost research and credit rating agency in the country, Agusto & Co.
A summary of the report made available to Business Post revealed that the over 900 microfinance banks operating in the country may be pruned to around 500 through consolidation activities as well as failures to meet the new requirements.
The apex regulatory agency in the nation’s bank sector, the CBN, is embarking on a two-phased increase in the minimum capital requirements for all categories of microfinance banks to take effect in April 2021 and April 2022.
As a result of this, the number of operators is expected to reduce and Agusto expects the microfinance industry to fare better in 2021 supported by the global roll-out of COVID-19 vaccines, accelerated digital transformation of microfinance banks and businesses in general, a renewed focus on essential sectors and government support for MSME businesses.
“The industry, however, continues to have a high level of susceptibility to macroeconomic challenges as was witnessed in 2020,” the agency said in its outlook for the year.
In the report, the credit rating agency paid attention to the impact of the COVID-19 pandemic on the sector and non-performing loans (NPLs), an assessment of the new capitalisation requirements for microfinance banks, analysis of the financial performance of microfinance banks and a detailed assessment of the major impediments to growth in the industry.
The pandemic and the technology gaps
Many microfinance banks in Nigeria, like in most developing countries with relatively low penetration of e-channels, witnessed a doubling of obligations that were past due for up to 30 days (PAR 30) during the first wave of the pandemic and lockdown restrictions in early 2020.
Despite up to N5 billion spent by the major national and state microfinance banks in Nigeria on the implementation of internet, mobile and USSD banking services, the industry remains heavily reliant on brick-and-mortar branches for the acquisition of customers and disbursement of loans and the collection of notes and coins for repayment. Given the low technological literacy in the country, collections from Micro, Small and Medium-Scale Enterprises (MSMEs) ground to a halt during the six-week lockdown, even in sectors categorised as essential and in regions not otherwise facing restrictions.
The economic environment also did not lend itself to loan disbursements given the sharp decline in business activities while many microfinance banks were caught off guard by the pandemic with few having the infrastructure in place to lend to MSMEs digitally, the report stated.
Microfinance banks rising NPLs
Agusto said the doubling of non-performing loans witnessed by the Nigerian microfinance industry in 2020 was exceptional in the light of the pandemic, thus many operators had to provide some forbearance and also restructure loans for clients with difficulty repaying as restrictions were gradually lifted.
One of the primary strategies adopted by operators in the sector to drive recoveries in 2020 was to promise customers who met all outstanding obligations access to new loans.
Subsequent to the six-week lockdown, many microfinance banks shifted focus to providers of essential goods and services and also existing customers to drive disbursements. The growth in the industry’s loan book was, however, depressed with the portfolio remaining flat as operators adopted a more cautious approach given the heightened credit risk of MSMEs in key sectors such as education, supply of non-essential goods and services, transportation and hospitality.
Agusto expects to see improvements in the microfinance industry in 2021 as the global and domestic economies rebound and operators adjust to the new realities with a 5 per cent growth in the loan book and a 400-basis point drop in the non-performing loan ratio from an average of 12.6 per cent for major operators.
The pandemic has raised the stakes for payment infrastructure
Microfinance banks in Nigeria have been given a loud wake-up call by the COVID-19 pandemic to accelerate investment in digital channels for loan disbursement and collection.
Many operators have since developed web portals for loan applications and are actively exploring the use of payment services such as Remita, Paystack and ultimately mobile money for collections.
The efficacy of such channels in Nigeria may, however, be limited by the low digital literacy of the unbanked, underbanked and low-income target market of the Microfinance Industry. Having a strong physical presence in various geographical locations remains the major driver of success in the microfinance industry in Nigeria.
The largest microfinance banks have branches spread across the country and are easily identifiable to the target market of low-income earners and MSMEs operating in the surrounding area.
Agusto said it believes the future success of digital channels in the microfinance space (critically for collections and consequently disbursements) will be strongly dependent on the adoption of digital payments by low-income earners and MSMEs in everyday purchase and sales transactions. On the contrary, if the underlying economic activities continue to be executed in notes and coins, then the fundamental challenge of converting collections to a digital transaction would remain.
Notwithstanding, the licensing of three payment service banks (PSB) – Hope PSB Limited, 9 PSB Limited and Moneymaster PSB Limited – may offer a possible solution in the mould of Safaricom’s popular M-Pesa platform in Kenya.
Users of the M-Pesa platform in Kenya and other East African countries are able to pay digitally from and to a mobile telephone number for groceries at a market stall, for public transport or for the services of an artisan, for example. This “mobile money” can be used to settle loan obligations using the same platform, thus facilitating digital collections.
By Modupe Gbadeyanka
No fewer than 131 customers of Wema Bank Plc will win N11 million in cash prize in the company’s 5 for 5 promo season 4 monthly draw fixed for Friday, January 24, 2025, in Warri, Delta State.
According to a statement from the lender, from the 131 customers, 80 of them will win N25,000 each, 40 will win N100,000 each, eight domiciliary account holders will win N250,000 each and three will get N1 million each, with one to be from Warri, venue of the event.
The 5 for 5 promo selects winners from the bank’s pool of active and transacting customers, via thoroughly regulated electronic live draws.
The first 3 seasons saw the Wema Bank 5 for 5 Promo disburse over N150 million to 2,378 Nigerians across the six geopolitical zones in Nigeria, and with the launch of Season 4 on October 1, 2024, Wema Bank raised the bar, setting aside a whopping N135 million for disbursement this season alone.
So far, over 1,000 Nigerians have won cash prizes in daily, weekly and monthly draws, with 540 customers winning in 55 daily draws, 550 customers winning in 11 weekly draws and 262 customers winning in 2 monthly draws; totalling over N27 million disbursed so far.
The third monthly draw of the season, which also happens to be the first monthly draw of 2025, is set to hold this January in Warri, and another 131 winners will emerge from the draw.
“The goal for us with the Wema Bank 5 for 5 promo is giving back, providing support and rewarding our loyal customers, it’s been one of the key means through which we say ‘thank you’ as a Bank, and four years strong so far, it’s only gotten better with each season.
“We made millionaires in December ahead of Christmas and it was heartwarming to hear from our amazing customers how instrumental these rewards were in sorting out some bills. Now, we are even more ready to kickstart 2025 on a millionaire note,” the chief executive of Wema Bank, Mr Moruf Oseni, said.
“As a tradition, the 5 for 5 Promo continues to tour different locations across the six geopolitical zones, however, our winners are always selected from across the country. So even though one of the millionaires will be from Warri where this draw will hold, there’s still room for two more millionaires and over 120 more winners of cash ranging from N25,000 to N250,000.
“The joy for us is in the smiles that are made, the stories that are positively impacted and the hope that these cash rewards bring to the winners; from students to small business owners, working professionals, and so on.
“We are all too familiar with the running ‘100 days of January’ reality that plagues a lot of us after the heavy spending that comes with December, so this draw is the perfect opportunity to support our customers beyond the daily and weekly draws that we hold every other weekday.
“I congratulate the winners in advance, and I encourage every new and existing Wema Bank customer to seize this opportunity and start transacting today. The 5 for 5 promo is as transparent as can be, so anyone can win, provided they meet the minimum requirements,” he added.
By Dipo Olowookere
The United Bank for Africa (UBA) Plc has completed its scheduled routine system maintenance on its card service.
The financial institution over the weekend informed its customers of a scheduled maintenance on its card service from 12 am to 5 am of Sunday, January 19, 2025.
Customers were told that the action could make them experience service disruption while using the UBA cards for financial transactions.
The lender said it was carrying out the maintenance for better service delivery, apologising for any issue they may encounter during the period.
“In line with our commitment to provide you with exceptional experience and to enable us to serve you better, we will be carrying out a scheduled routine maintenance on our card services.
“During this period, you may not be able to use your Debit & Credit Card. Please use our alternative channels, LEO, *919#, Mobile App or Internet Banking for transactions
“An update will be provided as soon as the maintenance is completed.
“We appreciate your understanding and apologize for any inconvenience this may cause. Please be assured that we are committed to providing you with excellent banking services,” the notice earlier sent to customers said.
After the completion of the process, UBA mailed another statement to customers, informing them they could use their cards without any issue.
“We are pleased to inform you that our scheduled routine system maintenance has been completed.
“You can now enjoy safer and quicker transactions on our card service.
“We regret any inconvenience you may have experienced, and assure you of our commitment to continuously provide you with excellent service,” the statement sighted by Business Post read.
By Aduragbemi Omiyale
On Thursday, January 30, 2025, the board of directors of FBN Holdings Plc will gathered for a meeting, a statement signed by the company secretary, Mr Adewale Arogundade, has disclosed.
This is coming amid the boardroom crisis rocking the financial institution over the leadership of the board headed by popular businessman, Mr Femi Otedola.
Mr Otedela, who sold his stake in Forte Oil, now known as Ardova Plc (AP), a few years ago to invest in the power generating sub-sector through Geregu Power Plc, acquired some shares in FBN Holdings.
Soon after his acquisition was announced, a leadership tussle erupted between him and Mr Tunde Hassan-Odukale, extending to Mr Oba Otudeko.
Some days ago, some shareholders of the company called for the removal of Mr Otedola as chairman of FBN Holdings through an Extra-Ordinary General Meeting (EGM).
The leadership crisis triggered the firm to assure its customers that its operations will not be affected by happenings in the boardroom.
“This matter does not in any way impact the operations of the company, and all the businesses within the Group continue to provide uninterrupted services to its customers.
“We assure our valued customers, shareholders, investors, other stakeholders and the general public that we are taking all necessary steps to protect the interests of the company and its subsidiaries.
“The Group’s performance continues to improve, resulting in a higher market capitalisation even as we work towards surpassing the regulatory minimum capital well ahead of the deadline,” parts of the statement read.
As the company makes efforts to manage the situation, members of the board will meet by the end of this month to “consider its unaudited accounts for the year ending December 31, 2024, on Thursday, January 30, 2025.”
In the notice signed by Mr Arogundade, FBN Holdings said its closed period, which commenced on Wednesday, January 1, 2025, “will continue until 24 hours after the company’s unaudited accounts and 2024 audited financial statements are filed via the issuer’s portal of the Nigerian Exchange (NGX) Limited, in line with Rule 17.18(a) Closed Period Rules, Rulebook of the Exchange, 2015 (as amended).”
A closed period is a timeframe when those who have privileged information about the financial statements of a firm within the organisation are prohibited from trading securities of the company at the exchange.
This is put in place to prevent them from having an undue advantage over shareholders not having any business dealings with the organisation.
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