Panic Withdrawals trail CBN’s revocation of 200 microfinance banks’ licences

Friday, 24 September 2010 by Hope Moses-Ashike 

Worried depositors of microfinance banks (MFBs) have being besieged the banks demanding their money, following Central Bank of Nigeria’s (CBN’s) revocation of the licences of 200 MFBs. A large crowd of depositors was seen at most of the banks visited by BusinessDay. Looking worried, the depositors, most of who spoke on condition of anonymity, said they had to ask for their money as the CBN did not name the MFBs which licences were revoked. “It is a precautionary action we are taking. Nobody wants to lose money to any bank for any reason”, one of them said.

Managing directors of some MFBs who spoke with BusinessDay under anonymity said the CBN took them unawares with the announcement. They told BusinessDay that both investors and depositors are confused as the list of the affected banks has not been made known. Similarly, sources at the National Association of Microfinance (NAMB) said that the CBN has been consulted on the impact of its action on the sub-sector.

A managing director from Lagos who claimed that his bank was not affected said: “With the situation of the microfinance banks generally, I saw this coming”. He stated that those whose licences were withdrawn had closed shop long ago. Prior to this development, the regulatory authorities had instructed some microfinance banks to shore up their capital base within a specified period after examining each bank.

Analysts were of the opinion that failure to meet up with CBN’s instruction may have triggered the action. The CBN Tuesday revoked the operating licence of 200 MFBs following results of its audit of the sub-sector. Lamido Sanusi, the CBN governor, said the apex bank revoked the licences in the last two weeks. According to him, the comprehensive list of the affected MFBs would be released soon.
(read article here)

‘Poverty In Nigeria To Drop 50% By 2015’

Weitten by From Jerry Uwah, Washington DC	Sunday, 25 April 2010 00:12

LeadershipNigeria
920 million to remain poor || 1.2m more infant deaths may occur || Poverty in Nigeria and other sub-Saharan African countries would drop by a half to 21 per cent from its current level of 42 per cent by 2015, the World Bank and the International Monetary Fund (IMF) have said.

The federal government estimates put poverty rate in Nigeria at 55 per cent but independent observers insist that 70 per cent of Nigerians live below the poverty line.

The latest Global Monitoring Report 2010 on the Millennium Development Goals (MDGs) released at the World Bank/IMF Spring Meetings in Washington D.C., yesterday, said the estimates are largely based on the strong progress in some regions before the global financial crisis.

However, the report said that as a result of the crisis, 53 million more people will remain in extreme poverty by 2015 than it otherwise would have been. Overall, the report projects that the number of extreme poor could total around920 million five years from now, marking a decline from the 1.8 billion people living in extreme poverty in 1990.

The MDGs - a set of internationally agreed targets adopted in 2000 - measures the extent to which people across the world have access to clean water, education, food, healthcare and other basic needs.

However, the critical MDG target of reducing by half the number of people suffering from hunger from 1990 to 2015 is very unlikely to be met, as over a billion people struggle to meet basic food needs, the report says.

Both the 2008 food price crisis and the financial crisis that hit in the same year have exacerbated hunger in the developing world.

Moreover, the report notes that malnutrition among children has a multiplier effect, accounting for more than a third of the disease burden of children under age five. According to the report, for the period from 2009 to the end of 2015, an estimated 1.2 million additional deaths may occur among children under five due to crisis-related causes.

Noting that these effects might have been more serious, the report stated that pre-crisis policy reforms by developing countries, as well as strong actions by countries and by international financial institutions helped avert a much worse crisis. "Governments kept social safety nets intact (at least through 2009), and massive efforts by the international community to limit economic contraction and contagion have paid off.

"Spurred by recent strong performance in emerging economies and the recovery of global trade, Gross Domestic Product (GDP) growth in developing countries is projected to accelerate to 6.3 per cent in 2010, up from 2.4 per cent in 2009, according to new IMF projections contained in the report.

Global output, meanwhile, is projected to increase to 4.2 per cent this year, reversing a decline of 0.6 per cent in 2009.

"The international community cannot afford to be complacent, since the recovery remains fragile, with long-term implications for many of the goals, including those related to health and education," cautioned Justin Yifu Lin, World Bank chief economist.

Before the crisis hit, progress on the individual MDGs was already mixed. The proportion of children under five who are underweight declined from 33 per cent in developing countries in 1990 to 26 per cent in 2006, a much slower pace than is needed to halve it by 2015. Improvement on this target has been slowest in sub-Saharan Africa and South Asia, where as many as 35 per cent of children under five suffer from stunting.

"The crisis is hitting everyone. But for poor countries, the impact will last long after the global economy has recovered," said Lin. "Furthermore, if recovery is not sustained, continued weak external conditions could lead to widespread domestic policy failure. History tells us that the consequences for human development will be disastrous," he warned.

Kaduna Govt Disburses N155 Million Micro-credit Loan To Traders

By Baba Negedu, Reporter, Kaduna

Special Adviser on Media and Public Affairs to the Government of Kaduna State, Umar Sani (middle); Chairman, NUJ, Kaduna State Council, Yusuf Idris (left) and his Secretary, Mr. Dominic Uzu, during an interactive forum with journalists at the NUJ Press Centre, Kaduna…recently.

Photo: Nath Jubril

Kaduna State government has disbursed N155 million as micro-credit loans to about 21,856 traders from 252 market associations in the state and called on the traders to make good use of the government assistance to them.

Governor Namadi Sambo, while issuing out cheques to the beneficiaries, disclosed that the state has concluded agreement with Access Bank to raise N1billion for the traders and with Unity Bank to also raise N1billion for farmers in the state.

Sambo, who described the state’s gesture to the traders as a poverty alleviation strategy, said the micro-credit delivery system is meant to provide immediate support to the productive sector of the state’s economy “so as to enhance their operational efficiency and eventually get such enhancement sustained.”

While congratulating the beneficiaries, Sambo urged them to judiciously use the facility by allowing it to be revolving thus paying back promptly to allow other people also participate in the scheme and restated his administration’s commitment to implementing poverty alleviation programmes targeted at the very poor in the society.
 

Sambo said, “You will recall that the first phase of the distribution of poverty alleviation materials carried out in November 2009, then about 4,950 persons benefited and very soon the second phase of the distribution of poverty alleviation materials will take place in Kachia Local Government Area and many more people are expected to benefit.

“This administration’s primary drive has been focusing on projects/programmes that touch the lives of the common man, positively making him have a sense of belonging. We are not unmindful of the harsh economic realities currently being experienced by our citizens thus posing a challenge to us to extend measures to cushion these difficulties and make life meaningful to our people. This we have identified and pursued from the inception of this administration to date.”

According to Sambo, “Today 252 associations from Sheikh Abubakar Gumi, Chechnya, Kafanchan, Sabongari, Zaria City, Tudun-Wada Zaria markets and the Central Union with a total of 21,856 members will benefit from a total loan package of N155 million through five micro-finance banks. Our support to the six market associations will also be extended to other markets in Kaduna State in the near future so that they could also benefit from the government’s good gesture in boosting their businesses,” he said.

Method of Action

The Grameen Bank's Method of Action can be illustrated by the following principles:

1. Start with the problem rather than the solution: a credit system must be based on a survey of the social background rather than on a pre-established banking technique.

2. Adopt a progressive attitude: development is a long-term process which depends on the aspirations and committment of the economic operators.

3. Make sure that the credit system serves the poor, and not vice-versa: credit officers visit the villages, enabling them to get to know the borrowers.

4. Establish priorities for action vis-a-vis to the the target population: serve the most poverty-stricken people needing investment resources, who have no access to credit.

5. At the begining, restrict credit to income-generating production operations, freely selected by the borrower. Make it possible for the borrower to be able to repay the loan.

6. Lean on solidarity groups: small informal groups consisting of co-opted members coming from the same background and trusting each other.

7. Associate savings with credit without it being necessarily a prerequisite.

8. Combine close monitoring of borrowers with procedures which are simple and standardised as possible.

9. Do everything possible to ensure the system's financial balance.

10. Invest in human resources: training leaders will provide them with real development ethics based on rigour, creativity, understanding and respect for the rural environment.

Managing the Double Bottom Line in Microfinance

Managing the Double Bottom Line in Microfinance

Dr. Sourendra Nath Ghosal , Head (Knowledge Management) , Microfinance Focus

Micro financing institutions have emerged as a successful delivery model to garner savings of poor of course in a limited manner and to fund rural and urban poor to pursue any economic activities to enable them to earn their livelihood. It has been reported to have an average annual growth of 30% and have covered about 68 million people. (Vide STATE OF THE MICRO CREDIT SUMMIT CAMPAIGN REPORT –2003 and subsequent reports of CGAP). So much so good but an in depth analysis would reveal that yet these institutions have to go miles to achieve its ultimate objective of alleviation of poverty of poor and not just remain as an institution to fund immediate trading or farming needs of these people.

Some of the constraints in attaining the above objective that these institutions face as has been pointed out in various research studies (vide Presentations of CGAP & World Bank data) could be summed up as follows:

1. Inadequacy of donor funds particularly when compared to its insatiable demand; in fact one research study has revealed that on an average annual cash flow estimated for this sector is at least $5 billion but in fact donor funding is even below $1 billion;

2. Insufficient flow of funds from the private sectors as most of them consider such investment is risky if not ranked as unsafe;

3. Inadequate state support as most of the state funds are routed through political institutions for obvious reasons;

Above all these institutions source funds from commercial banks at high cost.

It is obvious therefore most of these institutions lend money at high rate of interest and despite this their margin as reported by most of them remain low and therefore they have very poor leverage to maneuver pricing of their products and services to suit the needs of poor, poorer and poorest. Hence the question of alleviation poverty relegates to background and only continuity and sustainability remain as primary or rather sole objective of these institutions. In fact social mission is dumped for obvious reasons by most of these institutions. Furthermore some smart management take advantage of poor people dependence and ignorance of financial natty gritty and impose other charges along with structuring interest rate on flat basis or at monthly rate to hide the higher load of interest they charge on these helpless poor.

It is therefore imperative to help them to source low cost funds to empower them to strategize their business with social mission of alleviation of poverty and also to pursue commercial viability for attaining sustainability which is indeed equally important. This fine tuning is feasible when mindset of state agencies and donor institutions could be changed so that they not only think these institutions are less risky as well more effective both in achieving social and commercial missions.

-more-

How a Village Saved Its Fishery

How a Village Saved Its Fishery: "A tiny Muslim village in Thailand revived its mangrove trees and brought back its shrinking fish population...." (focus is not on their religion but on their community).

In a tiny Muslim fishing village called Tamarind Cape, a mangrove swamp has been reborn.
Twenty-five years ago it was almost gone. Because Mangrove charcoal is prized across Southeast Asia for its cooking properties, a Thai logging company was making quick use of Tamarind Cape's limited supply of wood. As the swamp that once split the village in two started to shrink, the fisherman began to notice something. Their catch was disappearing too.

"Ninety-seven percent of the 600 people who live here depend on the sea," said Babu Nyansee, a 74-year-old Imam and the village headman of Tamarind Cape. Babu and I were sitting on the banks of an estuary, staring out at surreal towers of limestone that jut suddenly out of the sea in this part of the Thailand. "As the mangroves disappeared, we began to realize that it was affecting the fishery; all the fish we eat come here to spawn. And many of the things they eat do too. So, slowly, we brought the ecosystem back with the help of Yadfon, an NGO based in Trang."
 
The old man spoke slowly and deliberately. Though small and rail thin, he projects considered strength, and as we talked it was clear he was speaking for everyone in his village. Babu is an unlikely conservationist, and a defender of this fishing village's interests.

The success of this small community in Tamarind Cape stands as a model for progress in Thailand's south, where polluting prawn and fish farms patchwork the coast, and many fishermen complain of emptying seas.

As we walked the muddy banks, balancing on palm fronds so as not to slip in the muck, he showed me a tool they're using here: small fish traps that float in the nutrient-rich current heading out of the swamp, where they also farm seaweed. "We used to just throw all our small fish away, or sell them for next to nothing. Now, we put them in these traps, and the grouper grow big and in a few months can sell for 150 baht ($4.50) each."

That's enough to feed a family for a few days.

Later, we cruised Babu's swamp in a longtail boat, past baroque tangles of mangrove roots. An osprey swooped over the river ahead of us, and Babu smiled and traced its path with his finger. It was a peaceful scene.

But just to the south, in the provinces that border Malaysia, a bloody, protracted war is being fought. This insurgency, which officially began in 2004 but has been fomenting for decades, has claimed over 3,500 lives in Thailand. Lately, there have been bombings and shootings in Pattani, Yala, and Narathiwas provinces almost daily, but the conflict gets very little international attention.

We were in Trang Province, a 45-minute drive north of the violence, but here ethnic Malay Muslims and Thai Buddhists appeared to live in relative harmony. I asked Babu why.

"In Trang, in my village at least, Muslims and Buddhists are like cousins. We join in each other's celebrations, we fish together, and we are all pretty satisfied with the role of our government. But in the deep south, people are dissatisfied with the lawmakers, and with human rights abuse on both sides. But there is another reason: The south is very poor. There is no work there, and there aren't that many fish."
To ease the suffering of his ethnic group in this war-torn area, Babu has invited several Muslim village heads to Mangrove Cape to study how to reintroduce these forested swamps. They are also encouraged to practice more sustainable models of fishing in their villages. "It's a small amount of people that we can affect," he admitted, "but a small change can make a difference."

There are many ethnic and political flashpoints in Thailand's southern insurgency, and it shows little sign of letting up. But as we cruised the mangroves, this Imam seemed to think that peace, too, might result from the rebirth of this misunderstood resource.

Challenges in Youth Livelihoods

Interesting statistics that should compel you to pray and be involved:

• Recent estimates suggest that developing countries are home to 1.3 billion of the world’s 1.5 billion youth aged 15-24. 
• While the youth population continues to grow rapidly, economic opportunities in the form of access to education, employment, or entrepreneurship are not growing at a proportional rate.
• Unemployment rates are much higher for youth than for adults, in some countries up to 7 times as high.
• According to the 2007 World Development Report, “youth make up 25 percent of the working population worldwide, but 47 percent of the unemployed.”

Demographic shifts caused by the rural exodus to urban areas, stagnant literacy rates, and static numbers of higher education opportunities all contribute to the need for greater attention to youth and their economic prospects. In many countries, unemployment, underemployment and dubious informal sector employment leave much insecurity. All of these factors are leading to heightened concerns about the potential for disaffected and idle youth to participate in potentially destabilizing or destructive activities.
Youth Livelihood