Benefits of Operating as a Registered Micro Finance Bank (MFB)
The following are the potential benefits that will accrue to the proposed Micro Finance Bank registered and licensed by the Central Bank of Nigeria: ➢ Commercial Operations. Operating as a CBN Licensed MFB as different from an NGO-MFI implies commercial orientation. This implies operating as an organization with long-term vision for financial sustainability and growth. Operating model and processes will therefore be designed along these directions. This transformation to a commercial organization will therefore pave the way for meaningful business relationships with other players in the Financial Sector of the National Economy.
➢ Access to Additional Funds. According to the CBN Regulatory and Operational Guidelines on Micro Finance Business in Nigeria, Licensed MFBs will have access to additional funds beyond their Shareholders’ Funds. Some of these sources are: ❖ Financial Institutions (10% of SMEEIS Funds as Equity in the Micro Finance Bank) ❖ Additional Funding through linkage Programme with the Financial Institution with equity funding in the MFB or with other Financial Institutions interested in providing wholesale funds for onward lending for faster growth of the MFB and for more extensive outreach. This is a provision for implementation in the CBN guidelines ❖ 1% of Annual Budgets of State and Local Government Funds ❖ National Micro Finance Development Fund
❖ Re-financing and Re-discounting Facility (RRF) of CBN ❖ Agricultural Credit Guarantee Scheme Fund (ACGSF) ❖ Interest Drawback Fund
❖ Multi-lateral and Bi-lateral funding arrangement specifically designed for micro, small and medium enterprises. A typical example is the current World-Bank Assisted MSME Project for Nigeria.
➢ Core competencies that will give the MFB strategic advantages in the Market environment. Some of these are: ❖...
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