While the banking halls of the “shaky” banks remain calm, panic withdrawals have hit most microfinance banks (MFBs) in Lagos as depositors besiege their counters for their deposits, Nigeria CommunicationsWeek can reveal.
A top official of one of the banks admitted that “many microfinance banks are having liquidity problem now. There are panic withdrawals due to the reduction in the level of public confidence. The problem was aggravated by the crisis in the banking industry, especially in the last two weeks.”
A visit to some of the microfinance banks showed business activities at an all time low.
Nigeria CommunicationsWeek gathered that the situation is exacerbated by the threat by the Central Bank of Nigeria (CBN) to also wield the big stick on erring microfinance institutions.
Microfinance banks help in eradicating
poverty by giving the active poor collateral-free loans and other financial services to support income-generating businesses. As each loan is repaid, the money is redistributed as loans to others, thereby multiplying its impact to assist in general economic growth.
MFBs have however been dogged by poor corporate governance, public risks aversion due to experiences related with such failed banks in the past, inherent risks which make its management more complicated and demanding than that of the commercial banks.
