In this conversation, MUYIWA OGUNDARE tells how easy it is for micro and small business owners in Akwa Ibom State and beyond can access affordable finances, loans or capital to fund and grow their businesses. Besides, he gives practical insights into why many loan requests don’t scale through and gives readers simple steps to take to make a microfinance bank a partner in their growth process. 

In life, it is what you know that makes meaning to you. What you do not know does not make meaning to you. Many people hear about microfinance banks but they do not even know what it is all about. Others think it is just a bank where you can borrow money and do business. Microfinance banking business is more than that. Some think it is only a bank for the poor and the grassroots, but it is not so.

What is microfinance banking? It is specialized financial institution set up to help the financially disadvantaged household and entrepreneurs to accessing funds. It gives them all financial services you can think of.

These disadvantaged individuals are those who ordinarily do not have the ability to approach the commercial banks for assistance. It helps giving access to affordable financial services and also helps to finance income generating activities. If you look at the economy you can categorize those who have the surplus, those who just comfortable and those who do not really have. Microfinance services are not just for those who have not, it is also for those in the middle class. Until everyone knows this, you might have the services close to you and you might not access it. Entrepreneurship, on the other hand, is setting up and managing a business or businesses, where the idea is yours and you take the financial risk with the hope of making profit or maximizing profit. When you bring both together, you find out that there is a correlation between the two: the microfinance bank who gives access to money for financing of business and the man who has idea on how to generate income. This is where both give an unexpected promotion to the economy, because where other financial institutions failed to provide money to boost the economy, the microfinance institutions steps in the bridge the gap. The contributions of the microfinance banks to the economy are enormous.

But as good as this sounds, experience shows that the microfinance institutions are really not helping as it is in the books, you approach them for funding assistance and they will tell you, open account and run it for six months. After six months, they tell to bring a post-dated cheque of value you’re asking for or do cash-backing, in the case where you don’t have other requirements collateral. It is still very strenuous….cuts in…

It’s unfortunate that we have a society where dishonesty and insincerity take the order of the day. Why do we have to go through all this? Why does a microfinance bank have to put stringent conditions in place before running business? When microfinance banking started some years back, CBN wanted them to do neighbourhood or relationship banking, that was why some were restricted to operate within their localities with those they know among themselves. Some levels of loans were not to be collateralized, monies were to be given to them based on their character. But a lot of the people did not comply with this. Secondly, we have some people who are not serious minded. This set of people think that cheap access to affordable funds is a national cake. There was a time over 300 licenses of microfinance banks were revoked by the CBN because of non-performing loans from people who were not serious minded.  As a business, your profit of ten years can be eroded in six months by non-performing loans. If you’re sincere and honest, why do you take a loan and not want to pay back? Majority of the people are not sincere, majority of the people are not honest. A lot of people go to deceive banks to take money and at the end, they run away with it. Some even borrow the money to do genuine businesses, maximize profit from the business but refuse to pay back the money. Sometimes it is hard to know who is not sincere and this is why some banks require that you first open an account and run it for six months. Within this period it is expected that hidden characters and motives of the customer requesting for loan will be known. If you’re a type who does not pay back loan, your character will show within this period. 

To have a seamless relationship between the banks and customers, we must deal with the issue of dishonesty and insincerity. It is sad that some bad eggs make us place these restrictions. It is an act of wickedness that make people take a loan and refuse to pay back. 

How start-ups can access affordable funding

Helping entrepreneurs does not only end in lending money to them, it goes further than that, of you see an entrepreneur who is serious minded and honest, we deal with such people. We sit down and look at your proposal, we take advice from specialist in your area to know if your business is viable or not. In this case we will be able to advise our customers to either go into it or not. A lot of customers who approach banks for business do not even know the business, they just want to go I to it because someone else’s has succeeded in it. We provide this expert advice and be sure that they know what they want to do. After assessing the risk, we will be honest enough to tell you, yes, this business we can run with it or no, this business will not be profitable and we cannot run with it. 

Quest News 24

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