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EXAM FOR MICROFINANCE BANK CHIEFS

By NBF News

When he assumed office last year as the Governor of the Central Bank of Nigeria (CBN), Mr. Sanusi Lamido Sanusi made clear his mission. It includes a comprehensive reform of the financial services sector to limit risks in the system, stabilize the economy and ultimately save the banking sector from collapse.

Since then, the apex bank has initiated a handful of measures towards bringing sanity into our banks, including the microfinance sub sector. One of such measures already carried out is the audit of licensed Micro finance banks operating in the country.

The audit of the estimated 890 microfinance banks in the country was heartily welcome. It was expected to reveal the true profile of the banks and the integrity of their management. As providers of financial services to low income businesses, it has become expedient to ensure the character and competence of those at the helm of the banks.

However, the most recent plan by the CBN to make all serving and prospective Managing Directors and Chief Executives Officers of microfinance banks write a qualifying examination on leadership competence is already attracting divergent views. This test will be a key criterion for the serving ones to retain their posts or the intending ones to get appointed.

On this latest plan, we urge the CBN to tread cautiously. The CBN appears to us to be overreaching itself on its mandate, unwittingly. By its plan, the first test for the MD/CEOs will be held this October. The exercise will be conducted by the Chartered Institute of Bankers of Nigeria (CIBN). Those to take the examination, according to the plan, will first go through a training programme.

That notwithstanding, we are not convinced that the decision to subject bank MD/CEOs to written examinations makes much sense. There is no doubt that there is need to put the microfinance banks in good stead. But, compelling their chief operators to write a test sounds pedantic and pedestrian. It underscores the over-emphasis on paper qualification that has failed to make any enduring impact on many aspects of our national life.

Besides, there is no proof that the intended written test will not be compromised, thereby making the exercise counter-productive. We believe the plan by CBN may be well-intentioned, but the methodology for getting the desired result is faulty. Rather than tread this path, the appropriate thing for the CBN to do is to roll out comprehensive guidelines that will clearly spell out the criteria for selection of MD/CEOs of microfinance banks, and required qualifications for those who wish to occupy such position. If this is done, a better management of Micro finance banks could well be on course.

We urge the CBN to jettison this plan and think of other strategies to help micro finance banks achieve their statutory obligations and rebuild customer confidence. Altogether, as small as their financial muscle might be, the place of microfinance institutions as providers of financial mediation in a developing country like Nigeria cannot be over-emphasized. Every effort to enhance their performance must be well thought through.