‘Failed banks’ staff have infiltrated microfinance institutions’

The inability of microfinance banks in the country to meet their obligations to customers has been blamed on the infiltration of their management and boards by some former staff of most of the failed banks that have closed business.

The acting Managing Director, the National Deposit Insurance Corporation (NDIC), Umaru Ibrahim, said in Abuja that most managers of the 930 licensed microfinance banks currently operating across the country pay scant attention to issues of corporate governance, particularly strict adherence to stipulated guidelines and regulations on risk management.

Mr. Ibrahim spoke on Monday at a press briefing just as the Central Bank of Nigeria (CBN) warned of plans to harmonise the code of corporate governance next year, particularly the criteria for the appointment of bank chief executives, to ensure that only qualified people are appointed as chief executive officers of banks and other financial institutions in the country.

Multiple challenges for microfinance banks

“The inability of the microfinance banks in the country to meet their obligations to their customers could be traced to the fact that the management of most of them has been infested by ex-employees of failed banks in the country,” Mr. Ibrahim said.

Apart from the squabbles between their management and boards, the NDIC boss also acknowledged challenges the managers are facing, on corporate governance and risk management issues as well as the recruitment of the right staff to manage their affairs, pointing out that there is the need to critically appraise these issues to enable them effectively perform the roles they are expected to play.

“We are collaborating with the CBN to find the best way to regulate the operations of these microfinance banks. The CBN will launch and train the operators or outsource the examination of the capacity of the microfinance banks to enable them operate in line with acceptable regulations spelt out by the regulatory authorities,” he said.

No data automation system

Meanwhile, the Chairman, Federal Inland Revenue Service (FIRS), Ifueko Omoigui-Okauru, also at the same briefing, spoke on the efforts of her agency to boost internally generated revenue in 2009. She said such efforts have been hampered largely by the absence of a data automation system to provide the relevant information about all government ministries, departments and agencies (MDAs) from any part of the country at the touch of the button.

According to Mrs. Omoigui-Okauru, one of the greatest achievements of the federal revenue agency during the year has been its ability to consistently surpass the targets for non-oil sector revenue from about N217.5 billion in 2006 to over N1 trillion by last October.

“In 2006, the FIRS had set the non-oil sector revenue target of N217.5billion, but achieved N513.7 billion. In 2007, the target was N605 billion, but the service realised N715 billion. In 2008, the target was moved up to N738 billion, but the service raised N911 billion. In 2009, the figure was further adjusted to N1.3 trillion because of the drastic drop in the oil price, but as at October, the service has already hit N1 trillion mark,” she disclosed.

Though she said the performance in the first quarter of the year was very slow, with an average of N158 billion a month, Mrs. Omoigui-Okauru pointed out that since May, the performance of the service has consistently surpassed set targets. Despite these achievements, she said a lot still need to be done, considering that they performed without a full data automation system in the service, adding: “The FIRS has been working on an integrated tax administration system, which we hope would be fully in place next year.”

She stressed the need for continued investment on tax verification, research and development, promising that with full automated system of operation, not only within the service, but also to connect the third party providers, the agency will achieve its target.

“The automation system (unique tax service identification numbers) will ultimately link everybody together, not just with the service within, but also with the various FIRS offices throughout the states of the federation. So, automation is a major priority, apart from capacity building and staff education.”