Sunday, May 3, 2020

MFBs Recapitalization: UNESCO Laureate Lends Support, Commends A Professor Of Law, Professor Abiodun Amuda-Kannike (SAN) As He Advises CBN On More Time For Micro-Finance Banks Recapitalization In Nigeria, Says Global Economic Crisis Looming.

...UNESCO Laureate faults CBN's Circular Letter to MFBs in the ongoing global Covid-19 pandemic.

.... Professor Sir Bashiru Aremu Backs Abiodun (SAN) as Senior Advocate hinges his arguments, submission on  Global Covid-19 pandemic and financial crisis.

By Victor Bieni

UNESCO Laureate, Prof Sir Bashiru Aremu has commended the efforts of Prof Abiodun Amuda-Kannike (SAN) on his  advice to  CBN to   Grant  MFBs more time for recapitalization.

Professor Sir Bashiru Aremu disclosed this to our reporter in a press statement made available to Newsmen recently backed and  Commended the appeal made by a Professor of Law, and  Senior Advocate of Nigeria (SAN), Professor Abiodun Amuda-Kannike asked for  the extension of time given by Nigeria's Apex Bank (CBN) to all Micro-Finance Banks On Recapitalization ground.

In the submission for extension of time in the face or realities of the present global financial crisis,  Professor of law, Professor Abiodun Amuda-Kannike (SAN) has called on the Central Bank of Nigeria (CBN) to grant more time for recapitalization of the Micro-Finance Banks (MFBs) in the country to enable them meet up in view of the economic crisis created by the corona virus pandemic all over the world including Nigeria. UNESCO Laureate, Prof Sir Bashiru Aremu said

The Central Bank of Nigeria (CBN) had in a circular issued to all Microfinance Banks with ref: FPR/DIR/GEN/CIR/07/054 dated 29th April, 2020 which was signed by Kevin Amugo, Director, Financial, Policy and Regulation Department, extended its earlier deadline to Micro-Finance Banks by one year from date.

UNESCO Laureate, Professor Sir Bashiru Aremu then backed  Professor Amuda-Kannike (SAN), who is currently chairman of one of the MFBs and also, Provost, College of Law, Kwara State University, Malete who made the appeal on Thursday in Ilorin following the CBN circular which extended the recapitalization by one year stated  that these financial institutions may not be able to bounce back to business on account of the present global economic crisis which has affected virtually all businesses.

Professor  Abiodun (SAN) has argued: “I think the CBN is too much in a haste with this circular. What is the CBN premising it’s decision on? Has is conducted a Covid19 impact assessment to arrive attach the one year additional grace? CBN has not talked about any palliatives, it has not said anything about reviewing existing guidelines to cushion the effect of this pandemic. I will not be surprised if we start getting visitation letters for routine risk based audit.

“This is unacceptable and does not make sense on the face of the World economic realities, not to even talk about Nigeria. The deadline extension is too little even because of the Covid-19 and other problems facing the nation and the World. In fact, it is good to withdraw the issue of recapitulation for now completely because of the reality on the ground and whenever the issue will come up, it should be after world economy would have be fully revamped which could be as long as 5 to 6 years from now on.

“The CBN should not be seen as working against the interest of the Federal Government in revamping the nation’s economy more so, when the whole essence of Micro Finance Bank is to develop the nation’s small and micro economic activities.

“We on our part are calling on the President of the Federal Republic of Nigeria to intervene before this policy of CBN destroy the economic development/revitalization of the Federal government which in itself is being reviewed especially through budget review as a result of the changes in the prices of oil at the World market and Covid-19 health problem".

UNESCO Laureate, Professor Sir Bashiru Aremu also faulted the CBN Circular to MFBs on the ground that the World is currently facing serious economic crisis as a result of the Covid-19 pandemic then advised CBN Management to listen to the words of wisdom from Professor Abiodun Amuda-Kannike (SAN) for Socio-economic well-being of the Citizenry.

 CBN Circular which states:“The Central Bank of Nigeria in consideration of the impact of the Corona virus (Covid-19) pandemic on economic activities has revised the deadline for compliance with the minimum capital requirements for Microfinance Banks (MFBs) in Nigeria communicated vide its circular dated March 7, 2019".

Consequently, the CBN has extended the deadline for compliance with the revised minimum capital requirements for all categories of MFBs by one year as follows;

“MFBs operating in rural unbanked and under-banked areas (Tier 2) shall meet the N35 million capital threshold by April 2021 and N50 million by April 2022.

“MFBs operating in urban and high density banked areas (Tier 1) are expected to meet the N100 million capital threshold by April 2021 and N200 million by April 2022.

“State MFBs shall increase their capital to N500 million by April 2021 and N1billion by April 2022, and

“National MFBs are expected to meet minimum capital of N3.5 billion capital by April 2021 and N5 billion by April 2022”, the circular stated.

 UNESCO Laureate, Prof Sir Bashiru Aremu also quoted what Prof  Amuda-Kannike said  that it is important that when policies are made, the interest of the common down trodden citizens must be taken into consideration and any attempt to do otherwise is likely to make the government unpopular and could even lead to further crisis.

“Micro-Finance Banks service the grass root economy through small-scale businesses, through collection of small loans which commercial banks will not give to them, and if the government is not careful, most of the MFBs will be out of business and the whole essence will be defeated”, UNESCO Laureate, Prof Sir Bashiru Aremu also supported what Senior Advocate of Nigeria said

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