CBN to set exams for microfinance banks’ CEOs
From ISAAC ANUMIHE, Abuja
Friday, January 22, 2009
As part of the reforms in the banking industry, managing directors of microfinance banks will now face Central Bank of Nigeria (CBN) organised exams. Any manager who fails the test will cease to manage their banks.
Addressing microfinance bank executives during the 4th Microfinance Conference in Abuja, the CBN Governor, Mallam Sanusi Lamido Sanusi, disclosed that a training programme will commence in the first quarter of the year and any bank that does not comply with the rules would have its licence withdrawn.
Sanusi noted that certificates will be issued at the end of the exercise. According to him, CBN had begun the process of reviewing the microfinance policies and would soon commence an audit of the banks.
The apex bank’s governor observed that microfinance banks were already facing challenges bordering on inadequate funding, poor corporate governance, poor risk management and investment mismatch.
To this effect, he said that the bank would collaborate with the United Nations (UN) to provide the road map in the auditing.
While declaring open the two-day event, Vice President Goodluck Jonathan hailed the actions of CBN in sanitising the banks saying that the actions were taken in the interest of the economy.
Approving the examination of the banks’ chief executives, the Vice President told the CBN management to make the exams more practical than theoretical because a lower qualified executive who is not corrupt is better than a higher qualified executive who is corrupt, adding that good managers may not necessarily be good academically.
“The key issue is that they must be competent and must not compromise standards,” he said.
He expressed optimism that Nigerians are competent to change their economy and move the nation forward.
For him, to move the nation forward, small units, like a family, with entrepreneurial acumen can do so and not when one is as big as Dangote Group of Companies.
The vice president, however, promised that the Federal Government would provide the infrastructure necessary for the smooth operation of entrepreneurs.
Micro finance is not being regulated and monitored properly in most of the countries. One good step that Nigeria initiated is licensing and regulating MFIs. But most importantly CBN must remember that It is taking an exam will never fulfill their objective. They have to train the CEOs and monitor them on a regular basis.
Definitely a good initiative and other countries should observe the results.
Passing an examination per se will not make bad managers good. What needs to be done is to improve the quality of board members for them to know which reports that should come to them and how to analyse these reports for their decision making on their board responsibilties. As the old Chinese proverb goes ” The fish rots from the head” . Furthermore it is imparative for the CBN to build its own capacity to supervise them effectively.
Excellent!!
I agree with Dr. Andah — passing an examination per se will not make a bad manager good. But this test would certainly indicate who is who in the industry. Managers may not come with SIMILAR answers, as there are still some grey areas where there is no ‘concensus’ . But such tests will show if the managers are at least on the right direction. Capacity building (what type?) would then be critical both for the managers, board members, and also to Central Bank supervisors… I hope this practice would also be applied in other countries.