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MDCL Accelerates Microfinance Industry Growth with Launch of Liquidity Platform

April 13, 2021 · 4 min read
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The Function Suite of Sheraton Hotel, Lagos, welcomed the crème-de-la-crème of the financial services sector on March 31, 2021 during a high-impact business forum for key stakeholders in the microfinance industry, organised by the Microfinance Development Company Ltd (MDCL), with the theme, “The 21st Century MFB: Leveraging Technology to Drive Financial Inclusion in the MFB Industry”

Setting the tone for what was to come, the Chief Executive Officer of MDCL, Obinna Onunkwo, welcomed everyone to the event and said it was put together to address some of the critical challenges the microfinance industry was facing. He also pointed out that, in line with its objective of creating a Shared Services platform for the industry, MDCL had entered into strategic partnerships with other companies to help them achieve their business goals. 

Director, MDCL, Dr Daniel Ogun; CEO, MDCL, Obinna Onunkwo; Director of Finance, MDCL, Winifred Oche; Chairman, MDCL, Rogers Nwoke; Keynote Speaker and Partner, KPMG, Lawrence Amadi at the event.

One key partnership is that with InfoWARE, a software company that helped MDCL build the Intermember Liquidity Placement Platform (ILPP) which enables microfinance banks to place liquidity among themselves. Another one is with Stanbic IBTC to provide an on-lending facility to its members, while the last one is the creation of a digital lending platform for microloans, built in partnership with Migo. 

“It is important for all MFBs to unite and speak with one voice, so we can have a voice in the bankers’ committee meetings and be able to dictate policies that affect us as an industry,” Mr Onunkwo admonished. 

Corroborating Mr. Onunkwo’s position, the Board Chairman of MDCL, Rogers Nwoke, opined, “financial inclusion had been a struggle for a very long time, and we are yet to meet the targets set by the CBN in that regard. One reason for that was the absence of liquidity for microfinance banks. MDCL is a response to the problem of funding. We are here to have a discussion on how to drive financial inclusion with technology, and we are going to crown the discussion with a launch of the Intermember Liquidity Placement Platform (ILPP).” 

The President of NAMB, Alhaji Yusuf Ahmad Gyallesu, pointed out that the ILPP was a very good initiative and a dream come true for the microfinance industry, as it would provide them an opportunity to look inwards for liquidity, instead of looking outside. He then encouraged all microfinance banks to cash in on the solution to move their businesses forward. 

While delivering the keynote address, Partner and Head of Technology Assurance at KPMG, Lawrence Amadi, said that, with a population of over 200 million people in Nigeria, over 80 million are financially excluded and microfinance banks have a key role to play in helping to reduce that number, in line with the CBN’s goal of having 80% of the population in the financial net. 

According to him, “supporting innovative thinking is what MFBs must do in order to successfully drive change in the country. To do this effectively, they have to tap into technology to transform the entire financial sector.” 

In a goodwill message by the Director of Other Financial Institutions Supervision Department (OFIS) of the CBN, Nkiru Asiegbu, who was ably represented by the Head of Microfinance Supervision, Idowu Akinlade, she mentioned that the event could not have come at a better time, considering that the industry is experiencing a high influx of FinTechs.

While commending MDCL for the great initiative to solve the liquidity challenge in the MFB industry through the ILPP, she pointed out that “innovations may solve some problems, but they may also create new ones.” It was therefore pertinent for the promoters to mitigate against server risk, operational risk, credit risk, compliance/money laundering risk, data security risk and other possible risks that may arise from the use of the platform. 

The Director of Special Insured Institutions Department at the NDIC, J.J. Epiotodok, who was represented by the Deputy Director in charge of the Department, Adedayo Olukoya, congratulated MDCL for taking the bull by the horn and noted that the theme of the event was apt, considering the many challenges bedevilling the MFB industry. 

Executive Secretary, NAMB, Caleb Shikir; CEO, MDCL, Obinna Onunkwo; Deputy Director, Special Insured Institutions Dept, NDIC, Adedayo Olukoya; Head, Microfinance Supervision, CBN, Idowu Akinlade; and MD/CEO, Law Union & Rock Plc, Mayowa Adeduro at the event.

“Financial inclusion is at the heart of microfinance banking, but the industry faces a dearth of cheap and long-term sources of funding, together with infrastructural challenges. This is why the ILPP is a very welcome initiative,” Mrs Olukoya opined. She further suggested that MDCL needed to partner with institutions like the Development Bank of Nigeria, Bank of Industry, African Development Bank, World Bank, Islamic Bank and other multilateral organisations to bridge funding gaps in the industry.

To contextualise the importance of ILPP, there was a panel session which was preceded by short presentations from the MD/CEO, Law Union & Rock Insurance, Ademayowa Adeduro; Partner at Bloomfield Law Practice, Adedoyin Afun; Product CEO, BankOne (Appzone), Mudiaga Umukoro; and MD/CEO of InfoWARE Ltd, Uwa Agbonile, represented by the Head of Sales and Marketing, Tereigh Ozakpo. The discussion centered around possible collaborations across different verticals, in furtherance of the financial inclusion objective of the federal government.  

As the forum came to a close, the curiosity on the faces of attendees had lifted, as everyone could see a roadmap for the accelerated growth of the microfinance industry, leveraging the technological innovation of MDCL to solve perennial issues that had plagued microfinance banks in the past. Everyone left with a resolve to embrace new ways of doing business, riding on the strength of technology and strategic partnerships.

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