THE EFFECTIVE RISK MANAGEMENT AND SUCCESSION PLANNING FOR MICROFINANCE BANKS IN LAGOS STATE

Economic experts have emphasised the need for succession planning to ensure sustenance of microfinance banks.

These experts, while speaking at a capacity building seminar for chief executive officers/managing directors and deputy chief executive officers of microfinance banks in Lagos, said there was also a need for effective risk management.

The Chairman, National Association of Microfinance Banks, Lagos Chapter, Mojisola Garber, said succession planning and risk management would always go hand-in-hand as the lack of succession planning posed a risk to the continuity of microfinance banks.

She stated due to the Central Bank of Nigeria policy, CEOs had to step down after a period of 10 years.

She said, “Most of the current CEOs in microfinance banks came in around 2011, which means most of us will leave by 2021. That is why we are emphasising the need for CEOs to plan and train successors that would keep the business running smoothly even after their exit.

“This gathering today is also to enable us to assist as much as possible the microfinance banks that are still struggling with the minimum capital requirement imposed by the CBN.”

Garber stated that the NAMB aimed to give more access to more information to aid the growth and development of microfinance banks.

“The recapitalisation policy by CBN is confronting most MFBs as we speak now and thus this training will give us the MFBs access to more information that can aid our growth,” she added.

The Director, Special Insured Institutions, Nigerian Deposit Insurance Corporation, Mr J.J Etopidiok, said CEOs could employ independent/external consultants to come and use their independent opinion to select a potential successor.

According to him, CEOs should plan on how to make the bank sustainable and profitable in the long run.

The Chief Executive Officer, Accion Microfinance Bank, Taiwo Joda, said there was need for all microfinance banks to be resilient so as to drive profitability, attract the confidence of Nigerians and achieve financial inclusion.

He noted that in the microfinance banking space, the CBN, working in partnership with microfinance banks, had set a lot of risk parameters and ratios, from liquidity risk to portfolio risk management and a number of that based on the Basel III accord.

Joda said, “The CBN has said it would come up with a fresh policy this year.  This capacity training is to ensure that all microfinance banks are doing exactly what the regulators want them to do in their various organisations.”

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