Corporate governance and proficient human resources have been noted by the Central Bank of Nigeria (CBN) as core ingredients to sustain the microfinance sector.
In the same vein, chairman of Lift Above Poverty Organization (LAPO) Institute, Dr. Godwin Ehigiamusoe, said that obtaining institutional sustainability was a constant challenge hindering a smooth administration for microfinance institutions.
These comments were made at the 5th conference on Microfinance and Enterprise Development by Agnes Martins, the Director, Other Financial Institutions Department, CBN, and Ehigiamusoe.
The conference which was themed ‘Human Resources, Corporate Governance and Microfinance Sustainability in Nigeria’, was organized by LAPO Institute in Benin City, Edo State.
Martins said, “It is impossible for any institution, including microfinance, to survive without sound corporate governance and competent human resources.”
She pressured that the high failure rate peculiar with microfinance banks was due to poor asset quality and sometimes fraudulent activities.
“With a strong workforce and best corporate governance, appropriate policies and strategies can be formulated. Effective oversight hinged on the presence of a principled board and management will enhance productivity at all levels within an organization and translate to sustainability”. She noted.
Martin begged the question of why some institutions are able to consistently meet and even beat all regulatory minimum prudential ratios and financial soundness indicators while some eventually fail.
According to her, the critical distinguishing factors are the quality of corporate governance and human resources.
The apex bank’s director said that to support the efforts of the government and stakeholders in eradicating poverty, steady sustainability of microfinance institutions is imperative.
Similarly, Ehigiamusoe while speaking urged that the vision of the microfinance banks in allaying mass poverty and unemployment would remain a mere vision so long as there is an absence of sound corporate governance.
“A strong relationship between good corporate governance and institutional viability has been amply demonstrated. Effective governance is required to set viable goals and direction, perform oversight functions and demand performance and accountability from the management,” he said.