Empower micro finance banks to reach more customers, Arvofinance boss urges CBN

Mr Ayotunde Bally, Chief Executive Officer of Arvofinance, a digital lending company, has urged the Central Bank of Nigerians (CBN) to allow Microfinance Banks (MFBs) borrow from its Standing Lending Facility (SLF), to enable them reach more consumers.

Bally made the appeal in an interview with the News Agency of Nigeria (NAN) on Thursday in Lagos.

He said though microfinance banks were not qualified to borrow from the facility, he appealed that they should be permitted to borrow from it.

“We would have loved to borrow from CBN’s Standing Lending Facility (SLF) window but we cannot because we are not qualified for it. It is a product for discount houses and commercial banks.

“The SLF will really help us in reaching much more consumers that are in need of credit. We currently get application requests averaging N3 billion monthly, but we can only lend within our capacity.

“Access to more funding at better rates, will allow us scale faster and extend credit to more consumers.

“If CBN truly wants to solve the problem of financial exclusion, they need to empower MFBs, Microfinance Institutions and other consumer lenders,” he said.

He also called on the government to join hands with credit agencies to work at the bottom of the pyramid to teach financial responsibility.

Bally suggested that financial responsibility should be included in the school curriculum, noting that no system could thrive without a functioning consumer credit system.

Bally said his company planned to increase its lending to N5billion this year, after disbursing N2 billion to Nigerians in 2021, with a default rate of less than 5 per cent.

“Our total loan disbursed in 2021 was N2 billion with a default rate of less than 5 per cent. Our loans projection this year 2022, is to disburse N5billion; maintaining the same default rate of less than 5 per cent,” he said.

Bally said though some percentage of outstanding loans had been written off, recovery had been quite challenging.

“Recovery has been quite challenging, especially as majority of our target audience, those at the bottom of the pyramid, are not financially literate.

“They do not understand the pros and cons of keeping a clean credit profile; so, to them, a loan is what they access and repay when it is convenient,” he said.

Meanwhile, Deposit Money Banks and merchant banks have borrowed the sum of N9.17tn from the CBN through the SLF window within a period of seven months, according to figures obtained from the banking sector regulator.

Banks often access the SLF window to borrow funds, subject to certain eligibility requirements, in order to temporarily address their short-term liquidity needs.

Lenders also access the window to deposit their excess cash or reserves.

Arvofinance is a digital lending platform with various consumer lending products; from nano loans to payday loans and SME loans.

The fintech solution company provides quick loans, online loans, and short term loans to Nigerians with no collateral, and no guarantors through a simple application process. (NAN)