Challenges In Operation Dept of Microfinance Banks
Tunde Raji - June 2, 2016

Having spent over five years in the microfinance bank industry, I have observed a few key challenges in operations department of microfinance banks in Nigeria.

It is pertinent to mention that operational challenges in microfinance bank vary from bank to bank but there is a challenge that is peculiar to all: it is known as Multi-tasking.

One operation officer is saddled with responsibilities of completing tasks that supposedly be performed by two or more personnel within a specified time frame.

This multi-tasking syndrome in microfinance banks hinders mastery, proficiency and productivity of personnel. The irony of it all is that such multi-tasked personnel’s remuneration is not commensurable to the tasks assigned.

My own summation is that microfinance bank professionals should be motivated by being adequately rewarded financially through robust salary package.

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25 thoughts on “Challenges In Operation Dept of Microfinance Banks”

    1. The operators and the drivers of this business need to inculcate a “differential management” system into microfinance industry in order to achieve optimal performance and productivity.

  1. I think is like that in most microfinance bank because of the volume of transactions being carry out by the operation staff. Most of the collection are being done on the field by either collection officer or loan/account officer which reduces the volume of working in customers. Even the volume of cash transactions are lower compare to commercial bank.

    1. Core banking operations is the duty of Operation staff. Collection of cash from customers outside the banking hall during working hours is acting outside core duties or jurisdiction.

      1. In a microfinance banking having field collection officer is allowed, especially for group loan customers because they are expected to have a meeting point where their repayment is collected. Also micro savers will not come to the banking hall because they want to save #200, #500, or #1,000. These are cheaper funds to MFBs.

        1. Sunday,
          I do not agree with this your statement:
          “Also micro savers will not come to the banking hall because they want to save #200, #500, or #1,000. These are cheaper funds to MFBs”. Microfinance clients can come and save any denomination of naira, that is why it is named MICROFINANCE BANK.
          Even in conventional commercial banks, clients are obliged to save any denomination into savings account as many times as it is convenient for the customers.

  2. Solution may not be in sight soon. Most MFBs maintain a high number of back office personnel that depends largely on few field officers generating income (this is not saying operations personnel are zero income generators). The irony is there’s a waiting candidate for the position as soon as the incumbent walks away due to pay dissatisfaction, no thanks to unemployment and poor economy.

  3. Generally, cost of operation in Nigeria is high relatively to what is obtain in another countries. All operational expenses relating to granting loan is high leaving only labour which are very cheap and abundantly available. Thus, pricing labour low, is common practice and some of ways to reduce overhead cost or rather general cost of production. Now, as an investor, which primary objective is to earn huge ROI as soon as possible, many Mfbs neglected the part of their mission statement “to help the alleviate the poverty via inclusive financing of micro and small businesses”. To get to a win-win situation, a situation in which every parties(clients, workers & shareholders) will benefit optimally; there is need to start mobilizing deposit from general masses, deposit from people, organizations and foreign donors that pays less priority to the high interest on investment.

    1. Ismaheel,
      Do you agree with me that interest charges on loans is too high in Nigeria? I know some will hide under the dwindling Nigeria economy. Even prior to recession, the least interest charges on loan is 5% on loan sum at either flat rate or reducing balance.

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  7. Most of Microfinance banks love the multi-tasked job because they are avoiding excess salaries on the staff. So the work of 10 people will be assigned to 2 people will less wages.

  8. The category of client coupled with the assumptions underlying MFB makes income generation very low, perhaps, no organization will pay what she doesn’t make in income as salary hence a dilemma. One place I might disagree with you is the impression that unemployment is only in the operation aspect of MFB. The simple truth is that the business of MFB is more of developmental rather than elitistical, suffice to say that it’s just the way it is expected most especially in a developing economy like this

    1. Agoro,
      “The category of client coupled with the assumptions underlying MFB makes income generation very low, ”
      This is a myth!
      Low income generation in microfinance banks is attributable to many factors such as: capital inadequacy, poor management, misappropriation of funds and fraud, high portfolio at risk, and so forth.

  9. Well said sir. I worked in a mfb for some years and was saddled with tasked of 3 offices with low remuneration. This should be corrected.

    1. Anthony,
      This anomaly can only be corrected by the regulatory bodies such as CBN and NDIC.
      Microfinance Staff will not complain if they are multi-tasked and the remuneration is commensurable to the efforts dissipated.

    1. Abiodun,
      If you desire to move, always check the “Vacancy” section of this blog.
      New jobs are updated on regular basis.
      Alternatively, you can bookmark the “RSS feed” at the bottom section of the blog. Good luck!

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