CBN Governor, Sanusi Lamido Sanusi
By Obinna Chima
The Central Bank of Nigeria (CBN) had engaged the services of a
management consulting firm to review the operating template for finance
companies in Nigeria so as to develop a road map for the reform and
transformation of the sub-sector.
To this end, the President, Finance Houses Association of Nigeria (FHAN), Mr. Samuel Durojaiye, has advised members of the association to support the apex bank’s efforts to strengthen the regulatory environment of the sector. He also urged members to ensure that they render all statutory returns and reports regularly, as well as to ensure that they renew their operating licenses annually.
Durojaiye, according to a statement yesterday, made these remarks at a meeting of chief executive officers of Finance Houses in the country.
He disclosed that the consulting firm had presented a preliminary report to the apex bank, which detailed the direction of their assignment.
The FHAN boss also reminded the operators that the apex bank was taking the issue of corporate governance practices very serious and therefore counselled members to identify structural weaknesses in their various organisations so as to avert any crisis.
He particularly advised that members expand the ownership structures of their businesses, broaden their various boards by recruiting independent non-executive directors, create board committees on specific operational issues, and address evident insider abuses and market indiscipline which hamper operational efficiency and corporate growth.
Other issues that were discussed at the meeting were the need for members to comply with the uniform year-end policy of the apex bank as well as to upgrade their financial reporting template to meet with the International Financial Reporting Standards (FMDA) requirements.
Durojaye also commended the CBN for the bold initiatives it had taken to reform, transform, and reposition the finance company sub-sector to enable it play increasing role in Nigeria’s financing value chain. He particularly acknowledged the apex bank’s continuing support to and engagement with the association on this project.
“Thereafter, the President presented to members the major issues of concern, as contained in the report, which the meeting should address and come up with a common position that will be relayed to the CBN thereafter.
“These include the following: the need to broaden funding sources for finance companies, upward review of the minimum capital base requirement for operators, determine the scope of permissible activities that finance companies should engage in, developing a regulatory framework that will govern finance lease practice, institutionalising a funding pool to stimulate lending activities in the sub-sector and structured programme to address the reputation and poor visibility challenges of the sub-sector,” it added.
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