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Whatever has an  advantage  also has its  disadvantage. This is a well known fact that has been established time-and-time, over-and-over again. The objective of establishing microfinance in Nigeria, which aims to help alleviate poverty through empowering the people by increasing their access to factors of production, especially credit, cannot be underestimated.
Microfinance is about providing financial services to the economically active population of the country who are traditionally not served by the conventional financial institutions.
Giving loans to small scale business operators who are spread out in different locations of the Nigerian environment may not exactly be a problem.
What however seems to be a predicament is the ability of these microfinance banks to monitor their customers in order to recoup their money.  
This is where the issue of employing more staff come in. Without doubt, bringing in more hands will facilitate the transaction because the close monitoring by these staff will eventually lead to easy repayment of loans by customers. But this subsequently, will bring about the problem of overhead cost as Uche Ubani, managing director and chief executive officer of Peniel Microfinance Bank Limited, Lagos, rightly observed.
“The challenge we are facing today is the challenge of close monitoring because they are so many and the amount involve is small. So, for you to have that close monitoring that is required, to make them pay up as at when due, you need to employ so many people. And that alone is impacting on our overhead. I think the biggest challenge that microfinance banks have is the issue of overhead cost,” he said. 
As at the time he took over Peniel Microfinance Banks, which was formerly Oriofe Community Bank, “it had authorised share capital of N30 million, which was well above the minimum requirement for conversion by Central Bank of Nigeria (CBN). But unfortunately, because of the way the community bank was managed, about N30 million had been completely eroded by losses”, he disclosed. 
Ubani added that they had a negative shareholder of over N70 million, “we were able to turn that N70 million negative shareholder fund to a positive share capital of over N25 million to be able to meet the conversion requirement. 
“And while we were doing that, the N80 million authorised share capital was fully utilized. The authorised capital had to be increased to N200 million,” he said. 
Continuing, the Peniel boss noted: “I took over the management of Oriofe Community Bank on the August 14, 2006. As at that time the bank was closed, we were able to reopen the doors of the bank again when I came in by bringing in fresh funds into the system. Talking to customers and investors, we were able to see that the bank has a lot of prospects. 
“By the grace of God, we started the conversion process and we were able to meet all the conversion requirements and obtained our microfinance bank license before the end of deadline, which was December 31, 2007,” he concluded. 
Ubani has been able to change the perception of and instil more confidence on his numerous customers, says he goes to the markets around the bank’s environment to talk to them on one-on-one basis. 
“I know some customers that started in 2006 with a loan of barely N10, 000, some of them today, have a credit limit of well over N4million.”
Mike Ezeji, managing director, Mike Express Company Limited, owners of Evergreen Fish Farming Lagos, is one of the beneficiaries of this bank. To him, the microfinance bank is like “god sent” considering the level of change he has experienced since he began transaction with the bank. 
His words: “I found them to be very enterprising, very understanding, ability to read who-is-who, and also with a lot of freedom to take some level of decisions. We have been doing very much better since the day they decided to work with us. They have been cooperating, assisting in very many ways not only advancing funds.”  
The only questionable aspect of microfinance banking, he observes, is the issue of high interest rate. To this end, he advices that microfinance banks cut down on their interest rates. Ezeji equally urged the Federal Government to assist by providing more funds to them.
As testified by Basil Nwankwo, medical doctor, El-Shaddai Hospital, Lagos, Peniel Microfinance Bank has been of so much assistance to him in the area of salary payment through overdraft. Through the bank’s financial assistance, he has been able to purchase some hospital equipment. 
“They have helped us in so many ways. They grant us loan facilities. Sometimes, we don’t make up for salary payment and when we apply, they help us through overdraft or cash. They educate us on financial issues. Their manager comes here often. 
Through their daily contribution package, some of my nurses can now boast of saving something at the end of the month rather than living from hand-to-mouth. And they can also have access to loans. Definitely, they are benefiting from us and we are also benefiting from them,” he disclosed.