The Central Bank of Nigeria (CBN) recently issued limits on daily cash withdrawals by individuals and corporate customers of NGN 150,000 (USD 962) and NGN 1 million (USD 6,417), respectively, effective June 1, 2012.
This cash withdrawal limit is reported to be aimed at encouraging the use of electronic payment channels to reduce the usage of cash in an effort to moderate financial institutions’ cost of cash management. Godwin Ehigiamusoe, Chief Executive Officer of Nigerian MFB Lift Above Poverty Organisation (LAPO), commented on the limit, reportedly stating, “the informal sector which microfinance banks serve is still largely cash dominated and it will take sometime to get the small business people to embrace cash-less transactions. This is where the challenge lies for MFBs. A solution is to fast track the current efforts at mobile payment. MFBs can leverage on it to make payment, for instance loan disbursement to their clients. The CBN may consider an extension of deadline for the directive to allow the deepening of mobile payment culture in Nigeria, as it has happened in East Africa” [1].
By: Alexandra Pattee, Research Associate
About the Central Bank of Nigeria (CBN): The Central Bank of Nigeria (CBN), established in 1958, is Nigeria’s central banking authority. As defined by the 1958 Act of Parliament that created CBN, its statutory mandates are as follows: “to issue legal tender currency; to maintain external reserves; to safeguard the international value of the legal tender currency; to promote monetary stability and a sound financial system in Nigeria; and to act as banker and financial adviser to the Federal Government.” As of July 2010, CBN reports total assets of NGN 7.37 trillion (the equivalent of USD 48.6 billion).
About Lift Above Poverty Organisation (LAPO): Established in 1987 in Nigeria, LAPO is a microfinance institution that provides savings, investment and loan products in order to address the needs of low-income households. The majority of LAPO’s clients are engaged in micro-, small and medium-scale enterprises. LAPO’s efforts earned it the “Pro-poor Innovative Challenge Award in Microfinance” in 2002 from CGAP (Consultative Group to Assist the Poor) and the Global Excellence Award for Microfinance in 2006 from Grameen Foundation USA. In 2009, LAPO reported to the nonprofit, US-based Microfinance Information Exchange (MIX) total assets of USD 51.1 million, a gross loan portfolio of USD 26.8 million, return on assets (ROA) of 8.84 percent, return on equity (ROE) of 40.6 percent and approximately 195,000 borrowers.
Sources and Resources:
[1] Business Day, “Cash withdrawal limit, a challenge to MFBs”, http://www.businessdayonline.com/NG/index.php/microfinance/21807-cash-withdrawal-limit-a-challenge-to-mfbs
MicroCapital.org Article, June 7, 2011, “Nigeria’s Guaranty Trust Bank (GTBank) Partnering with Mobile Telecommunications Network (MTN) to Offer Mobile Banking”, https://www.microcapital.org/microcapital-brief-nigeria’s-guaranty-trust-bank-gtbank-partnering-with-mobile-telecommunications-network-mtn-to-offer-mobile-banking/
MicroCapital.org Article, May 23, 2011, “International Finance Corporation (IFC) May Invest in Nigerian Mobile Money Industry”, https://www.microcapital.org/microcapital-brief-international-finance-corporation-ifc-may-invest-in-nigerian-mobile-money-industry/
MicroCapital.org Article, May 5, 2011, “Central Bank of Nigeria Inspecting Microfinance Institutions with Provisional Licenses, Plans to Cut Number of Microbanks “Drastically””, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-inspecting-microfinance-institutions-with-provisional-licenses-plans-to-cut-number-of-microbanks-“drastically”/
MicroCapital.org Article, March 7, 2011 “Central Bank of Nigeria (CBN) Directs Microfinance Banks to Adopt Technology and Shared Service Platforms, Hints at New Microfinance Policy Framework”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-directs-microfinance-banks-to-adopt-technology-and-shared-service-platforms-hints-at-new-microfinance-policy-framework/
MicroCapital.org Article, November 11, 2010, “Survey on Kenya’s M-PESA Mobile Transfer Service Shows Increased Impact in 2009”, https://www.microcapital.org/microcapital-brief-survey-on-kenyas-m-pesa-mobile-transfer-service-shows-increased-impact-in-2009/
MicroCapital.org Article, July 5, 2010, “Nigerian Tech Firms Systemspecs and Maxim-Pro to Begin Training Microfinance Institution (MFI) Staff on Integration of E-Payment Service, Remita”, https://www.microcapital.org/?s=nigeria+mobile&x=0&y=0
MicroCapital Universe Profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
MicroCapital Universe Profile: Lift Above Poverty Organisation (LAPO), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Lift+Above+Poverty+Organisation+%28LAPO%2
Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/
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