MICROCAPITAL STORY: Central Bank of Nigeria Laments Poor Participation in Microfinance Industry In Northern Nigeria

Originally reported by Nigerian news agency This Day, Mathius Kura, the Plateau State Branch Controller of Central Bank of Nigeria (CBN), a bank aligned with the Nigerian government to drive regulation and policy, noted the irony in how little participation there is in microfinance bank industries in the northern states of Nigeria. Kura was speaking at a one-day workshop – Micro-finance, Problems and Prospects – organized by the Chartered Institute of Bankers of Nigeria (CIBN). Kura observed that the Anambra state alone has over 100 microfinance banks; a value that surpasses that of the entire north put together, excluding Kwara State.

Leading economists have argued for policy changes in Nigerian microfinance for years to battle this type of trend. A panel at the Enugu Forum hosted by the African Institute For Applied Economics in 2005 stated, “There is need for infrastructure development that enhances the operation and growth of micro-enterprises and microfinance institutions especially electricity, water, and access roads to remote locations.”

It is also widely observed how rampant poverty is in the northern states of Nigeria. Charles Chukwuma, a Nigerian economics professor and the Governor and Chairman of the Board of Directors of the CBN, noted “poverty is unacceptably high in Nigeria but the alarming and persisting level of poverty in Nigeria is a phenomenon in the North. While Lagos State records the highest poverty level in the South, which is about 60 percent, there is no State with less than 60 percent in the North. It is as high as 95 percent in some Northern States”.

Microfinance operations in Nigeria have not existed without controversy: suspension threats for bank executives making false returns, reports of excessive compensation packages and organizations drifting from their core intent are just some examples.

The CBN was established in 1959 and reports March 2008 total assets of over NGN 8 trillion (USD 70.25 billion).

Chartered Institute of Bankers of Nigeria (CIBN) was established in 1973 as “a professional Institute aimed at promoting banking education and ensuring adherence to Ethics in the Nigerian Banking Industry”.

By Scott Everett, Research Assistant

Additional Resources:

MICROFINANCE GATEWAY: Home, “Policy Challenges For Microfinance Design And Practice In Nigeria”, Enugu Forum, 2005

BUSINESSDAY: Home, “Poverty In Northern Nigeria”, By Obi Iwuagwu, July 31, 2008

MicroCapital article, April 29, 2008, “The Lagos State Government (LSG) in Nigeria Announces New Microfinance Legislation”

MicroCapital article, August 29, 2008, “Controversy Arises Over Pay for Employees of Microfinance Institutions (MFIs) in Nigeria”

MicroCapital article, May 13, 2008, “Central Bank of Nigeria Warns of Mission Drifting by Microfinance Institutions”

MicroCapital article, May 16, 2008, “Nigeria: Central Bank Threatens Microfinance Institutions and Directors Over Reporting Requirements”