MICROCAPITAL STORY: Only 12 of 36 Nigerian States Contribute to Microfinance Activities for a Total of $1.26m

The Governor of the Central Bank of Nigeria (CBN), Charles Soludo, said in Lagos on Tuesday that only 12 out of 36 states in the country have contributed to microfinance activities in their states to the tune of N12.08 billion, approximately USD 1.26 million. The governor of the apex bank who was speaking at the launch of Enhancing Financial Innovation and Access (EFINA), a nongovernmental organization, named the states (rank by population) as Zamfara (21), Delta (12), Lagos (2), Ekiti (29), Kebbi (23), Kwara (30), Ondo (18), Kogi (20), Cross River (27), Benue (9), Anambra (10), Osun (19) and Oyo (5). Lagos state has disbursed N620 million, or USD 5.3 million, within one year through selected microfinance banks, Delta state has disbursed N600 million, approximately USD 5.1 million, through Oceanic Bank and some microfinance banks while Osun disbursed N99.78 million, approximately USD 8.5 million, through the Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB).

Soludo said that based on the 2006 census, it was estimated that over 91 million, 65 percent of 140 million of Nigerians, are underserved or totally lack access to financial services. The CIA World Factbook estimates that at 2007, 70 percent of the population was living below the poverty line and over 50 percent of the population was living in rural areas.

The Nigerian government, NGOs, and microfinance institutions have been making an effort to increase the country’s number of institutions offering microcredit. In 2005, the Central Bank of Nigeria issued the Microfinance Policy, Regulatory, and Supervisory Framework for Nigeria with the goal of promoting the establishment of microfinance banks, NGOs, and institutions that support the development and growth of microfinance service providers and clients. In April, the Lagos State Government announced a new microfinance bill which makes it mandatory for all local governments in the state to contribute a minimum of one percent of their allocations to the operations of the State’s microfinance banks. Recently, 815 microfinance banks comprising six states and 809 unit banks were granted licenses. The Central Bank of Nigeria recently concluded an interim capacity building program for 3000 staff of microfinance banks across the country and is planning to execute same program for part time directors to enable them assume their responsibilities effectively. Nigerian microfinance institutions have been working with one another to establish an inter-bank money market in order to increase liquidity amongst themselves.

Despite these efforts, a survey conducted by FinMark and Research and Marketing Services (RMS), a South African firm, shows a sad development in the nation’s banking and insurance sectors of the nation’s economy. According to the survey, 79 percent of the adult population is unbanked, 85 percent of adult females are unbanked, and 53 percent of the adult population is financially excluded with no access to either formal or informal financial services. The report also revealed that only two percent of the adult population has access to insurance products while 67 percent of the adult population is currently saving, however, 33 percent of those saving, choose to do so at home.

By Iyanna Holmes

Additional Resources:

All Africa: Nigeria: October 29, 2008, 12 States Contribute N10 billion , October 15. 2008, Effina Secures N1.965 Billion From Ford, Dfid

Central Bank of Nigeria: Microfinance Policy, Regulatory, and Supervisory Framework for Nigeria

Microcapital Story: April 29, 2008, The Lagos State Government (LSG) in Nigeria Announces New Microfinance Legislation ; October 30, 2008, Central Bank of Nigeria Grants 815 New Microfinance Licenses

Rural Poverty Portal: Nigeria

Vanguard: April, 17, 2008, Lagos Set to Introduce Bill on Micro-finance Bank; October 27, 2008, Microfinance Inter-bank Money Market Takes Off December