The state government of Nigerian province Jigawa has released NGN 100 million (about USD 850 thousand) for the recapitalization of nine community banks in the region, aiming to save them from imminent liquidation. By providing funds, the provincial government sought to preserve the banks’ liquidity while the institutions prepare for a legal and structural transformation into microfinance institutions, in response to a mandate (p.13) from the Central Bank of Nigeria. It remains unclear what terms, if any, the Jigawan government has attached to the capital infusion. At this point, the available information suggests that the funds are a giveaway.
“Government took the decision because of the important role micro-finance banks are expected to play in the state government’s war against poverty”, Alhaji Muktari Mohammed, Jigawa’s State Commissioner for Commerce, said. He added that government will continue to support all efforts to eradicate poverty in the state.
The Jigawan government’s move reflects one of key initiatives embodied in Nigeria’s national microfinance policy unveiled in 2005, requiring (p.13) that all existing community banks undergo an institutional transformation into microfinance banks.
Since the inception of Nigeria’s microfinance policy, Jigawa’s promotion of regional microfinance is just one of many recent actions by Nigerian government institutions. In February 2008, MicroCapital reported that the Nigerian national government created a USD 426 million microcredit development fund that would provide existing microfinance institutions (MFIs) with funding for credit creation and operational expenses. In June 2008, MicroCapital reported that the state government of Rivers had allocated USD 47.6 million toward a scheme that financed small and medium enterprises.
By Ryan Benson, Research Assistant
Additional Resources:
MIX Market: Nigeria Country Profile
Vanguard: Jigawa releases N100m to microfinance banks
Microfinance Gateway: Microfinance Policy, Regulatory, and Supervisory Framework For Nigeria
Microfinance Gateway: Microfinance Institutions in Nigeria:Policy, Practice and Potentials
MicroCapital Story: Nigerian Government Creates $426m Microcredit Development Fund
MicroCapital Story: Nigeria’s Rivers State Government (RSG) Allocates $47.6m for Microfinance Scheme
Central Bank of Nigeria: Home
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