Under Nigeria’s new national microfinance framework, all community banks must convert to microfinance banks and comply with the new regulations by the end of 2007, 24 months from the approval date of the policy. Community banks which fail to increase their capital from the prior requirement of 5 million naira (USD $40,000) to 20 million naira ($161,000) will cease operations. The Central Bank of Nigeria’s (CBN) survey shows that a minimum of 50 million naira ($400,000) is needed to provide effective banking services. Since community banks based in rural areas may be unable to raise that much in shareholder’s funds, a lower requirement was set.
A Nigerian community bank is a “self-sustaining financial institution owned and managed” by the community which it serves. (p.26) The National Board for Community Banks issued provisional licenses to 1,366 community banks from 1990 to 1997; the CBN was responsible for issuing the final licenses after two years of operation.
Continue reading “Nigeria Strengthens Microfinance Sector with New Regulations for Community Banks”
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