The Central Bank of Nigeria (CBN) recently mandated that microfinance banks (MFBs) adopt information technology infrastructure and utilize shared service providers—organizations that provide services such as cash processing and currency sorting for multiple banks—by June 2011 as concerns over struggling MFBs persist. CBN reportedly will offer financial assistance to MFBs to facilitate compliance with the directive. Use of the shared service platforms is also expected to help MFBs reduce operating expenses.
Dr Kingsley Moghalu, a deputy director at CBN, reportedly urged MFBs to prioritize corporate governance and guard against violations of industry guidelines established by CBN. Dr Moghalu also reportedly indicated that a new microfinance policy framework is forthcoming. The new framework, established in response to the ongoing turmoil in the microfinance industry in Nigeria, is aimed at educating MFB operators on the microfinance concept, maintaining adequate capital reserves and the importance of hiring adequately trained employees [1].
By John Howard-Smith, Research Associate
About Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is the central banking authority of the country. 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).
[1] Nigerian Tribune: “CBN raises concern over non-performing loans in micro finance banks”, http://tribune.com.ng/index.php/news/18140-cbn-raises-concern-over-non-performing-loans-in-micro-finance-banks
MicroCapital.org story, February 14, 2011: “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Reviews Efforts to Encourage Microfinance, Discusses Challenges”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-reviews-efforts-to-encourage-microfinance-discusses-challenges/
MicroCapital.org story, February 14, 2011: “MICROCAPITAL BRIEF: Microborrowers Past Due on $6.5m in Repayments to Microfinance Institutions (MFIs) in Lagos, Nigeria; National Association of Microfinance Banks Proposes Criminalization”, https://www.microcapital.org/microcapital-brief-microborrowers-past-due-on-6-5m-in-repayments-to-microfinance-institutions-mfis-in-lagos-nigeria-national-association-of-microfinance-banks-proposes-criminalization/
MicroCapital’s Microfinance Universe profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+(CBN)
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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