The Central Bank of Nigeria (CBN), Nigeria’s central banking authority, reportedly plans to announce new capital base minimums for microfinance banks (MFBs) by the end of June. A new capital requirement is expected to be established for those operating at the national level at NGN 2 billion (USD 12.8 million); the minimum for those at the regional level will decrease to NGN 100 million (USD 640,000) from NGN 1 billion (USD 6.4 million); and the minimum for those at the rural level, with one branch, will remain unchanged at NGN 20 million (USD 128,000).The national MFB operators are reportedly looking to recover a significant portion of outstanding debts to meet up before the new capital requirements.
In 2010, CBN revoked the operating licenses of 224 MFBs out of the 820 operating in the country, citing them as “terminally distressed and technically insolvent”. Mr Kingsley Moghalu, Deputy Governor of CBN said, “The factors that contributed to the unsoundness of the MFBs were attributed to high level of non-performing loan resulting in high portfolio at risk which had impaired the capital, gross under-capitalization in relation to level of operations, poor corporate governance and incompetent boards.”
By Carol Kim, Research Associate
About Central Bank of Nigeria (CBN): Central Bank of Nigeria (CBN), established in 1958, is Nigeria’s central banking authority. 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).
About National Association of Microfinance Banks (NAMB): The National Association of Microfinance Banks of Nigeria (NAMB) is a trade group of microfinance institutions (MFIs) that merged with the Association of Microfinance Banks in Nigeria (AMBN) in 2009. As of April 2011, NAMB had 820 member MFIs.
Sources and Additional Resources:
The Nation: “New Capital Base for Microfinance Banks”, June 2011 http://www.thenationonlineng.net/2011/index.php/news/8950-new-capital-base-for-microfinace-banks.html
MicroCapital.org: “MICROCAPITAL BRIEF: Central Bank of Nigeria Inspecting Microfinance Institutions with Provisional Licenses, Plans to Cut Number of Microbanks “Drastically”, May 5, 2011, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-inspecting-microfinance-institutions-with-provisional-licenses-plans-to-cut-number-of-microbanks-“drastically”/
MicroCapital.org: “MICROCAPITAL BRIEF: Microfinance Banks (MFBs) Whose Licenses Were Recently Revoked by the Central Bank of Nigeria (CBN) May Reapply Under Stiffer Requirements”, October 19, 2010, https://www.microcapital.org/microcapital-brief-microfinance-banks-mfbs-whose-licenses-were-recently-revoked-by-the-central-bank-of-nigeria-cbn-may-reapply-under-stiffer-requirements/
MicroCapital.org: “MICROCAPITAL BRIEF: Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks”, October 1, 2010, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/
MicroCapital’s Universe Profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
MicroCapital’s Universe Profile: National Association of Microfinance Banks (NAMB), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=National+Association+of+Microfinance+Banks+of+Nigeria+%28NAMB%29
Browse the MicroCapital Universe and add your entry to the wiki at https://www.microcapital.org/microfinanceuniverse/
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