MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN): MSME Development Fund Not for Bailing out Microfinance Banks

The Central Bank of Nigeria (CBN), Nigeria’s central banking authority, reportedly has asserted that its Micro-, Small and Medium Enterprises Development fund, which is due to be launched in June, is designed for capacity building and not to bail out distressed microfinance banks (MFBs). CBN also cautioned MFBs to update their registrations annually or face penalties. CBN has reportedly recorded greater stability in the industry by unspecified measures since it revoked 244 licenses of unqualified MFBs in September 2010, as MicroCapital reported at the time.

For the year 2010, 24 microfinance institutions (MFIs) in Nigeria report to the US-based nonprofit Microfinance Information Exchange (MIX) an aggregate gross loan portfolio of USD 84.4 million outstanding to approximately 482,000 borrowers.

By Brendan Millan, Research Associate

About the Central Bank of Nigeria (CBN): The Central Bank of Nigeria (CBN) was established in 1958 as Nigeria’s central banking authority. As defined by the 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 November 2011, CBN reports total assets of NGN 9.77 trillion (USD 61.9 billion).

Sources and Resources:

[1] Microfinance Africa: “Nigeria: CBN Says Enterprises Fund Not to Bailout Microfinance Banks”, http://microfinanceafrica.net/news/nigeria-cbn-says-enterprises-fund-not-to-bailout-microfinance-banks/

[2] The Nation: “CBN mulls establishment of Microfinance Development Fund” by Collins Nweze. http://www.thenationonlineng.net/2011/index.php/business/money/40714-cbn-mulls-establishment-of-microfinance-development-fund.html

[3] Business Day: “CBN to Boost Economy with Microfinance Fund” by Onyinye Nwchukwu, http://www.businessdayonline.com/NG/index.php/news/76-hot-topic/37621-cbn-to-boost-economy-with-microfinance-fund

MicroCapital.org story, April 18, 2012, “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) Bans Minimum Deposit Requirements, Flat-rate Interest”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-bans-minimum-deposit-requirements-flat-rate-interest/

MicroCapital.org story, April 1, 2012, “MICROCAPITAL BRIEF: Central Bank of Nigeria to Endorse Microfinance Development Fund, More Automated Teller Machines (ATMs), Regulation Related to Electronic Statements, Dispute Resolution”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-to-endorse-microfinance-development-fund-more-automated-teller-machines-atms-regulation-related-to-electronic-statements-dispute-resolution/

MicroCapital.org story, October 4, 2011, “MICROCAPITAL BRIEF: Central Bank of Nigeria Approves New Capital Base Requirements for Microfinance Banks (MFBs), MFBs Await Capital Verification Results”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-approves-new-capital-base-requirements-for-microfinance-banks-mfbs-mfbs-await-capital-verification-results/

MicroCapital.org story, October 1, 2010, “MICROCAPITAL BRIEF: Central Bank of Nigeria Revokes Licenses of 224 Microfinance Banks”, https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-revokes-licenses-of-224-microfinance-banks/

MicroCapital Universe Profile: Central Bank of Nigeria (CBN), https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29

Browse the MicroCapital Universe and add your entry to the wiki at: https://www.microcapital.org/microfinanceuniverse/

Similar Posts: