The Central Bank of Nigeria (CBN) recently reported that the total assets held by microfinance banks (MFBs) in the country increased by 3 percent to NGN 196.5 billion (USD 1.3 billion) during the six months ending in June 2012. CBN stated that this was due to an increase in deposit liabilities of 21 percent from NGN 86 billion (USD 548 million) to NGN 104 billion (USD 664 million). Another reason cited for the increase in total assets was due to the reduction in sales of new securities to banks by NGN 15 billion (USD 96 million). During the same period, the paid-up share capital of MFBs increased by 8 percent to NGN 49 billion (USD 313 million). Loans and advances also increased by 28 percent to NGN 87 billion (USD 552 million). In addition, aggregate reserves decreased from NGN 2 billion (USD 12.8 million) to negative NGN 1.6 million (USD 10.2 million).
The Nigeria Deposit Insurance Corporation (NDIC), a quasi-independent agency of the federal government that insures deposit-taking financial institutions, released a 2011 annual report that reportedly claimed that MFBs had reduced the amount of credit extended to clients due to heavy investment in fixed assets. NIDC also reported that MFBs had only limited access to donor funds and government-backed poverty alleviation programs while access to wholesale funds has not been established. The report is not available online.
By Jennifer Young, Research Associate
About Central Bank of Nigeria (CNB)
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 12.7 trillion (USD 80.8 billion).
About Nigeria Deposit Insurance Corporation (NDIC)
The Nigeria Deposit Insurance Corporation (NDIC) is a quasi-independent agency of the federal government of Nigeria. Its purpose is to protect depositors and guarantee the settlement of insured funds when a deposit-taking financial institution can no longer repay its deposits, thereby helping to maintain the stability of the financial system.
Sources and Additional Resources
Business Day Story: “Increase Deposit Liabilities Pushes Up MFBs’ Assets by 3% in H1”
http://www.businessdayonline.com/NG/index.php/microfinance/48389-increased-deposit-liabilities-pushes-up-mfbs-assets-by-3-in-h1
MicroCapital Story: “MICROCAPITAL BRIEF: Central Bank of Nigeria (CBN) to Implement Financial Literacy Framework by March 2013,” December 6, 2012.
https://www.microcapital.org/microcapital-brief-central-bank-of-nigeria-cbn-to-implement-financial-literacy-framework-by-march-2013/
MicroCapital Story: “MICROCAPITAL BRIEF: Nigerian Deposit Insurance Corporation (NDIC) Launches Investigation into Managers, Directors of Distressed Microfinance Banks,” April 7, 2012.
https://www.microcapital.org/microcapital-brief-nigerian-deposit-insurance-corporation-ndic-launches-investigation-into-managers-directors-of-distressed-microfinance-banks/
MicroCapital Story: “MICROCAPITAL BRIEF: Nigerian Deposit Insurance Corporation (NDIC) Disburses $12.6m to Depositors of Closed Nigerian Microfinance Banks,” April 3, 2012
https://www.microcapital.org/microcapital-brief-nigerian-deposit-insurance-corporation-ndic-disburses-12-6m-to-depositors-of-closed-nigerian-microfinance-banks/
MicroCapital Universe Profile: Central Bank of Nigeria
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Central+Bank+of+Nigeria+%28CBN%29
MicroCapital Universe Profile: Nigeria Deposit Insurance Corporation (NDIC)
https://www.microcapital.org/microfinanceuniverse/tiki-index.php?page=Nigeria+Deposit+Insurance+Corporation+%28NDIC%29
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