United Bank for Africa Group Plc (UBA) of Nigeria, the largest financial services institution by total assets in West Africa, recently announced that it will invest USD 25 million in initial capital to open a microfinance subsidiary, UBA Microfinance Bank Limited. UBA Microfinance was established to provide poor people who are un-banked or under-banked with access to financial services. UBA’s Chief Executive Officer, Tony Elumelu adds, “We have people in small businesses and they need some advisory services to enable them to run their business right. They have the potentials, the economic conditions are right; but they don’t know how to go about it.”
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NEWS WIRE: Nigeria: United Bank for Africa Invests $25m to Open Microfinance Bank
Source: Zenith News.
NEWS WIRE: Nigeria: Central Bank Threatens Microfinance Institutions and Directors Over Reporting Requirements
Source: allAfrica.com.
MICROCAPITAL STORY: Central Bank of Nigeria Warns of Mission Drifting by Microfinance Institutions
At a seminar for Finance Correspondents and Business Editors, the Central Bank of Nigeria (CBN) said it was worried about microfinance banks (MFBs) drifting from their core functions. The CBN also expressed concern about the distribution of MFBs in the country and the lack of functional support institutions.
MICROCAPITAL STORY: The Lagos State Government (LSG) in Nigeria Announces New Microfinance Legislation
The Governor of the Lagos State Government (LSG), Mr. Babatunde Raji Fashola, announced a new microfinance bill which “will make it compulsory for all local governments in the state to contribute not less than one percent of their allocations to the operations of the microfinance banks in the state,” according to VANGUARD, a Nigerian daily newspaper. The Deputy Governor of the LSG, Mrs. Sarah Sosan, also “urged prospective loan beneficiaries to not see [the new legislation] as a gift, but as repayable obligations,” as reported by THISDAY, another Nigerian daily.
MICROCAPITAL STORY: The Managing Director of the Royal Trust Microfinance Bank (RTMB) Advocates Greater Collaboration between Microfinance Institutions (MFIs) and Insurance Firms in Nigeria
Speaking at the April meeting of The Nigerian Council of Registered Insurance Brokers’ (NCRIB) monthly lecture series in Lagos, Mr. Lucky Ologbo of the Royal Trust Microfinance Bank (RTMB) stated that, “since insurance brokers have numerical advantage and exist in all the nooks and crannies of the country, they are most strategically positioned to forge relationships with microfinance institutions, which also operate all over the country.”
MICROCAPITAL STORY: The Federal Executive Council (FEC) of Nigeria Approves $27.2m Loan from the International Fund for Agricultural Development (IFAD) for Rural Microfinance
The Federal Executive Council (FEC) of Nigeria, presided over by President Umaru Musa Yar’Adua, approved a USD 27.2 million loan from the International Fund for Agricultural Development (IFAD), as reported by AllAfrica.com. The loan, along with a USD 400,000 grant from IFAD, will constitute the core financing of IFAD’s Rural Finance Institution-Building Programme (RFIBP), a seven-year plan to strengthen rural microfinance institutions (MFIs) in Nigeria as well as establish increased linkages between MFIs and mainstream financial institutions. As stated in the September 2006 submission from the Executive Board of IFAD to the government of Nigeria, the official recipient of the loan is the Federal Republic of Nigeria and the loan terms are for 40 years, including a grace period of ten years, and a service charge of 0.75 percent per year (page vi). The Federal Ministry for Agriculture and Rural Development will implement the RFIBP (page 10).
NEWS WIRE: Nigeria: AIG, Blue Financial Services, Intercontinental Bank (ICB) to Invest $20m in New Microfinance Institution
Souce: Business Day.
MICROCAPITAL STORY: Nigerian Government Creates $426m Microcredit Development Fund
Nigerian President Alhaji Musa Yar’Adua announced the creation of an N50 billion (the equivalent of over USD 426 million) microcredit development fund to be administered by the Central Bank of Nigeria (CBN). The new fund will be used to provide existing microfinance institutions (MFIs) with funding for credit creation and operational expenses.
MICROCAPITAL STORY: Treasure Microfinance Bank (TMFB) to be Launched February 26 in Lagos, Nigeria, and to Seek Listing on Nigerian Stock Exchange (NSE)
Dr. Tunde Ayeye, Chairman of the newly licensed Treasure Microfinance Bank (TMFB) headquartered in Lagos, Nigeria, announced on Tuesday that the bank will be officially launched on February 26th, 2008. According to Chairman Ayeye, the bank has secured NGN 50 million, equivalent to USD 432,000, of start-up capital and plans to reach NGN 1 billion (USD 8.6 million) within one year and become a listed company on the Nigerian Stock Exchange (NSE). TMFB does not report to the MIX Market, the microfinance information clearinghouse, and the Central Bank of Nigeria’s (CBN) listing does not provide any additional financial information. However, the CBN does report that TMFB is a registered microfinance bank since February 1st, 2008 and that it was formerly known as the Oja Odan Community Bank. Previous reporting on TMFB by MicroCapital can be found here.
NEWS WIRE: Nigeria: Central Bank Licenses 107 New Microfinance Banks
Source: This Day (Nigeria).
MICROCAPITAL STORY: Nigerian Deposit Insurance Corporation (NDIC) Insures Microfinance Institutions
The Nigeria Deposit Insurance Corporation (NDIC) recently announced that, beginning January 1, 2008, it will extend deposit insurance services to microfinance institutions (MFIs) operating in the country. Managing Director and Chief Executive of the NDIC, Mr. Alhaji Ganiyu Ogunleye, said that the corporation will extend coverage of NGN 100,000 (USD 850) per depositor.
NEWS WIRE: Nigeria: Central Bank “Expects” Contributions from Local Governors to Fund Deposit Insurance for Microfinance Institution Customers
Source: Nigerian Tribune.
NEWS WIRE: Nigeria: Central Bank Predicts 450 of 700 Microfinance Institutions Will Survive Into the New Year
Source: This Day.
NEWS WIRE: Nigeria: Microfinance Banks Seek Central Bank’s Intervention On Cheque Clearing
MICROCAPITAL STORY: Treasure Microfinance Bank to Begin Operations in Nigeria
The Central Bank of Nigeria (CBN) has given provisional approval for newly established Treasure Microfinance Bank to begin operations. This is ahead of the December 2007 deadline set for all Community Banks in the country to convert to Microfinane Banks.
The targets of Nigeria’s microfinance policy, according to the CBN are to ensure that the majority of the poor but economically active population is covered by 2020, and to increase the share of micro credit as percentage of total credit to the economy from 0.9 percent in 2005 to at least 20 percent in 2020. (For further information on Nigeria’s policies on microfinance, refer to a previous MicroCapital article.)
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Grameen Foundation Supports Citibank’s USD 1mm Financing of Nigerian Microfinance Institution LAPO
Citibank, part of the Citigroup global financial services company, will provide a USD 1mm Nigerian naira equivalent structured loan through it’s subsidiary, the Nigerian International Bank (NIB), to Lift Above Poverty Organisation (LAPO), a Nigerian microfinance institution (MFI). The loan is supported by a USD 500,000 guarantee from the Grameen Foundation. The deal is LAPO’s first commercial transaction with a bank, and the first transaction between Citibank and a Nigerian MFI. The investment comes at a time when many Nigerian MFI’s are struggling to meet minimum capital requirements (see previous article on microcapital.org) among other standards to be introduced in forthcoming regulation of the industry, due to be enforced by the Central Bank Nigeria (CBN) in December 2007 (see previous article on microcapital.org).
Mergers and Acquisitions in Nigerian Microfinance to Ease Compliance with Forthcoming Regulation
Central Bank Nigeria (CBN) has endorsed a broadening of mergers and acquisitions among existing microfinance institutions (MFI’s) or ‘community banks’ so that they can comply with minimum capital requirements which are part of forthcoming regulation. The regulation, which requires all such organisations to register as microfinance banks by December 2007 (see previous article on microcapital.org), requires a minimum capital base of 20mm Nigerian naira (USD 156,500) for ‘state community banks’ and NGN 1bn (USD 7,824,000) for ‘federal community banks.’ After a meeting between CBN and the National Association of Community Banks of Nigeria (NACOB) Abdulgadir Bauchi, president of NACOB, said “community banks can now go into mergers and acquisitions so as to meet the deadline given by the apex bank to transform to microfinance bank[s].”