This month, the Central Bank of Nigeria (CBN) held a workshop designed to educate the public on the new microfinance policy framework released in December 2005. (See Microcapital Blog 7/3/06). The workshop is part of a campaign to sensitize stakeholders (the Nigerian government, Central Bank, the MFIs themselves, public and donor agencies) to the opportunities derived from the new policy program.
Under Nigeria’s new national microfinance framework, all community banks must convert to microfinance banks and comply with the new regulations by the end of 2007, 24 months from the approval date of the policy. Community banks which fail to increase their capital from the prior requirement of 5 million naira (USD $40,000) to 20 million naira ($161,000) will cease operations. The Central Bank of Nigeria’s (CBN) survey shows that a minimum of 50 million naira ($400,000) is needed to provide effective banking services. Since community banks based in rural areas may be unable to raise that much in shareholder’s funds, a lower requirement was set.
A Nigerian community bank is a “self-sustaining financial institution owned and managed” by the community which it serves. (p.26) The National Board for Community Banks issued provisional licenses to 1,366 community banks from 1990 to 1997; the CBN was responsible for issuing the final licenses after two years of operation.
Continue reading “Nigeria Strengthens Microfinance Sector with New Regulations for Community Banks”
This paper reviews the impacts of multiple agricultural partial credit guarantee schemes (PCGSs), through which governments agree to absorb a portion of lenders’ losses on particular loans or loan portfolios. Governments often use PCGSs to de-risk financial institutions’ lending to small and medium-sized enterprises (SMEs), especially as a countercyclical tool in times of
At 
the session titled “Building an Enabling Environment for Low-Income Housing Finance,” R V Verma, former Chairman of the National Housing Bank (NHB) (India) and consultant to the World Bank Group, said that “pushing the formal financial system to reach out to the informal sector [presents] a lot of challenges, but also huge opportunities. As part of financial inclusion, housing microfinance has a very important role.” Mr Verma went on to describe the market in India, which has an outstanding mortgage balance of INR 13 trillion (USD 200 billion) but a shortage of 24 million housing units. He also explained efforts to mitigate risk for housing lenders – both credit risk and issues with land title. Among the tools in use is a central registry of outstanding property loans. Mortgage insurance is also available even to informal workers – when lenders are willing to issue them loans.
Adedeji Adesemoye of the Central Bank of Nigeria described his institution’s efforts to address Nigeria’s shortage of 17 million housing units via resources including a loan package of USD 300 million awarded by the World Bank’s International Development Association (IDA) in 2012. While much of this package was for refinancing mortgages, USD 15 million of it was earmarked for housing microfinance. That portion was disbursed to nine microfinance institutions to test lending to existing (non-housing) clients for land acquisition, incremental construction and
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the SAM (Semaine Africaine de la Microfinance) plenary on “Public Solutions to Promote Entrepreneurship in Africa,” Kennedy Komba of the Alliance for Financial Inclusion (AFI) explained that his institution’s SME (Small and Medium-sized Enterprise) Working Group comprises 53 regulatory and policy-making bodies. To facilitate the growth of entrepreneurship, these agencies have created collateral registries, adjusted lender liquidity ratios, updated know-your-customer frameworks and established rules for digital financial services. Trainers in Zambia used a financial education game to reach 5,000 people, of whom 80 percent were able to improve their businesses as a result. In Ghana, the Ministry of Agriculture and the Bank of Ghana collaborated to boost local value chains in an effort to reduce costly
Event Name: Financial Inclusion 2020 Global Forum
Event Date: October 28-30, 2013
Event Location: Lancaster London Hotel, London, UK
The Tanzania Postal Bank (TPB), a Tanzania-based financial services organization, recently partnered with the World Savings Banks Institute (WSBI), a Switzerland-based international banking association, and the Bill and Melinda Gates Foundation (BMGF), a US-based nonprofit organization, to launch a new mobile banking service called “TPB Popote” that aims to increase the financial inclusion of low-income people in rural regions of Tanzania.
A recent entry on the Gender Debate blog cites the report “Microfinance: Champion in Poverty Alleviation and Failure in Female Empowerment” by Alexandra Dobra to argue that most microfinance services only focus on the financial empowerment of women, wasting their potential to promote the “full and equal participation of women in all spheres of society including decision-making and access to power” [1].
In connection with a USD 400 million debt facility received from Mainsail Trading Limited, an investment company based in Dubai, and guaranteed by Suisse Bank Plc, a British private bank, Africa Capital and Business Support Limited (ACBS), a Nigerian financial intermediary, announced the signing of a memorandum of understanding with Integrated Microfinance Bank Limited (IMFB) for an injection of NGN 6 billion (USD 39 million).
A new law to regulate the microfinance sector in Uganda is expected before the reading of the 2010/2011 budget in June [1]. The plan was announced by Ruth Nankabirwa, the microfinance state minister at the third Financial Inclusion Advisors Conference recently hosted in the capital, Kampala. According to Ms. Nankabirwa, membership in the microfinance sector has grown from 644,318 in 2008 to 1,154,715 in 2009. A large proportion of funds within the sector are unregulated – there are over 1,340 microfinance institutions (MFIs) in Uganda that are not regulated. Ms. Nankabirwa argues that regulating the microfinance sector will increase consumer confidence and encourage more people to use its services.
Chief Olutayo Adenekan, the Lagos State chairman of the National Association of Microfinance Banks (NAMB), is reportedly still working to implement an intervention fund to provide short-term financial support to microfinance banks [1,2,3].
Founded in 1999, Neptune Software Plc is a banking software provider. The UK-based company has over 170 employees and offices in the UK, South Africa, Nigeria, Kenya, Uganda, and India. Neptune partners with technology leaders such as BEA, Oracle, Sybase, IBM, and Business Objects. While Neptune also provides financial services software to the broader financial services industry, the company has created a niche with microfinance institutions. In Nigeria, Neptune has partnered with over 45 successful microfinance institutions. In 2005, CGAP awarded the company the highest rating, 4 stars, for its operational excellence.
Source: Harvard International Review.
Source: BusinessDay Online, Oluyinka Alawode
Article available here.
Another microfinance bank with the passion to boost the economic emancipation of the nation especially at the grassroots level has come on board. Seedvest Microfinance Bank Limited commissioned weekend in Ibadan, Oyo State had in attendance representatives of the deputy governor, financial sector surveillance of the Central Bank of Nigeria (CBN), Tunde Lemo and other financial institutions department, trade unions and associations.