Two Nigerian microfinance trade associations, the National Association of Microfinance Banks (NAMFBIN) and Association of Microfinance Bank in Nigeria (AMBN), have pledged to form the single organization titled, the National Association of Microfinance Banks (NAMB). Under the supervision of the Central Bank of Nigeria (CBN), NAMB would become the only authorized organization to represent microfinance institutions. Currently, Nigerian regulators have been overwelmed by the large number of microfinance institutions operating in the country and the microfinance banking industry has been in turmoil. By forming a single microfinance trade association, the hope is to promote greater adherence by members to a common set of business practices and to lessen the regulatory burden on the state thereby restoring confidence in the industry as a whole.
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MICROCAPITAL.ORG BRIEF: Access Bank Plc. and State of Anambra, Nigeria Launch $16.5m Microfinance Scheme
Access Bank Plc, a Nigerian commercial bank, has agreed to work with the Anambra state government to launch the state’s first microfinance scheme, by providing an equivalent of USD 16.5 million to selected microfinance institutions (MFIs) within the month. State Governor Peter Obi plans to set up workshops at the local government level throughout the state, in order to monitor progress and train operatives on “effective operation of the scheme.” He has also organized a committee, consisting of himself, representatives of the Access Bank, the Central Bank of Nigeria, microfinance bank operators, and others, who will oversee the program. The criteria for taking out a loan are not based on assets or collateral, but on “proven good character of the borrower.” The MFIs receiving funds are restricting the maximum amount that can be loaned to an individual to be equivalent to USD 3,294.
MICROCAPITAL.ORG STORY: The Nigeria Deposit Insurance Corporation (NDIC) “Overwhelmed” by Microfinance Responsibilities
A recent article from Next.com, [1] an online source for Nigerian news, reported that the Nigeria Deposit Insurance Corporation (NDIC), the financial industry regulator and subsidiary of the Central Bank of Nigeria (CBN), is unable to regulate and keep up with the rapidly expanding microfinance sector in the country. [2] At a workshop for finance correspondents in Kaduna, Nigeria, [2] [4] Jacob Afolabi, a deputy director at the NDIC, stated that the NDIC and the CBN are “overwhelmed by the number of microfinance banks in the country.” [2]
NEWS WIRE: Kenya: Banks’ Trouble Assists Microfinance Institutions
Source: East African Standard.
MICROCAPITAL.ORG STORY: ‘Fidelity Plc’ of Nigeria to Offer Banking Service Including Check Clearing to ‘Support Microfinance Bank’
According to Marcel Mbamalu of the Guardian in Nigeria, Support Microfinance Bank, a microfinance institution in Nigeria, has entered a “strategic and clearing partnership” with Fidelity Bank Plc, a major universal bank (capable of banking and investment activities) in Nigeria [1,2,3]. Customers of Support Microfinance Bank will now be able to receive banking services, including the clearing of checks, from all 140 branches of Fidelity Bank Plc [1].
MICROFINANCE PAPER WRAP-UP: Strategies for Effective Loan Delivery to Small-Scale Enterprises in Rural Nigeria, by Benjamin Okpukpara
Written by Benjamin Okpukpara, published in the Journal of Development and Agricultural Economics Vol. 1(2), pp. 041-048, May, 2009, housed at Academic Journals.org, 8 pages, available at:
http://www.academicjournals.org/JDAE/PDF/Pdf2009/May/Okpukpara.pdf
This work studies the determinants of micro business loan acquisition for rural entrepreneurs in Nigeria. In Nigeria, only 35 percent of the “economically active” population has access to formal credit [1]. In order to increase access to formal credit to rural areas, the government has enacted various microcredit programs specifically targeting the rural poor. However, according to the author, most of these programs have fallen short of their goals due to “poor targeting” and a “lack of organized ways of administering loan to the rural enterprises” [2,4]. Therefore, this study attempts to ascertain which strategies can overcome the problem of low access to microfinance services.
NEWS WIRE: Nigeria: Microfinance Banks Will Not Be Bailed Out
Source: The Vanguard.
NEWS WIRE: Nigeria: High Microfinance Interest Rates Cause Loan Defaults
Source: The Guardian (Nigeria).
MICROCAPITAL.ORG STORY: Nigerian MFI, Integrated Micro Finance Bank Plc (IMFB), Temporarily Closes Doors Due to Lack of Liquidity
The Central Bank of Nigeria (CBN) has granted permission to Integrated Micro Finance Bank Plc (IMFB) to temporarily shut its doors due to a lack of short-term liquidity [1]. The announcement comes shortly after the unexpected resignation of IMFB Chief Executive, Mr. Simon Akinteye. According to Mr. Femi Fabamwo, Deputy Director of the Other Financial Institutions Department of the CBN, the short-term liquidity problems of IMFB were intensified when huge numbers of enraged customers demanded their money back. Lacking sufficient financial resources to meet depositors´ requests, IMFB appealed to the CBN, which has allowed it until next month to reopen.
NEWS WIRE: Nigeria: Crackdown on Microfinance Institutions Begins
Source: This Day.
NEWS WIRE: Nigeria: $315m Microfinance Fund Failing to Get Out of Starting Gate
Source: Next.
MICROCAPITAL STORY: PS Microfinance Bank in Nigeria Exposed as Unlicensed and Fake, Bank Closes Operations Abruptly, Several Depositors Lose Huge Amounts of Money
Nigeria based PS Microfinance Bank Limited has closed operations abruptly, leading to heavy financial loses for several of its depositors, as per a press release on The Guardian – Nigeria. According to the release, the bank collected money from ‘almost every trader’ in the Akute area in Nigeria with the promise of providing attractive loans. Following the collection of money, the bank officials are said to have closed down not only their rental office in the Akute region but also their head office in the Ogba region of Nigeria. Officials of the bank have reportedly ‘gone into hiding’ and have been unreachable to both their clients and the press. As stated, the victims of the bank’s fraudulent activities are mostly traders including several women and the total loss for the depositors is estimated to be in the range of millions of Naira; an exact figure of the total amount defrauded by the bank is not currently available. Presently, PS Microfinance Bank does not maintain a web presence nor does it appear to report to MIX, the microfinance information clearinghouse; it is however unclear if a website was in fact existent for the bank prior to its closure.
MICROCAPITAL STORY: Lagos State Association of Microfinance Banks in Partnership with Greek Banking Group PROBANK to Create Common Software for Microfinance Banks in Nigeria
The Lagos State Association of Microfinance Banks has entered into a partnership with PROBANK, a Greek banking group, to design a common software for all microfinance banks in Nigeria. According to a press release on Vanguard – Nigeria, the centralized software system would link all microfinance banks in Nigeria and primarily address issues related to the clearing of cheques among microfinance banks. In this regard, the Chairman of the Lagos State Association Mr. Olutayo Adenekan, was quoted thus by the press release: ‘We [Nigeria] always had problems of clearing our cheques among ourselves and between commercial banks’. Mr. Adenekan was also quoted as stating that the aim of the partnership with PROBANK, is to ‘reduce, to the barest minimum, the numerous problems encountered by customers in the various microfinance and commercial banks’. The Lagos State Association is the regional chapter of the National Association of Microfinance Banks in Nigeria; it does not maintain a web presence.
MICROCAPITAL STORY: New Microfinance Institution AccessBank Tajikistan Established with Investments Totaling USD 11 million from Access Microfinance Holding, the European Bank for Reconstruction and Development (EBRD), the International Finance Corporation (IFC), and Kreditanstalt fuer Wiederaufbau (KfW)
Several international finance organizations have invested in a new microfinance institution, AccessBank Tajikistan. Access Microfinance Holding AG (AccessHolding) will hold a majority stake in the new bank, and international investors including the International Finance Corporation (IFC), the European Bank for Reconstruction and Development (EBRD), and Kreditanstalt fuer Wiederaufbau (KfW) will invest a total of USD 11 million for equity stakes. AccessBank Tajikistan will launch operations in late 2009 in the Tajik capital, Dushanbe.
MICROCAPITAL STORY: Peace Microfinance Bank of Nigeria Seeks License To Operate State Microfinance Bank
Peace Microfinance Bank of Nigeria is still seeking licensing from the Central Bank of Nigeria (CBN) to become a state microfinance bank. In preparation, Peace raised USD 6.75 million (Naira 1 billion) in share capital by December 2008. According to the Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, this is the minimum paid-up capital necessary for a state microfinance bank. Furthermore, a state bank must operate in two-thirds of the local government areas in the state of operations. These requirements are part of 2005 reforms in Nigeria’s microfinance sector, further discussed in this MicroCapital story. Currently, Peace operates primarily in the Federal Capital Territory (FCT) of Nigeria, a small area in the center of the country that includes the capital city of Abuja. Presumably, this is the area in which Peace intends to operate as a state bank.
MICROCAPITAL STORY: ACCION Microfinance Bank Limited of Nigeria Has Reached Total Assets of USD 9.1 Million
The ACCION Microfinance Bank Limited (AmfB) of Nigeria which was incorporated in May 2006 and granted an operating license by the Central Bank of Nigeria in April 2007 [1], announced that it has reached a benchmark in serving over 10,000 customers with USD 10.1 million worth of loans disbursed [2]. A further look at its financials reveals other key numbers.
MICROCAPITAL STORY: Islamic Microfinance – What Next? Nigeria Promotes “Non-Interest” Banking
In a recent speech before the senate, Lamido Sanusi who is the governor of the Nigerian Central Bank (CBN) governor, emphasized that it is important to ensure that banks do not claim to offer Islamic banking products when they are in fact running a conventional banking business.
MICROCAPITAL STORY: Microfinance Interbank Money Market Commences in Nigeria
The Microfinance Money Market Association of Nigeria (MMMAN) was inaugurated in Lagos in March 2009. MicroCapital previously reported on the announcement of the proposed interbank money market in September 2008. The MMMAN was developed by the Financial Derivatives Company (FDC), an asset management company, and the Kakawa Discount House to allow microfinance banks (MFBs) to borrow and invest excess liquidity amongst one another. Financial Vanguard reports that five MFBs, the Integrated MFB, Mic MFB, Accion MFB, Susu MFB and Gapbridge MFB, have officially joined MMMAN. These MFBs have also been trading amongst one another since October to pilot the system. Mr. Jaiyeola Laoye, Managing Director and CEO of Kakawa, said at the inauguration, “The market is for short and medium term liquidity and would help [the MFBs] carry out their functions more effectively.” Also speaking at the inauguration, FDC’s Managing Director Bismarck Rewane, added “Most times, banks get closed down when they are faced with liquidity problems than when they encounter solvency challenges.” The MMMAN is designed to bring stability to the microfinance industry by providing further sources of liquidity to MFBs and to mobilize liquid funds between MFBs at competitive rates.