The United Nations’ International Fund for Agricultural Development will provide USD $27 million in debt capital to support the expansion of microlending activity in Nigeria, with the goal of creating a sustainable rural financial system in the West African nation. Co-financed with nonprofit Ford Foundation, the financing aims to build ties between Nigerian MFIs and formal financial institutions in twelve Nigerian provinces. While Nigerian MFIs currently provide services to a variety of demographics, IFAD hopes that the capital infusion will particularly improve access to financial services to women, young people, and other marginalized groups. It is unclear whether IFAD’s financial assistance will be allocated to a Nigerian government agency such as central bank, or if it will be allocated directly to MFIs operating in-country.
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MICROCAPITAL STORY: Controversy Arises Over Pay for Employees of Microfinance Institutions (MFIs) in Nigeria
Controversy has arisen over the governance and operations of microfinance institutions (MFIs) in Nigeria. A recent Daily Sun article reported that Pastor Kehinde Alaba, Managing Director and Chief Executive Officer of Lagos State University Micro Finance Bank (LMFB), believes that government restrictions hinder the ability of MFIs to provide quality financial services to the poor. Meanwhile, members of the Central Bank of Nigeria (CBN) recently made comments suggesting that MFI mangers were acting inappropriately and it may be necessary to revoke the licenses of egregious offenders.
MICROCAPITAL STORY: Nigeria State, Lagos, to Release N850m (USD 7.3m) to Five Microfinance Institutions
The Lagos State Microfinance Institution (LAMSI), a government agency, is giving N850m (USD 7.3m) to five microfinance institutions (MFIs), including Integrated Microfinance Bank (IMB), LASU Microfinance Bank, MIC Microfinance Bank, Gapbridge Microfinance Bank and Ojokoro Microfinance Bank. Applications from other MFIs are still being evaluated.
MICROCAPITAL STORY: Nigeria’s Jigawa State Government Releases $850k to Microfinance Banks
The state government of Nigerian province Jigawa has released NGN 100 million (about USD 850 thousand) for the recapitalization of nine community banks in the region, aiming to save them from imminent liquidation. By providing funds, the provincial government sought to preserve the banks’ liquidity while the institutions prepare for a legal and structural transformation into microfinance institutions, in response to a mandate (p.13) from the Central Bank of Nigeria. It remains unclear what terms, if any, the Jigawan government has attached to the capital infusion. At this point, the available information suggests that the funds are a giveaway.
MICROCAPITAL STORY: Olive Microfinance Bank Inaugurates Corporate Office in Lagos State Nigeria
Having received final approval in January 2008, Olive Microfinance Bank formally opened its corporate head office in Ikeja, the capital of Lagos State, Nigeria. Created by Nigerians from “various reputed” Nigerian banks, Olive is now in the process of hiring an extended network of staff to operate the institution.
MICROCAPITAL STORY: Ecobank Completes its Takeover of Kenya’s East African Building Society (EABS) Bank
Ecobank Transnational Incorporated (ETI), a Pan African bank based in Togo, acquired a 75 percent stake in Kenya’s East African Building Society (EABS) Bank. The transnational changed the bank’s name to Ecobank Kenya Limited and appointed businessman Peter Kanyago as the new chairman. The Pandit family, founders and the single largest shareholders of EABS, will retain 25 percent representation in Ecobank Kenya Limited. Although the value of the deal was not disclosed, it was estimated to total USD 18,6 million (KES 1.3 billion).
NEWS WIRE: Kenya: Ecobank Completes Takeover of Microfinance Institution EABS Bank
Source: Daily Nation.
MICROCAPITAL STORY: United Bank for Africa Group Plc (UBA) of Nigeria Invests $25m to Establish Microfinance Subsidiary, UBA Microfinance Bank Limited
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.”
NEWS WIRE: Kenya: Ecobank Closing Deal to Acquire 75% of East African Building Society (EABS Bank)
Source: Business Daily Africa.
NEWS WIRE: Nigeria: United Bank for Africa Invests $25m to Open Microfinance Bank
Source: Zenith News.
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: Non-Profit ACCION International and Africa’s Ecobank Group Launch Microfinance Institution (MFI) in Ghana
ACCION International, a microfinance-oriented non-profit, and Ecobank, a banking group with operations throughout Africa, have partnered to launch microfinance bank EB-ACCION Savings & Loan in Ghana.
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.
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.