Search Results for: nigeria

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Source: EFInA.

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.

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.

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.

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.

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.

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In a report by AllAfrica.com, at the 2008 annual dinner of Bankers’ Clearing House Committee which was held at Hamdala Hotel Kaduna, Alhaji Mohammed Ibrahim Gusau, the Kaduna Branch Controller of the Central Bank of Nigeria (CBN) announced that 18 community banks in the state of Kaduna had already converted to microfinance banks and that as of January this year, 23 microfinance banks had been licensed or given approval-in-principle to operate.

Royal Exchange Plc, a Nigerian insurance company, has received approval from the Central Bank of Nigeria (CBN) to operate a microfinance bank according to a report on Nigeria’s Business Day Online.  Having satisfied all statutory requirements for opening a microfinance bank, Royal Exchange is currently making preparations to begin operations in the next few months.  The new venture is in line with the company’s mission to evolve into one of the leading financial service firms in the world.  According to Royal Exchange Group Managing Director Allan Walmsley, “That vision has seen us strategically restructure our operations while a comprehensive and integrated rebranding project also is currently underway.”   Other components of this vision include technology upgrades, human capital development, risk management, product enhancement and diversification.  Walmsley also stated that the company envisions “a number of strategic acquisitions to assure our future in the non-banking, financial services industry.” 

In a presentation at the Micro-Finance Investors Forum in Kano, Nigeria, Malam Ahmad Dogara of the Association of Oasis Associates, indicated that Islamic microfinance could be an excellent substitute for conventional microfinance already being used in the country. According to a report in the Daily Triumph, the economist lamented that despite prior success of conventional microfinance, these services were still not reaching all the poor and some of the money went to activities unrelated to helping entrepreneurs. Mr. Dogara pointed out that in some Muslim communities conventional microfinance has been rejected principally for its non-compliance with Islamic law, particularly with regard to interest. He explained “Islamic microfinance could arguably help the current short comings, since it focuses on achieving social justice, disallows exploitation and battles poverty as well.”

In Nigeria, the Anambra State Government has initiated moves to prosecute farmers who have defaulted in the repayment of microcredit loans given to them by the government. In 2008, the Anambra State Government had given NGN 150 million (USD 1 million) worth of loans to some 2,339 farmers in the form of revolving loans. According to the Anambra State Government, a number of the farmers are refusing to repay the loans.