The UK Department for International Development (DFID) has become increasingly involved in Nigeria’s microfinance sector over the last three months, with recent donations to two separate Nigerian organizations involved in microfinance. In August DFID donated N12 million (USD 102 thousand) to an Abuja Enterprise Agency (AEA) run project entitled AEA FCT-wide Enterpreneurship Campaign (AFEC), and then again in October announced that it would provide GBP 8 million (USD 13.8 million) over five years to Enhancing Financial Innovation and Access (EFINA), a non-governmental organization (NGO) conceived by DFID.
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NEWS WIRE: Nigeria: Directors of Microfinance Banks Seek Recognition on Loans Management
Source: Business Day.
MICROCAPITAL STORY: Blue Financial Services, International Bank Plc, and AIG Investments Found Nigerian Blue Intercontinental Micro Finance Bank
Blue International Micro Finance Bank Limited (BIMFB), a newly created Nigerian micro finance bank, has begun operations in Nigeria, which will be using its capital base of N3 billion (USD 25 million) to provide micro loans to Nigerians. Blue Intercontinental Micro Finance Bank Limited is a partnership between International Bank Plc and Blue Financial Services of South Africa. This N3 billion (USD 25 million) is N2 billion (USD 17 million) over what is required by the Central Bank of Nigeria for starting up a microfinance bank in the country, and is reportedly the first to begin operations throughout different states in Nigeria, according to Business Day.
MICROCAPITAL STORY: AIG Investments Provides Equity for Nigeria’s Blue Intercontinental Micro Finance Bank
On September 18, AIG Investments (AIG), the asset management division of American International Group Inc., announced that its Global Emerging Markets Fund II LP will invest equity in the Blue Intercontinental Micro Finance Bank (BIMFB), a microfinance institution (MFI) that promotes financial services and products within Nigerian retail markets. The exact terms of the investment were not disclosed.
MICROCAPITAL STORY: Central Bank of Nigeria Laments Poor Participation in Microfinance Industry In Northern Nigeria
Originally reported by Nigerian news agency This Day, Mathius Kura, the Plateau State Branch Controller of Central Bank of Nigeria (CBN), a bank aligned with the Nigerian government to drive regulation and policy, noted the irony in how little participation there is in microfinance bank industries in the northern states of Nigeria. Kura was speaking at a one-day workshop – Micro-finance, Problems and Prospects – organized by the Chartered Institute of Bankers of Nigeria (CIBN). Kura observed that the Anambra state alone has over 100 microfinance banks; a value that surpasses that of the entire north put together, excluding Kwara State.
NEWS WIRE: Nigeria: Microfinance Banks to Set up Interbank Market
Source: Vanguard.
MICROCAPITAL STORY: United Nations International Fund for Agricultural Development (IFAD) Loans $27m to Support Nigerian Microfinance Sector Development
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.
MICROCAPITAL STORY: Microfinance Institutions (MFIs) in Nigeria in Talks about Establishing an Inter-Bank Money Market
According to the Vanguard, microfinance institutions (MFIs) in Nigeria are in talks with Government Banks, known as discount houses, about establishing an inter-bank money market. The market would allow MFIs to lend to each other on a short term basis, allowing them to earn extra returns or cover temporary shortfalls in liquidity. The practice is common in banking sectors around the world.
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: Nigerian Microfinance Institution Lift Above Poverty Organization (LAPO) Obtains USD 5 million Loan from Standard Chartered Bank Nigeria with Grameen Foundation Guarantee
Nigerian microfinance institution Lift Above Poverty Organization (LAPO) recently obtained a USD 5 million loan from Standard Chartered Bank Nigeria, the local subsidiary of the British bank Standard Chartered Bank Plc. The loan was structured in local currency and was backed by a USD 2 million guarantee from the Grameen Foundation under its Growth Guarantees program. The loan represents Standard Chartered Bank Nigeria’s largest transaction with a microfinance institution.
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: Nigerian Global Trust Bank Acquires Ugandan Microfinance Institution CML (Commercial Micro Finance Limited)
Nigeria-based Global Trust Bank has recently acquired Ugandan microlender CMF (Commercial Micro Finance Ltd) for an undisclosed price. Global Trust will assume control of CMF’s eight branches and six agencies as part of the deal, and CMF will change its name to Global Trust Bank Uganda. Global trust plans to continue CMF’s microlending operations.
MICROCAPITAL STORY: Proposperity Microfinance Bank LTD of Nigeria Launches New Line of Microfinance Products
Nigerian microfinance institution (MFI) Prosperity Microfinance Bank Ltd (Pmbank) plans to launch a new set of microfinance products. The products cover a wide range of services and will expand the offerings of pmbank, which had previously been focused on microcredit.
MICROCAPITAL STORY: Why the Central Bank of Nigeria’s Small and Medium Enterprises Equity Investment Scheme (SMEEIS) was Replaced by a Fund for Microfinance
This past spring, the Nigerian government cut its Small and Medium Enterprises Equity Investment Scheme (SMEEIS) due to a lack of success and underutilization. Recently, many comments by officials as well as outside criticisms have surfaced, explaining and defending the decision to cut SMEEIS and instead support the Nigerian Microcredit Development Fund.
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: Nonprofit Nigerian Institute of Animal Science Urges Microfinance Institutions to Ensure Food Security
Responding to an emerging world food shortage, nonprofit research institute Nigerian Institute of Animal Science (NIAS) has urged the country’s microfinance institutions to aim their microlending services at small and large-scale livestock farms to ensure food security.
PAPER WRAP-UP: Microfinance in Nigeria and the Prospects of Introducing its Islamic Version There in the Light of Selected Muslim Countries Experience by Aliyu Dahiru Mohammed and Zubair Hasan
Written by Aliyu Dahiru Mohammed and Zubair Hasan and released in April 2008 as part of University Library of Munich’s Munich Personal RePEc Archive (MPRA) Paper Series as number 8127, 18 pages, available at http://mpra.ub.uni-muenchen.de/8127/1/MPRA_paper_8127.pdf.
This paper examines the potential for microfinance in Nigeria and the specific challenges of aligning microfinance with Islamic law. It proposes that if an Islamic version of microfinancing could be implemented in Nigeria, as it is in other countries, the microfinance industry would see greater growth and success.