Nigeria: Group plans microfinance bank for small entrepreneurs

From People Daily

A group of entrepreneurs have given a commitment to set up a microfinance bank to give loans to small and medium enterprises. President of the group, Mrs. Bose Oboh, told the News Agency of Nigeria (NAN) in Lagos that they would source funds from local and international organisations.

The entrepreneurs, who are operating under the aegis of Fate Foundation Alumni General Assembly, consist over 4000 members. She said that the aim was to help the members to solve financial problems that had retarded the growth of their businesses. Oboh said that already 100 members of the group had formed a cooperative society that would soon transform to the microfinance bank. She said that loans from the bank would not exceed five per cent. Oboh advised the Federal Government to creative conducive environment for entrepreneurs to thrive. “The government should have passion for entrepreneurs in the country by coming up with policies that will aid their contribution to the GDP,” Oboh said.

Nigeria: Nation, Others Challenged On Dev of Microfinance Banks

From Daily Champion

Nigeria and other third world countries have been urged to borrow a leaf from Bangladish by according top priority to the development of micro-finance banks to enable the government cater for the poor in their respective societies.

The challenge was given by the Nobel peace prize winner in Micro-finance, Prof. Mohammed Yunus recently in Lagos.

Prof. Yunus who was key speaker at the maiden edition of international conference on micro-finance; “A tool for poverty eradication & Economic Growth in Nigeria” focused his lecture on Bangladish experience, stressing that major complaints by poor is that conventional banking had remained exclusive reserve of the rich.

He was of the opinion that banking for the rich is the same thing as baking for the poor. In his word; “The rich people in the in the society are identified with conventional banking while the poor go the micro-finance banks. The grameen banks are owned by the poor women. It is simply doing the opposite”.

According to him, opposition to micro-finance banks and collateral for lending in Bangladish were restricted to rural areas.

Prof. Yunus explained that his reason for establishing the grameen banks was aimed at resolving the problem of the poor, saying, “Once your get there your problem is half way solved.

This is even as he revealed that of the 45 million population of Bangladish, about 8.5 million people with the grameen bank, representing one third of its population.

He also revealed that the bank generates about $1.5 million annually. This leaves the bank with more money that it could it give out to borrowers. Nearly half a million of the fund is coming from the people,. As every borrower is required to put savings.

In all, there are 2,600 branches of the bank located at accessible locations within the country. Members of the Bank’s Boards are equally among the borrowers.

The noble laureate said a minimum deposit rate of 12.5 per cent is available for the customers while borrowing rate is pegged at 10 per cent.

Also, no interest is charged on interest rate with highest rate pegged at two per cent principle. People should not borrow the bank, rather the bank should borrow the people, he explained.

While stressing that the available incentives were mapped out to guide against the children inheriting the poverty of their parents, he said 100 per cent of the children in Bangladish are presently in school.

“Presently, there are 52,000 students in the universities in Bangladish, borrowing for education is at zero interest. We want to make sure that they never get back to poverty, previously, if you get the children in Bangladish out of poverty, they go back to it. This had been stopped”, he asserted.

He further revealed that interest rate margin between conventional banks and grameen banks is current fixed at 16 per cent, adding that there is no time limit for repaying the loans.

Again, this is designed to assist the loan beneficiaries who usually complained of their inability to repay the life tonic because they were unable to secure jobs after graduation.

Prof. Yunus took a swipe on the Central Banks of the various nations, saying, “They do not understand micro-finance bank, they don’t know it”.

He therefore hoped that all Millennium Development would be concluded by the year 215.

It would be recalled that the pioneer Managing Director and Chief Executive Officer(CEO) of First Bank of Nigeria Micro-Finance Bank Limited, Mrs. Pauline Nsa had at a similar forum organized early in the year by the bank in Lagos bitterly complained that Central Bank of Nigeria had solely focused on commercial banks at the expense of poor populace who are in dire need of micro-financing.

Mrs. Nsa opined that there was need for mid-layer banks to handle SMEs as neither the SMEs nor the commercial banks are adequately set-up to serve them, yet MFBs engage more in SME banking than servicing the micro-sector for which they licensed.

She pointed out that one of the main issues plaguing micro-financing in Nigeria is the CBN’s conversion of community banks to MFBs.

In his own contribution, a financial expert and management consultant, Mr. Fela Durotoye highlighted the need for the poor to empowered with capacity and financing rather than being given aids or charity.

He contended that venture capitalists are unwilling to invest in micro-financing for the moral burden of profiting from the poor, reiterating that grameen success story was based on the founding intent to help the poor rather than profit from them.

Most of the participants at the forum agreed that the path to solving the challenges of micro-financing in Nigeria is multi-layered and range from adequate regulatory policies, social/angel sources of funds, direct research, adopting models that have worked, engaging credit bureaus, building and building capacity amongst others.

Nigeria: Expert Blames Distresses In MFBs On Wrong Banking Model

Amaka Ifeakandu, Leadership

An expert in microfinance banking has blamed the distress being experienced in micro finance banks (MFBs) in the country on the adoption of conventional banking model by operators in the microfinance industry .

The founder, Grameen Bank, Yunus Muhammad, who made this remark in Lagos, said that this system of operation has helped to increase the operating cost of MFBs, as most of them subscribe to flamboyant lifestyle like their counterpart in the banking sector.

The Nobel laureate opposed the microfinance banking operating system which focused more on the rich than the poor who should be target beneficiaries.

Yunus also said that the micro banks in the country operated in contrast to what their operation should be, adding that:“Micro-financing is non-conventional banking; it is not an extension of conventional banking.

Conventional banking is banking for the rich, whereas micro-financing is banking for the poor.”

Speaking further, he said: “Grameen’s interest rate for instance, is cost of fund plus 10 per cent per annum.

The interest rate is done on simple interest and not compound interest, as done in Nigeria.

The interest rate also has no hidden charges. In addition, loans for education attract five per cent interest and that the loan is payable after the borrower graduates and starts working.”

Loans for housing at Grameen Bank, he said were given at eight per cent interest rate, and loans were given to beggars at zero per cent interest rate.

“I firmly believe that we can create a world where not a single person will be a poor person and I say this, not because it is good to say, but because it is possible, poverty is a symptom of an improper society, the people are the victims,” he added.

He, however, said that conventional banks could be established in the cities,while MFBs could operate in the rural areas.

Speaking on interest rates, Yunus observed that Grameen bank’s interest rates were just four per cent above that of conventional banks, noting that any interest rate that was 15 per cent above the cost of funds for a microfinance bank, “is no longer serving the poor.”

“We go to our borrowers. They do not come to us. We meet our borrowers at their door steps every week. Our office is for us to meet and not for banking business,” he added.

The bank, he said, set up to provide financial services to the poor, decided to turn conventional banking upside down. “Whenever we encounter a problem, we ask ourselves how does the conventional banks do it, then we turn it upside down”.

He said Grameen Bank mobilises its credit mainly from its borrowers, who also own the bank. He also disclosed that all Grameen Bank branches, as a matter of policy, are located in the rural areas and not in urban centres.

Yunus also suggested that the best model was to create a separate regulator for microfinance banks, adding that experience has shown that conventional regulators like the central banks do not understand how microfinance banks work. He also suggested that regulators need to put a cap on interest rates on microfinance lending.

Nigeria: Yunus asks business chiefs to embrace social entrepreneurship

By Siaka Momoh, Businessday Online

Microfinance banking (MFB) icon and Nobel Laureate, Yunus Mohammad has called on the Nigerian business chieftains to embrace social business.

“You can do it. It is not right to think profit only. You can do non-for-profit business and be concerned only with recouping your capital; this is the way to give back to society, to lift the poor out of poverty,” he told a robust collection of bankers and business people that filled the Muson Centre Shell Hall on Monday, at a First Bank-organised conference.

Yunus argues that many of the problems in the world today, including poverty, persist because of a too narrow interpretation of capitalism. Capitalism, he argued, centres on the free market, as “it is claimed that the freer the market, the better is the result of capitalism in solving the questions of what, how and for whom. It is also claimed that the individual search for personal gains brings collective optimal result.”

He notes that the theory of capitalism assumes that entrepreneurs are one dimensional human beings who are dedicated to one mission in their business lives – maximise profit, arguing that this interpretation of capitalism insulates the entrepreneurs from all political, emotional, social, spiritual, environmental dimensions of their lives. “Many of these world’s problems exist because of this restriction on the players of free market,” he says.

Yunus, who is an advocate of doing things the opposite way, argues: “I have said that capitalism is a half-told story. By defining ‘entrepreneur in a broader way we can change the character of capitalism radically and solve many of the unresolved social and economic problems within the scope of the free market.

“Let us suppose an entrepreneur, instead of having a single source of motivation (such as maximising profit), now has two sources of motivation, which are mutually exclusive, but equally compelling – (a) maximisation of profit and (b) doing good to people and the world.”

Yunus tells the Nigerian business chieftains gathered that social business will be a new kind of business introduced in the marketplace with the objective of making a difference to the world.

How?  Investors in the social business can get back their investment money, but will not take any dividend from the company. Profit would be ploughed back into the company to expand its outreach and improve the quality of its product or service. A social business will be a non-loss, non-dividend company.

Nigeria: Seven fundamental flaws with microfinance banking in Nigeria

By Babajide Komolafe, Vanguard

It was obvious from the beginning. Only just that the regulators and operators were not humble enough to accept it, that the framework for microfinance banking in Nigeria is faulty and cannot achieve its objectives. This reality was made the more and undeniably obvious last week by the revealing and moving presentation of Professor Mohammad Yunus, the founder of the first microfinance bank called Grameen Bank.

From his keynote address delivered at the first  FirstBank Impact conference series, Yunus, a Nobel peace prize winner, indirectly told the gathering of regulators, top bankers, microfinance operators,  national assembly members and government officials that what we have in Nigeria is not microfinance banking but micro commercial banks.

Though he was not asked to  make an assessment of microfinance banking in Nigeria, the panel discussion before his speech might have prompted him to explain the fundamental principles behind the founding of Grameen Bank.

The panel discussion featured Mr. Fabanwo, Director, Other Financial Institutions Department (CBN), which is the supervising department for microfinance banks (MFBs), Professor Ibidapo Obe, former vice chancellor, University of Lagos, Mrs Bunmi Lawson, Managing Director, Accion MFB and Managing Director FirstBank Microfinance Bank,Mrs. Pauline Wandoo Nsa.

During the question and answer session, Oba Rilwan Akiolu, the Oba of Lagos, asked two questions. The first was directed at Nsa, CEO of First Bank MFB. He asked, “What is your interest rate? Rather than give a simple answer, Nsa began to educate the gathering about the high running cost of MFBs.

“Let me first provide a background. Runing a microfinance bank is expensive”, and she went on and on without answering the  question. Rather she said, “Our our rates are not that high. Some MFBs charge up to 10 per cent.  But ours is still reasonable”. But the Oba and the audience however insisted,  “Tell us your own rates or the range”.

Eventually she said, “Our rates range from three to four percent”. The rates she quoted are however monthly rates. This implies that some MFBs in Nigeria charge up to 100 per cent per annum, while First Bank MFB charges between 36 and 48 per cent.

The second question was directed at Fabanwo, the CBN Director that supervises MFBs. He was asked why CBN can’t create a fund that can be assessed by the MFBs so that they can lend cheaply. Responding,  Fabanwo first defended the high running cost of MFBs and then said there is actually a fund for such purpose but it is in the pipeline. He said it would come after the CBN had sanitised the sector and ensure that the operators understand what microfinance banking is all about.

Yunus presentation however show that it is not only microfinance banking  operators in Nigeria that does not understand and practice microfinance banking, the OFID director and the entire CBN also lack understanding of what they are regulating. It is a case of the blind regulating the blind and both are pretending to see.

According to Yunus, there are at least seven fundamental flaws with microfinance banking in Nigeria.

The first is that it is not for the poor, the poorest poor. Rather it is for traders, suppliers and importers and this explains the cut throat interest rates Nigerian MFBs charge. Yunus said, “We should remember where microfinance came from; it is banking for the poor. I am not saying that banking cannot be done for the rich.

There is banking for the rich but the complaints we hear is that banking is too restricted to the rich. That is why we decided to start by reaching out to the poor and the poorest. This is the most important part of it and this is the beginning of the whole idea and movement called microfinance. So the conventional banks go to the rich we went to the poor”

Secondly, because it for commerce, microfinance banks in Nigeria are predominately in the cities and urban areaa, a sharp contrast to the rural based nature of the first microfinance bank. “Conventional banks go to the cities, particularly the big banks, they have the largest branches, we went to the villages, and the most remote villages. The remoter you are the more exited we are.

That was what Grameen Bank was all about. Grameen means rural and when we were enacting the law that set it up we incorporated a clause that says this bank would never work in an urban center, never. It  still today has never worked in any urban area, 35 years after inception, not even in the municipalities. In fact anything covered by the municipality is a no-fly zone”, Yunus said.

Thirdly, Nigerian microfinance banks insist on collateral and they don’t lend to start a new business. This according to Yunus is not microfinance.

He said, “We dismiss the idea of collateral. Conventional banks want collateral, we said, “Forget it”.  The more collateral one can provide the more exited conventional banks are but in our case, the less collateral people have, the more exited we are. If you have nothing, we get more excited about you.

We say yes we have gotten our customer.  “Conventional banks ask the borrower, how much do you know about this business”. The more he or she can convince the conventional banks he or she is an expert in the business the more excited the conventional banks, we reversed that, when a client says I don’t know anything about this business, we get excited about him, that is the person we want.”

Fourthly, microfinance banking according to its founder is women oriented and focussed. In Nigeria that is not the case. It is who ever can pay the interest rate. “Conventional banks go to the men, we went to women”, Yunus said.

Fifthly, Nigerian microfinance banks are owned and are regulation required to be owned by the rich hence the minimum capital base of N20 million. But according to the founder it should not be so, it should be owned by the poor who are also its customers. “Conventional banks are owned by rich men, Grameen Bank is owned by the poor women”, Ynus said.

The sixth flaw is that microfinance banks are allowed to charge any interest rate. But in the Gremeem Bank concept, the interest rate is capped at 10 per cent margin between the cost of funds and interest rate. Yunus said the highest interest rate which is for income yielding activities is 20 per cent simple interest and for housing loan it is 8.0 per cent simple interest.

For its education loan, given to children of the poor, the interest rate is 5.0 per cent simple interest and they don’t start paying until they graduate from school and start working.

To achieve this interest rate, Yunus said Grameen Bank bounded itself never to allow its cost of operations to exceed the ten per cent interest margin. And this is done by doing most of the banking at the door step of their customers. “We believe that people should not go to banks, rather banks should go to people. So we make sure we visit all our customers at least once in a week. Hence there is no need for expansive offices and this helps reduces our running cost”.

In Nigeria, it is the opposite. Microfinance banks have expansive, tastily furnished offices that can easily pass for the head office of a conventional bank.

However, the greatest flaw with microfinance banking in Nigeria is that it is profit oriented. The promoters saw it as a cheap access to owning a bank and making money. Hence they set target for staff and management. Grameen Bank on the contrary, according to Yunus was founded to solve a problem-poverty. “Microfinance is a social business; it is not for profit but to help people out of poverty. This is because poverty is the fault of the society, the individual is just a victim of poverty”, he said.

Yunus said it indirectly, but Professor Ibidapo had earlier said it bluntly that the current microfinance banking framework in Nigeria cannot work, it can’t achieve the cardinal objective of poverty eradication.

Thus far it has only produced micro-commercial banks, and no matter the amendments and adjustments, it would not produce anything different or near Grameen Bank.

The solution is to scrap the framework and design a new one. This of course requires a lot of humility on the part of the leadership of the Central Bank of Nigeria.

Nigeria: Yunus, Nobel Laureate, faults Nigeria’s microfinance banking

By Siaka Momoh, Anthony Osae-Brown & Blessing Anaro, Businessday Online

World renowed microfinanace expert and Nobel laureate, Mohammad Yunus, yesterday criticised Nigeria ‘s microfinance banking, saying it is tilted to favour the rich, at the expense of the poor.

Business stakeholders at the ‘International Conference on Micro financing’ organised by First Bank of Nigeria, roared in applause, as Yunus analysed micro finance banking in Nigeria and painted a picture of what it should be.

He said: “Micro financing is non conventional banking; it is not an extension of conventional banking. Conventional banking is banking for the rich, whereas micro financing is banking for the poor.

“What we did, is look at conventional banking and do it the opposite way. Conventional banking is for the rich so we decided it should be for the poor. Conventional banking is for men; we set up Grameen Bank for women. Conventional banking is set up in the city, whilst microfinance bank is for the rural area. Conventional asks for collateral, we do not ask for collateral.

“The conventional bank goes to the rich, we go to the poor, conventional banks go to the cities, we go to the rural areas. Conventional bank lends to men, we lend to women. Conventional bank wants collateral, we say forget it, the less collateral our customers have, the more excited we are, when the conventional asks what you know about the business, we ask what don’t you know about the business? Conventional banks are owned by the rich, Grameen bank is owned by the poor”.

He argued that the purpose of micro credit is not to make money, as is the case in Nigeria but to solve the problems of the poor.Yunus’ Grameen Bank has more money than it gives out and 50 percent of its deposits come from borrowers. The bank attracts more savings than it gives out. It is a net lender of money.

Stephen Olabisi Onasanya, managing director, First Bank, agreed with Yunus that micro financing was not being properly run in Nigeria.

Olabisi said: “It is clear from the deliberations here today that what we practise in Nigeria is not micro financing; that it is not about the rush to make profit, it has got to provide solutions to problems. We are not truly lending to the poor. Our customers still have to produce documents before we can lend to them. First Bank is set to do it right.

“ We will enter into discussion with Mohammad Yunus and see how we can partner with Grameen Bank to do it right”.

Yunus told the audience that microfinance should be a social business, attracting very low interests. According to him, Grameen’s interest rate for instance, is cost of fund plus 10 per cent per annum. The interest rate is done on simple interest and not compound interst, as done in Nigeria.The interest rate also has no hidden charges.

In addition, he explained that loans for education attract 5 per cent interest and that the loan is payable after the borrower graduates and starts working.

Similarly, loans for housing are given at 8 per cent interest rate. He stated that loans are given to beggars at zero per cent.

“I firmly believe that we can create a world where not a single person will be a poor person. I say this, not because it is good to say, but becuase it is possible, poverty is a symptom of an improper society, the people are the victims”, Yunus said.

He described how the Grameen Bank, the bank he set up to provide financial services to the poor, decided to turn conventional banking upside down. “Whenever we encounter a problem, we ask ourselves how does the conventional bank do it, then we turn it upside down”.

Speaking on interest rates, Yunus observed that Grameen bank’s interest rates are just 4 percent above that of conventional banks, noting that any interest rate that is 15 percent above the cost of funds for a micro finance bank, is no longer serving the poor.

He said Grameen bank mobilises it’s credit mainly from it’s borrowers, who also own the bank. He also disclosed that all Grameen bank branches, as a matter of policy, are located in the rural areas and not in urban centres.

“We go to our borrowers. They do not come to us. We meet our borrowers at their door steps every week. Our office is for us to meet and not for banking business.”

Yunus also suggested that the best model is to create a separate regulator for micro finance banks. He said his experience shows that conventional regulators like the central banks, do not understand how micro finance banks work. He also suggested that regulators need to put a cap on interest rates on micro finance lending.

He further narrated how he has successfully been able to replicate the Grameen bank model in New York, where most people argued that “it would not work”.

“Now we have four branches in New York and we are opening in two other cities in the US soon,” he said.

Speaking to newsmen at the end of the lecture, Onasanya, the managing director of First Bank, said Yunus speech had been insightful and that First Bank would restructure its micro finance model in line with some of the suggestions made by Yunus in his lecture.

He said the impact series of lectures was aimed at adopting the best practices from anywhere in the world locally.

Nigeria: Mapping Nigerian Microfinance Banks

From Microfinance Information Exchange

In 2006, the Central Bank of Nigeria began to transform a network of several hundred community banks into ‘microfinance banks’ (MFB). Since that time, the registration rolls have ballooned, now to over 900 institutions, albeit not without considerable turmoil. 224 banks had their licenses revoked in 2010, only to have 121 of these reverted back to a state of provisional approval months later. Reporting from clients indicates that many are uncertain or suspicious of these banks, and the sheer numbers create a regulatory burden.

At the same time, more than 60 percent of the population of Nigeria are financially excluded or have informal access only – 71 percent of loans are from family or friends, for instance. So, when there are several hundred financial institutions across the country focusing on low-income clients and able to offer a range of services, it’s worth trying to lean more about the details and dynamics of that sector. Are there ways to look at the data on microfinance banks in a way that helps us to understand access to finance in Nigeria?

Gunmen rob microfinance bank and bomb police station in northern Nigeria

By Associated Press

BAUCHI, Nigeria — Authorities say gunmen attacked a microfinance bank in northern Nigeria, carting away bags of cash and bombing a police station when making their escape.

The attack late Monday night saw eight men flee in two cars they stole from the bank in Gamawa, a city in Nigeria’s far north. The robbers tried to attack another bank, but couldn’t get past its bulletproof front doors.

A witness, who requested anonymity out of fear of the robbers returning, said paramilitary police shot at the gunmen, leaving two bystanders wounded. The robbers also threw explosives into a police station while escaping.

Police said they were investigating the attack.

Nigeria, home to 150 million people, suffers from a weak police force more focused on collecting bribes than law enforcement in the oil-rich nation.

Nigeria: CBN adopts measures to check MFBs’ operations

By AMAKA ABAYOMI, Vanguard

The Central Bank of Nigeria, CBN, has listed a number of measures it has adopted to checkmate the activities of microfinance banks (MFBs) in the country.

According to the CBN, it adopted these measures in the revised the policy framework to ensure that MFBs provide diversified, affordable and dependable financial services to the economically active poor.

Recognizing the challenges posed by lack of funding, the Federal, State and Local Governments will be persuaded to participate by devoting, at least, one per cent of their annual budgets to microcredit initiatives that will be administered largely through MFBs.

To ensure that all such licensed MFBs are adequately capitalised and operate in a safe and sound manner, the licensing and supervision of MFBs will be done solely by the CBN.

Efforts will also be made to strengthen the skills of regulators, operators and directors of MFBs through the continuous professional development that will instill professionalism, transparency and good governance as the bedrock of the sub-sector.

In its effort to increase financial inclusion, the CBN shall set up financial literacy and consumer protection programmes that will promote savings and banking culture among low-income groups.

The CBN also noted that MFBs will be required to include in their periodic returns disaggregated data on the uptake of their products and services as may be required, while linkages between deposit money banks, NGO-MFIs, other micro-enterprise finance institutions as well as MFBs would be strengthened and institutionalized to increase the flow of funds to clients.

Nigeria: MFBs to emerge stronger, improve access to finance

By Akin Yusuf , Businessday Online

…As CBN categorises capital base licence

There is high expectation of enhanced access to finance by the active poor population in the country following the categorisation of the sub-sector into Unit, State and National MFBs.

Formerly, there were two categories of microfinance banks which include unit and state licence. The minimum capital requirement of this classification was N20 million and N1 billion, respectively.

But last week, the Central Bank of Nigeria (CBN), in its revised policy framework for microfinance banks, came up with three categories of MFBs.

The new guideline stipulates that those under the Unit category will have a minimum paid-up capital of N20 million, those that will apply for state will have a paid-capital base of N100 million, while those for national will have a paid up capital of N2 billion.

Meanwhile, mixed feelings have trailed the categorisation by operators. Olufemi Babajide of the National Association of Microfinance Bank (NAMB) Lagos chapter, who spoke with BusinessDay, regretted that there was no inclusion of regional licence in the categorisation.

He said for instance, there are operators who might want to operate in areas such as Lagos and Oyo, without going to other areas like Kwara.

To Godwin Ehigiamusoe, managing director of Lift Above Poverty Organisation (LAPO) Microfinance Bank, who also spoke with BusinessDay, the N2 billion national licence was both reasonable and appropriate at the moment. He said the latest categorisation will lead to the emergence of strong national microfinance bank that will deliver responsive service to the clients.

“The N2 billion is quite okay to fund the operations of microfinance banks in Nigeria,” he said.

The regulatory authority explained that a Unit MFB that intends to transform to a State MFB shall be required to surrender its licence and obtain a State MFB licence, subject to fulfilling stipulated requirements.

For a State MFB that intends to transform to a National MFB must , at least, five branches which are spread across the local government areas in the state. This is to ensure that the MFB has gained experience necessary to manage a National MFB. It shall also be required to surrender its licence and fulfill other stipulated requirements.

The CBN, however, said the prescribed minimum capital requirement for each category of MFB may be reviewed from time to time.

Among other responsibilities, the policy assigns the government the responsibility of setting aside an amount not less than one per cent of the annual budgets of federal, state and local governments for microcredit initiatives.

Under the revised framework, MFBs shall be required, among others, to be adequately capitalised, better spread, run a low cost structure and be operated in a safe and sound manner.

According to the CBN, there exists a huge untapped potential for financial services at the micro level of the Nigerian economy. Attempts by government in the past to fill this gap were not sustained.

“The Microfinance Policy was therefore developed in 2005 to further address the observed gaps, the policy focused mainly on private sector-driven arrangements, with the establishment of microfinance banks,” the apex bank stated.

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