The Central Bank of Nigeria (CBN) has announced a new condition of receiving Microfinance Bank (MFB) licenses.  Going forward, only microfinance institutions that are ready to operate in rural areas will be given licenses.  This new condition follows the recent statements, reported on MicroCapital, by Charles Soludo, Governor of the CBN, that only 12 of 36 Nigerian states contribute to microfinance.  On a combined basis, these 12 states have contributed USD 1.26 million to microfinance.  The new condition is an attempt to create more balance in the availability of financial services across the rural and urban areas.  Mr. Tunde Lemo, Deputy Governor, Financial Sector Surveillance, CBN, said that the central bank will give special, rapid consideration to any microfinance institutions seeking to begin operations in rural, underserved  states. 

In October, MicroCapital reported that the CBN granted MFB licenses to 815 microfinance institutions at a ceremony which officially launched the results of a survey conducted by Enhancing Financial Innovation and Access (EFINA).  EFINA is a non-governmental organization that provides financial institutions and regulators with information to aid them in the development of products and services that will meet the needs of the poor in Nigeria.  The distribution of the new licenses across the states and across rural and urban areas was not disclosed.  In its research, EFINA found that 79 percent of men and 85 percent of women in Nigeria do not have bank accounts and that 53 percent of the adult population does not have access to either formal or informal financial services.  The survey also found that males were more likely to be banked than females.

The Central Bank of Nigeria (CBN) was established in 1958. In September, 2008 it reported assets of N8.4 trillion (USD 71 million). Further stories on the CBN’s involvement with microfinance can be found in these MicroCapital stories.

EFINA was set up in late 2007 through funding by the UK’s Department for International Development (DFID) and the Ford Foundation. MicroCapital recently covered the announcement of funding for EFINA.

By Iyanna Holmes, Research Assistant

Additional Resources:

AllAfrica.com: Nigeria: EFINA Partners Financial Institutions to Boost Economy

MICROCAPITAL STORY: October 21, 2008, DFID Expands Microfinance Partnerships in Nigeria With $13.9m In Funding; October 30, 2008, Central Bank of Nigeria Grants 815 New Microfinance Licenses; November 3, 2008, Only 12 of 36 Nigerian States Contribute to Microfinance Activities for a Total of $1.26

Vanguard:  CBN Gives Fresh Condition for Micro Finance Bank Licence