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 announcement comes less than a year after Peace became licensed by the CBN to practice microfinance in September 2008 and about one year after the incorporation of the bank in May 2008. Peace has just launched a 24 hour internet banking service that allows clients to check account balances and receive a Short Message Service (SMS) alert for all banking transactions. The service is available to customers from anywhere in the world. Recently, Peace has also planned the installation of ATMs to reduce traffic to bank branches. In response to a query that the bank was neglecting rural customers in the wake of this expansion, the managing director of the bank, Innocent Ukasaonya, responded, “The challenges of the 21st century are numerous and we have to adopt strategies of satisfying our customers. The rural populace have not been neglected at all we have a range of products and services to cater for their needs too”.
Peace is a very new bank that has been expanding rapidly. When Peace became a private limited company in May 2008, the company self-reported share capital of USD 1.35 million. There are Peace branches in 11 locations in the FCT, 1 location in the state of Nassarawa, and 1 location in the country of Niger.Five further branches are under construction. Because Peace has not yet completed one year of microfinance operations, Peace is not among the 12 microfinance institutions (MFIs) in Nigeria that report to the MIX Market, the internet microfinance information clearinghouse. A list of members of Peace’s Board of Directors and the management team can be found here.
Products and services of Peace include the Current Account, which requires no minimum balance and comes with an ATM card. The basic savings account has a minimum opening balance of USD 3.4 dollars. Peace additionally offers separate savings accounts for education and festivities. Clients become eligible for microventure loans, home loans, and leases six weeks after opening an account with the bank and pay an annual interest rate is 30 percent. To attract new customers, Peace has offered promotions including the Bus Leasing Scheme, in which clients can lease a Foton bus by paying 30 percent of the price, and the NYSC Savings Account, meant for army corps members.
The FCT is a small area and the hub of Nigerian politics. Total purchasing power parity GDP of the FCT was USD 5.01 billion in 2007, with a per capital GDP of USD 3,285. Natives of the FCT are engaged in agriculture, producing yam, maize, guinea corn, beans and millet. Woodwork and ironwork, as well as weaving on the part of women, is also common. The territory is administrated by a system of emirs and chiefs responsible for certain areas, which are in turn divided into districts that report to the authority of the emir. The emirs themselves are under representatives of the government. Major ethnic groups in the area include the Bassa, Gade, Gwandara, Koro and Ganagana. Because Abuja is a candidate city for the 2014 British Commonwealth Games, the city is in the process of modernizing and expanding. Abuja replaced Lagos as the capital of Nigeria in 2004.
As for Nigeria as a whole, the country received USD 1 billion in credit in the year 2000 from the IMF, contingent on economic reforms. President Yar’ Adua’s current Seven-Point Agenda includes areas of focus like agriculture, mass transportation, and wealth creation and employment. In 2008, the CIA World Factbook estimated the purchasing power parity GDP of the country at USD 338.1 billion with a growth rate of 6.1 percent, driven chiefly by rising oil prices. GDP per capita was USD 2,300. Although 70 percent of the labor force is engaged in agriculture, agriculture constitutes just 18 percent of GDP.
Additional Resources:
“Nigeria: Peace MFB Commences Internet Banking”, by Abubakar Buba, Published by AllAfrica, June 2009
“Peace Microfinance Bank To Hit N1bn Capital Base”, by Chinedu Aroh, Published by Leadership Nigeria, October 2008
Peace Microfinance Bank: Home
Federal Capital Territory: Home
Microfinance Policy, Regulatory and Supervisory Framework for Nigeria, Published by Central Bank of Nigeria, December 2005
“Central Bank of Nigeria (CBN) Closes Failed Community Banks”, by Mary Fu, Published by MicroCapital, January 2008
CIA World Factbook: Nigera
MIX Market: Nigeria
Wikipedia:: Federal Capital Territory
President Yar’Adua’s Seven Point Agenda
By Goda Thangada, Research Assistant
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