MICROCAPITAL STORY: Nigerian Government Creates $426m Microcredit Development Fund

Nigerian President Alhaji Musa Yar’Adua announced the creation of an N50 billion (the equivalent of over USD 426 million) microcredit development fund to be administered by the Central Bank of Nigeria (CBN). The new fund will be used to provide existing microfinance institutions (MFIs) with funding for credit creation and operational expenses.

The creation of the fund has been expected by the development community for some time and comes as part of Nigeria’s microfinance framework as established in 2005. The announcement took place on February 19th at CBN’s “Banks and the Nigerian Economy” conference and was followed by a request in which Yar’Adua asked states and municipal governments to contribute one percent of their annual budgets to the fund.

This comes after MicroCapital reported on a consolidation of the Nigerian banking community that closed down at least 145 banks leaving 716 MFIs in operation. According to another MicroCapital report, only eight of these providers report to MIX, the microfinance information clearinghouse. The reporting MFIs have a combined gross loan portfolio of USD 12 million with 250,000 active borrowers.

As noted by MicroCapital last month, the Central Bank of Nigeria (CBN) was established in 1958 and is responsible for the overall control and administration of Nigerian monetary and financial sector policies, including the granting and revocation of bank licenses. As of October 2007, it reported total assets of NGN 7.24 billion (USD 61.4 million).

by Jacob Keller

Additional Resources:

Symbiotics: announced

Central Bank of Nigeria: Home, reported, 1958

MIX Market: MIX

MicroCapital: reported, MicroCapital report

Bloomberg Currency Converter: Home