MICROCAPITAL STORY: Nigerian Based Kings Microfinance Bank Disburses 50 million Naira (nearly $367 k) Worth Of Loans to 5000 Nigerians

Kings Microfinance Bank (KMFB), a Nigerian based microfinance provider announced that it has disbursed loans worth Naira 50 million, approximately equivalent to USD 367 thousand, to nearly 5000 Nigerians over the last several months. This announcement was made by Mr. Laide Adebayo, the Managing Director of KMFB during a chat with journalists at Lagos, Nigeria, according to a press release found on Vanguard – Nigeria. KMFB is one of the 815 organizations that have been licensed by the Central Bank of Nigeria (CBN) to supply credit to the marginalized poor and thereby support the Nigerian Government in its efforts to address poverty and meet the United Nations’ Millennium Development Goals (MDGs). Originally founded as Maryland Community Bank, KMFB registered as a Microfinance Bank in January, 2008. KMFB does not report to the MIX Market, the microfinance information clearing house, nor has it published its financial data on its website. Hence information on its total assets, loan portfolio and client base is not available.

According to the World Bank, Nigeria has nearly 70 percent of its population living in poverty with more than 54 percent living below the poverty line (less than one US dollar a day). This translates to roughly two out of every three Nigerians living below the poverty line. The 2008 Human Development survey of the United Nations ranks Nigeria among the 25 poorest countries, measured on the basis of standard of living, life expectancy and literacy. Despite its abundance of natural resources (oil, and petroleum), Nigeria has not been able to leverage its vast wealth of resources to promote growth due to corruption. Currently, the World Bank has 23 ongoing projects in collaboration with the Nigerian government to alleviate poverty, worth a total investment of nearly USD 2.7 billion. A BBC report reveals that Nigeria needs between USD 5 billion to USD 7 billion per annum for the next eight years if it is to reduce its poverty rate by 50 percent and meet the UN Millennium Development Goals.

According to a statement on the United Nations Capital Development Fund (UNCDP) website, the Government of Nigeria has identified microfinance as an effective tool to achieve its objectives of economic growth, inclusive finance and poverty alleviation. A study by the Central Bank of Nigeria (CBN) reveals that only 35 percent of the economically active population of Nigeria has access to formal financial systems. The remaining 65 percent is mostly served by Non-Governmental Organizations (NGOs), credit unions and money lenders. As a first step towards creating a more reliable and stable financial system which the poor can avail of to expand their businesses, the Central Bank of Nigeria has started regulating the activities of all these informal financial institutions, including KMFB and bringing them all under its purview.

The press release on Vanguard quoted Mr. Adebayo as saying that soft loans were imperative to empowering the poor. Soft loans are loans that have extended grace periods and below-market rates of interest. However, no information on the rates offered by KMFB is available. Mr. Abedayo also noted that without providing adequate financial assistance to small scale businesses, Nigeria’s quest to join the league of developed economies by 2020 might not be realistic.

For more information on Kings MicroFinance Bank, please look up their website: http://www.kingsmfb.com/index.htm

By Bharathi Ram, Research Assistant

Additional Resources:

Vanguard- Nigeria news: http://www.vanguardngr.com/content/view/24312/49/

BBC Online: http://news.bbc.co.uk/2/hi/africa/6292378.stm

Central Bank of Nigeria (CBN): Microfinance in Nigeria

CBN: List of Microfinance Institutions

World Bank (WB): Development projects in Nigeria