200 Unit MFBs at risk over CBN capital requirements

About 200 Unit Microfinance Banks (MfBs) may be at risk folling the new Central Bank of Nigeria (CBN) guidelines that put minimum capital base for Tier-2 MfBs at N50 million.
Tokunbo Martins, director, Other Financial Institutions Department, CBN, said the Microfinance banks that could not shore up their capital as directed in the new guideline, could become agents of NIRSAL MFB.

The CBN on March 18, 2019, reviewed the minimum capital requirements for Microfinance banks, allowing for instalment payment and categorisation of Unit Microfinance into two of Tier 1 and Tier 2.

In the new capital requirement guideline, tier 1 MFBs are to pay N200 million as minimum capital requirement, while tier 2 are expected to pay N50 million.

In October 2018, the CBN increased the minimum capital requirement of Unit microfinance banks from N20 million to N200 million, State MFBs from N100 million to N1 billion and the National MFB from N2 billion to N5 billion.

Abdulhameed Abdulhameed, director/Chief Executive Officer, Nigeria Incentive-Based Risk Sharing for Agricultural Lending x(NIRSAL), who spoke at the ongoing Finance Correspondents and Business Editors workshop organized by the CBN in Gombe State, said, capitalisation for MfBs is crucial, as it determines the level of lending an operator can embark on.

Speaking on the theme: NIRSAL Micro-Finance Bank and Real Sector Financing, Abdulhameed noted that there are over 37 million Small and Medium Enterprises (SMEs) in the country, but only one million operators have access to credit.

He emphasised the need for adequately capitalized to lend more to SMEs adding that more lending to the sector, partnering with Nigeria Postal Service (NIPOST).

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NIPOST, he said operates in 1,800 locations across the country, and has the capacity to help bring financial services closer to the grassroots.

Tokunbo Martins, director, Other Financial Institutions Department, CBN, said, for Nigeria to achieve meaningful economic growth, SMEs needed to increase their credit access through MfBs.

“If we have this population and 50 per cent of them are living in abject poverty, what can we do to reverse the trend. It is though adequate financial access and improved lending through the MfB sector of the economy. Unfortunately, only one million out of 37 million SMEs have access to credit,” Martins said.

According to her, the number of MfBs operating in the country are now 902, many of them lending at 35 per cent per cent because of high cost of funds.

To aid the process of recapitalization, the CBN had directed that all Tier 1 unit microfinance banks shall meet a N100 million capital threshold by April 2020 and N 200 million by April 2021; Tier 2 unit microfinance banks shall meet a N 35 million capital threshold by April 2020 and N 50 million by April 2021; A state microfinance bank shall increase its capital to N500 million by April 2020 and N1 billion by April 2021; and A national microfinance bank shall hold a capital of 3.5 billion by April 2020 and N 5 billion by April 2021.

Hope Moses-Ashike

Hope Moses-Ashike is an Associate Editor, Banking and Finance, with more than a decade of experience reporting on Nigeria’s financial system and broader economy. She closely tracks market movements, monetary policy decisions, company disclosures, regulatory actions, economic indicators, and global developments, and interprets what they mean for businesses, investors, policymakers, and households. Her reporting helps readers understand complex issues such as inflation trends, foreign exchange market dynamics, interest rate decisions, bank performance, and investment risks. She also covers major international events and periodically travels to Washington, D.C., to report on the World Bank/IMF Spring and Annual Meetings. Her dedication to financial journalism has earned her multiple recognitions and invitations to high-level professional development programmes. She is an alumna of the International Visitors Leadership Programme (IVLP) in the United States and holds an Advanced Financial Journalism Certificate from the Press Association Training in London, UK. Her other notable achievements include completing the Lagos Business School CMC Programme, the Bloomberg Media Africa Initiative Programme, and a Master Class in Journalism at Rhodes University in South Africa.