Taking stock of the Nigerian microfinance banking sector: lessons from an assessment of 25 MFBs in five states
Microfinance practices in Nigeria are unique relative to other countries. Although NGO-microfinance institutions are present, regulated, deposit-taking microfinance banks (MFBs) dominate the landscape. With roughly 870 MFBs licensed by the Central Bank of Nigeria, the microfinance banking sector is large but still quite young – established in 2005. It was within this environment that the GIZ ‘Pro-poor Growth and Promotion of Employment in Nigeria (SEDIN)’ programme commenced a CAMEL & Social Performance Management (SPM) rating of 25 MFBs in five states. The results of the rating provided excellent holistic insight into the current practices of Nigerian MFBs and displayed a number of curious, at times worrying, trends within the sector. Subsequently, this stock-taking paper attempts to discuss what key policy implications may resonate from these findings.Bernhardt, B. and Dannecker, A. (2014) GIZ SEDIN Report: Loan Pricing of Microfinance Banks: Survey & Methods of Assessment (in press), Nigeria: GIZ SEDIN Programme.
Central Bank of Nigeria (CBN) (2011) Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012a) Revised Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012b) ‘Supervision – List of Financial Institutions – Microfinance Banks’ [website], Central Bank of Nigeria <http://www.cenbank.org/Supervision/Inst-MF.asp≯ [accessed 26 November 2012]. http://www.cenbank.org/Supervision/Inst-MF.asp
Consultative Group to Assist the Poor (CGAP) (2008) ‘Financial crisis glossary: a guide to the buzzwords of the crisis’ [website], CGAP, <www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par≯ [accessed 29 April 2014]. www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par
Garcia, W. (2013) SEDIN Training Report: Loan Portfolio Development Training Workshop Held in Ogun State (internal report available upon demand), Nigeria: GIZ SEDIN Programme.
Hoepner, A., Lin, H., Moauro, A., Perez-Rocha, B. and Spaggiari, L. (2012) Financial Results of Microfinance Institutions: Social Performance Matters, St Andrews, UK: Centre for Responsible Banking and Finance (RBF), University of St Andrews; Milan: MicroFinanza Rating.
MF Transparency (2011) Formulas and Approaches Used to Calculate True Pricing [pdf] <www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf≯ [accessed 29 April 2014]. www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf
Okoye, O.E. and Okpala, Amon O. (2001) ‘The history of community banking and its role in Nigerian rural economic development’, The Review of Black Political Economy 28: 73–87 <http://dx.doi.org/10.1007/BF02717271≯.
Social Performance Task Force (SPTF) (2012) ‘Introduction to the SPTF Universal Standards for Social Performance Management’ [website] <www.sptf.info/≯ [accessed 29 April 2014]. www.sptf.info/
Yunusa, M.L. (1998) The Community Banking System in Nigeria [pdf] UNDP Regional Office for Africa, <http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf≯, Dakar: UNDP Regional Office for Africa. http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf
Bernhardt, B. and Dannecker, A. (2014) GIZ SEDIN Report: Loan Pricing of Microfinance Banks: Survey & Methods of Assessment (in press), Nigeria: GIZ SEDIN Programme.
Central Bank of Nigeria (CBN) (2011) Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012a) Revised Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012b) ‘Supervision – List of Financial Institutions – Microfinance Banks’ [website], Central Bank of Nigeria <http://www.cenbank.org/Supervision/Inst-MF.asp≯ [accessed 26 November 2012]. http://www.cenbank.org/Supervision/Inst-MF.asp
Consultative Group to Assist the Poor (CGAP) (2008) ‘Financial crisis glossary: a guide to the buzzwords of the crisis’ [website], CGAP, <www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par≯ [accessed 29 April 2014]. www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par
Garcia, W. (2013) SEDIN Training Report: Loan Portfolio Development Training Workshop Held in Ogun State (internal report available upon demand), Nigeria: GIZ SEDIN Programme.
Hoepner, A., Lin, H., Moauro, A., Perez-Rocha, B. and Spaggiari, L. (2012) Financial Results of Microfinance Institutions: Social Performance Matters, St Andrews, UK: Centre for Responsible Banking and Finance (RBF), University of St Andrews; Milan: MicroFinanza Rating.
MF Transparency (2011) Formulas and Approaches Used to Calculate True Pricing [pdf] <www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf≯ [accessed 29 April 2014]. www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf
Okoye, O.E. and Okpala, Amon O. (2001) ‘The history of community banking and its role in Nigerian rural economic development’, The Review of Black Political Economy 28: 73–87 <http://dx.doi.org/10.1007/BF02717271≯.
Social Performance Task Force (SPTF) (2012) ‘Introduction to the SPTF Universal Standards for Social Performance Management’ [website] <www.sptf.info/≯ [accessed 29 April 2014]. www.sptf.info/
Yunusa, M.L. (1998) The Community Banking System in Nigeria [pdf] UNDP Regional Office for Africa, <http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf≯, Dakar: UNDP Regional Office for Africa. http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf
Bernhardt, B. and Dannecker, A. (2014) GIZ SEDIN Report: Loan Pricing of Microfinance Banks: Survey & Methods of Assessment (in press), Nigeria: GIZ SEDIN Programme.
Central Bank of Nigeria (CBN) (2011) Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012a) Revised Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012b) ‘Supervision – List of Financial Institutions – Microfinance Banks’ [website], Central Bank of Nigeria <http://www.cenbank.org/Supervision/Inst-MF.asp≯ [accessed 26 November 2012]. http://www.cenbank.org/Supervision/Inst-MF.asp
Consultative Group to Assist the Poor (CGAP) (2008) ‘Financial crisis glossary: a guide to the buzzwords of the crisis’ [website], CGAP, <www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par≯ [accessed 29 April 2014]. www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par
Garcia, W. (2013) SEDIN Training Report: Loan Portfolio Development Training Workshop Held in Ogun State (internal report available upon demand), Nigeria: GIZ SEDIN Programme.
Hoepner, A., Lin, H., Moauro, A., Perez-Rocha, B. and Spaggiari, L. (2012) Financial Results of Microfinance Institutions: Social Performance Matters, St Andrews, UK: Centre for Responsible Banking and Finance (RBF), University of St Andrews; Milan: MicroFinanza Rating.
MF Transparency (2011) Formulas and Approaches Used to Calculate True Pricing [pdf] <www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf≯ [accessed 29 April 2014]. www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf
Okoye, O.E. and Okpala, Amon O. (2001) ‘The history of community banking and its role in Nigerian rural economic development’, The Review of Black Political Economy 28: 73–87 <http://dx.doi.org/10.1007/BF02717271≯.
Social Performance Task Force (SPTF) (2012) ‘Introduction to the SPTF Universal Standards for Social Performance Management’ [website] <www.sptf.info/≯ [accessed 29 April 2014]. www.sptf.info/
Yunusa, M.L. (1998) The Community Banking System in Nigeria [pdf] UNDP Regional Office for Africa, <http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf≯, Dakar: UNDP Regional Office for Africa. http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf
Bernhardt, B. and Dannecker, A. (2014) GIZ SEDIN Report: Loan Pricing of Microfinance Banks: Survey & Methods of Assessment (in press), Nigeria: GIZ SEDIN Programme.
Central Bank of Nigeria (CBN) (2011) Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012a) Revised Regulatory and Supervisory Guidelines for Microfinance Banks (MFBs) in Nigeria, Abuja: Central Bank of Nigeria.
CBN (2012b) ‘Supervision – List of Financial Institutions – Microfinance Banks’ [website], Central Bank of Nigeria <http://www.cenbank.org/Supervision/Inst-MF.asp≯ [accessed 26 November 2012]. http://www.cenbank.org/Supervision/Inst-MF.asp
Consultative Group to Assist the Poor (CGAP) (2008) ‘Financial crisis glossary: a guide to the buzzwords of the crisis’ [website], CGAP, <www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par≯ [accessed 29 April 2014]. www.microfinancegateway.org/p/site/m/template.rc/1.26.3803/#par
Garcia, W. (2013) SEDIN Training Report: Loan Portfolio Development Training Workshop Held in Ogun State (internal report available upon demand), Nigeria: GIZ SEDIN Programme.
Hoepner, A., Lin, H., Moauro, A., Perez-Rocha, B. and Spaggiari, L. (2012) Financial Results of Microfinance Institutions: Social Performance Matters, St Andrews, UK: Centre for Responsible Banking and Finance (RBF), University of St Andrews; Milan: MicroFinanza Rating.
MF Transparency (2011) Formulas and Approaches Used to Calculate True Pricing [pdf] <www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf≯ [accessed 29 April 2014]. www.mftransparency.org/wp-content/uploads/2012/05/MFT-BRF-203-EN-Formulas-and-Approaches-Used-to-Calculate-True-Pricing-2011-05.pdf
Okoye, O.E. and Okpala, Amon O. (2001) ‘The history of community banking and its role in Nigerian rural economic development’, The Review of Black Political Economy 28: 73–87 <http://dx.doi.org/10.1007/BF02717271≯.
Social Performance Task Force (SPTF) (2012) ‘Introduction to the SPTF Universal Standards for Social Performance Management’ [website] <www.sptf.info/≯ [accessed 29 April 2014]. www.sptf.info/
Yunusa, M.L. (1998) The Community Banking System in Nigeria [pdf] UNDP Regional Office for Africa, <http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf≯, Dakar: UNDP Regional Office for Africa. http://unpan1.un.org/intradoc/groups/public/documents/idep/unpan004228.pdf
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