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THE MICRO FINANCE BANKS INDUSTRY IN NIGERIA

The micro finance policy, regulatory and supervisory framework for Nigeria was introduced to galvanize and empower the poor and vulnerable people by increasing their access to the factors of production.

The policy seeks to significantly enhance the latent capacity of the poor for entrepreneurship through the provision of micro finance services to enable them engage in economic activities and be more self-reliant, increase employment opportunities, improve household income and create wealth. In essence, the policy is about providing financial services to the poor who are traditionally not included by the conventional financial institutions.

The micro finance policy recognizes the existing informal institutions like the Esusu/ Alajo that is, the daily /monthly monetary contributions by market women and business men and seeks to bring them within the supervisory preview of the central bank of Nigeria {CBN}, in order not to only enhance the monetary stability but also to expand the financial infrastructure of the country to meet the financial requirements micro and small scale enterprises {MSE’s}.

The small size of loan advanced and /or savings collected, the absence of asset-based collateral and simplicity of operations are some of the basic features of the modern day micro finance banks in Nigeria.

Micro finance bank actually is a result of the consolidation policy of the central bank of Nigeria on community banks which were not well capitalized, lack technical expertise and oriented towards lending based on the cash flow and character of clients.

The present micro finance policy provides for two categories of micro finance banks in Nigeria namely

  1. Micro finance banks licensed to operate as a unit bank
  2. Micro finance banks licensed to operate in a state or the federal capital territory.

For micro finance banks licensed to operate as a unit bank, also known as community banks, they can only operate branches or cash centers within a local government and the minimum paid –up capital for this category of banks is N 20,000,000 million per branch while for micro finance banks licensed to operate in a state or the federal capital territory, the minimum paid-up capital is N 2,000,000,000 Billion.

A number of micro finance bank were recently closed by the central bank of Nigeria due to a number of reason amongst which are insufficient paid-up capital and mismanagement. The apex bank has promised to look into the sector with a view to providing the needed solution to the problems facing it.

Do you seek micro-finance banking opportunities in Nigeria or you just want to know more about the subject matter as it affects Nigeria, Please do visit

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