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Microfinance services in Nigeria are mainly provided by formal institutions, such as microfinance banks (MFBs) and commercial banks, and less formal institutions, such as non-governmental organizations (NGO-MFIs), which may transform into MFBs upon satisfying certain provisions. The Central Bank of Nigeria (CBN) regulates MFBs and commercial banks. NGO-MFIs are not regulated. Due to severe financial sector problems including numerous bank failures and the sudden revocation of over 200 MFB licenses in 2010, the CBN promulgated several important amendments to the regulatory and supervisory frameworks for commercial banks and MFBs beginning in mid 2010. The reforms currently underway include establishment of a tiered banking structure that attempts to better shield bank deposits from broad exposure to risk. Under the new framework, universal banking is no longer permitted, but rather banks must be licensed in one of three categories: commercial banks, merchant banks, and specialized banks, of which MFBs are one sub-category. In January 2011, CBN also issued a new regulatory and supervisory framework and guidelines for providers of non-interest Islamic financial services, which may include some MFBs and other microfinance institutions. CBN revised its Microfinance Policy Framework in mid-2011.



Microfinance & Banking

Consumer Protection

The regulatory and supervisory framework for financial consumer protection in Nigeria is still in development. The relevant legislation is the Consumer Protection Council Act No. 66 of 1992. This act creates a mechanism for consumers to file complaints and enables the Consumer Protection Council (CPC) to attempt to mediate and provide redress when it determines that a violation has taken place. There is currently no agency or law in Nigeria specific to financial consumer protection, but the CPC's mandate encompasses all products and services. Amendments to the CPC Act that would expand the CPC's enforcement powers have been pending before the National Assembly for some time. In 2009, a very comprehensive National Consumer Credit Regulatory Commission Bill was introduced, but not passed by the National Assembly.

The Central Bank of Nigeria (CBN) also plays a role in consumer financial protection, despite a lack of specific legislation or regulation on this subject. The CPC has developed a practice of forwarding unresolved financial sector complaints to CBN for resolution. In late 2009, CBN began to take measures to address widespread card fraud, including a requirement that all Deposit Money Banks (DMBs) establish consumer help desks for ATMs. This was greatly expanded in August 2011 with a new circular requiring all financial institutions to have help desks to handle all consumer complaints within a certain time frame, and report complaints regularly to the CBN.

Branchless Banking