Microfinance Policy, Regulatory And Supervisory Framework for Nigeria – 2005


(enacted in 2005)

The Microfinance Policy, Regulatory And Supervisory Framework for Nigeria, issued by the Central Bank of Nigeria (CBN) in 2005, creates a platform for the establishment of microfinance banks (MFBs) and establishes a framework for the CBN’s supervision of MFBs. Amendments to the regulatory and supervisory framework are expected in 2011.

This document includes the following sections:

  1. Introduction;
  2. Overview of Microfinance Activity in Nigeria;
  3. Justification for Establishment of MFBs;
  4. Microfinance Policy – lays out policy objectives, targets and strategies, including objectives to:
    • Make financial services more accessible to the population;
    • Promote synergy and mainstreaming of the informal sector into the national financial system;
    • Enhance service delivery by microfinance institutions to micro, small and medium entrepreneurs;
    • Contribute to rural transformation; and
    • Promote linkage programs between universal/development banks, specialized institutions and MFBs.
  5. Goals of MFBs;
  6. Policy Measures and Instruments in the Establishment of the Framework for MFBs – provides for two categories of MFBs based on geographical coverage:
    • MFBs licensed to operate as a unit bank (a/k/a community banks) and are community-based; and
    • MFBs licensed to operate in a state.
  7. Organic Growth Path for MFBs;
  8. Ownership of MFBs;
  9. Participation of Existing Financial Institutions:
    • Recognizes that in addition to MFBs, microfinance services are provided by commercial banks, community banks, and Non-Governmental Organization – Micro Finance Institutions (NGO-MFIs);
    • Provides for transformation of NGO-MFIs to into regulated MFBs upon meeting certain specified provisions; and
    • Transformation requirements of informal microfinance service providers into regulated entities are also provided.
  10. Justification for Capital Requirements;
  11. Framework for Supervision of Microfinance Banks;
  12. Regulatory Incentives;
  13. Roles and Responsibilities of Stakeholders; and
  14. Conclusion.