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 CBNâs supervision of MFBs. Amendments to the regulatory and supervisory framework are expected in 2011.
This document includes the following sections:
- Overview of Microfinance Activity in Nigeria;
- Justification for Establishment of MFBs;
- 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.
- Goals of MFBs;
- 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.
- Organic Growth Path for MFBs;
- Ownership of MFBs;
- 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.
- Justification for Capital Requirements;
- Framework for Supervision of Microfinance Banks;
- Regulatory Incentives;
- Roles and Responsibilities of Stakeholders; and