Business
Experts Want Consideration In Microfinance Market
Experts in the financial sector have called for consolidation in microfinance market, if it wants to compete with other around the world.
Mr Michael Barleon, managing director of AB microfinance bank while canvassing for consolidation said, the process should be a situation whereby the bigger microfinance banks consume the smaller ones, to build strong capital base.
However, the Central Bank of Nigeria (CBN) has given approval to over 900 operators to operate in the microfinance market. Because of this numbers, over 200 MFBs, representing 22 per cent of the number reside in Lagos State, even though the apex bank has yet to halt MF License.
Reacting to this, Barleon said, though the idea of CBN might be encouraging because of the rate of poverty in the country, he however moved for institutions that are financially strong to empower more lives.
He state that the number of microfinance institutions in the country is too large and are performing below expectation.
He believes that consolidation process will bring about microfinance institutions with strong capital base. Institutions with strong capital base, he said, is capable of making meaningful impact, urging microfinance firms to upgrade their capital strength to really extend financial assistance to the people.
While stating that the N20 million capital base for a unit-based MFB is too small, he called on the regulatory authority to review the capital base, such that, institutions would not face illiquidity, just as it is happening in the industry.
The bank boss however said, after the consolidation must have been concluded, institutions in the market would be very strong to withstand the test of time.
Strong capital base at times, he stressed, may not achieve the desired result if management in place is fraudulent and therefore called for good credit and loan management system from operators.
Deposit mobilisation and good loan recovery, he said should be the two core instruments to drive financially strong MFBs to the land of promise.
According to him, if you have good deposit mobilisation and loan recovery teams coupled with strong capital base, there is strong indication that you are going to dictate the market.
He therefore advised his colleagues to not only build strong capital base, they should also streamline their products to meet the yearnings and aspiration of their customers.
This, he hinted, is key to success in the industry.
Reacting on why some microfinance institutions failed in Nigeria, he noted that their inability to fine tune well packaged products to meet the demands of their customers led to their downfall.
To him, “when you don’t have a good credit product to sell, it makes it difficult to grow a financial institution.
There are a lot of MFIs but as far as I understand, they work with completely different products and concepts, with many of them asking for voluntary saving but are very hesitant to grant loans”.
Also canvassing for consolidation of operators in microfinance industry, Mr Ismail Radwan, senior economist, World Bank, Nigeria says, this is necessary to reduce the number of MFBs to a considerable size capital of creating meaningful impacts.
He therefore called for merger and acquisition in the micro financial sub sector such that a MFB could financially strong and sound, thus having many branches.
“I believe there should be financially strong MFBs with many branches rather than having many microfinance banks with little or no branches”, he observed.
This, he said, would make monitoring and supervision simple and less stressful for the CBN.
The World Bank Chief pointed out that the present system would not give room for rapid growth and development as it is been witnessed in other microfinance markets worldwide.
The Central Bank of Nigeria (CBN) yesterday said 33 banks have met new minimum capital requirements under its recapitalisation programme, raising a combined N4.65 trillion to strengthen the financial system.
The apex bank disclosed this in a statement marking the end of the exercise, which commenced in March 2024 and drew participation from domestic and foreign investors.
The statement was jointly signed by the Director of Banking Supervision, Olubukola Akinwunmi, and the Acting Director of Corporate Communications, Hakama Sidi-Ali.
The statement said “Over the 24-month period, Nigerian banks raised a total of N4.65tn in new capital, strengthening the resilience of the financial system and enhancing its capacity to support the economy.”
The regulator said local investors accounted for 72.55 per cent of the funds, while international investors contributed 27.45 per cent, reflecting continued confidence in the sector.
Commenting on the outcome, the CBN Governor, Olayemi Cardoso, said in the statement, “The recapitalisation programme has strengthened the capital base of Nigerian banks, reinforcing the resilience of the financial system and ensuring it is well-positioned to support economic growth and withstand domestic and external shocks.”
It added that while 33 banks have complied with the new thresholds, a few others are still undergoing regulatory and legal processes.
The statement noted, “The CBN confirms that 33 banks have met the revised minimum capital requirements established under the programme.
“A limited number of institutions remain subject to ongoing regulatory and judicial processes, which are being addressed through established supervisory and legal frameworks.
“All banks remain fully operational, ensuring continued access to banking services for customers.”
The apex bank stressed that the exercise was executed without disrupting banking operations, ensuring uninterrupted access to services nationwide.
It further stated that key prudential indicators have improved, particularly capital adequacy ratios, which remain above global Basel benchmarks.
The minimum ratios were set at 10 per cent for regional and national banks and 15 per cent for banks with international licences.
The bank also said the recapitalisation coincided with a gradual exit from regulatory forbearance, a move it said improved asset quality, strengthened balance sheet transparency, and enhanced overall stability.
To preserve these gains, the CBN said it has reinforced its risk-based supervision framework, mandating periodic stress tests and adequate capital buffers for banks.
It added that supervisory and prudential guidelines would be reviewed regularly to strengthen governance, risk management, and resilience across the sector.
“The successful completion of the programme establishes a stronger and more resilient banking system, better positioned to support lending, mobilise savings, and withstand domestic and global shocks,” the statement said.
The Tide learnt that foreign capital inflows into Nigeria’s banking sector rose by 93.25 per cent year-on-year to $13.53bn in 2025, up from $7.00bn recorded in 2024, amid the ongoing recapitalisation drive by the Central Bank of Nigeria.
Data from the National Bureau of Statistics capital importation report showed that the banking sector remained the dominant destination for foreign capital, accounting for $13.53bn of the total $23.22bn recorded in 2025, representing 58.26 per cent of total inflows, up from 56.81 per cent in 2024.
The surge reflects heightened investor interest in Nigerian banks as they raised fresh capital to meet new regulatory thresholds introduced by the apex bank, with industry-wide recapitalisation activities driving large-scale inflows across all quarters of the year.
However, the Centre for the Promotion of Private Enterprise (CPPE) recently raised concerns over weak credit flows to small businesses despite recent banking sector reforms.
The CPPE, led by a renowned economist, Dr Muda Yusuf, acknowledged that the ongoing bank recapitalisation exercise by the CBN has strengthened the financial system, but warned that the benefits have yet to translate into meaningful support for the real economy.
The facility will be disbursed through participating Microfinance Institutions (MFIs), which will in turn extend the loans to their customers, particularly SMEs, as they directly interface with businesses at the grassroots level.
The Executive Director of COMCIN, Mr. Micheal Ogbaa who represented the Chairman, Dr. Iredele Oyedele (FCA, FCCA), said the initiative is designed to strengthen micro-lending institutions and expand access to finance for grassroots entrepreneurs, particularly women and youths in the informal sector.
Ogbaa explained that COMCIN does not lend directly to individuals but works through its network of microfinance and cooperative institutions, which in turn provide loans to end users.
“We came together to advocate for the microfinance ecosystem. Commercial banks often exclude people at the grassroots, but our members are positioned to reach them. This facility will empower them to do more,” he said.
He noted that the loan scheme offers low interest rates and flexible repayment plans, making it more accessible to small business owners.
According to him, about 90 percent of beneficiaries are expected to be women, who play a key role in sustaining families and driving economic activities at the local level.
“Our focus is on traders, service providers, and players in the informal sector. These are the real movers of the economy. By supporting them, we are strengthening families and contributing to national development,” he added.
Ogbaa disclosed that eligible SMEs with proven integrity and business track records could access up to N5 million each through participating micro-lending institutions. The rollout has commenced in Lagos and will extend to Abuja, Enugu, and other regions, including the South-West, South-East, and North-East.
He said 12 micro-lending institutions have already benefited from the scheme, while 85 applications are currently being processed under the pilot phase.
“Our target is to reach at least 100,000 SMEs nationwide. We are building a platform that connects funding partners with credible micro-lending institutions, creating a reliable channel for financial inclusion,” Ogbaa said.
He added that COMCIN is also working to attract larger funding pools from development finance institutions and private investors, noting that successful implementation of the pilot phase would boost confidence and unlock more capital for SMEs.
“We have seen encouraging testimonies from early beneficiaries. As we demonstrate transparency and efficiency, more institutions will be willing to channel funds through us,” he said.
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