Business
MFBS Foresees Tough Times In 2010
Practitioners in the Microfinance Institution in the Nigeria have predicted that the sector would face tough time this year.
This prediction is connected to the sanitisation exercise being carried out by the Central Bank of Nigeria (CBN) in the sub-sector.
While some stated that mergers and acquisitions would envelope MFBs in the new year, others said weak MFBs would need to pave way for strong ones for any meaningful growth and development in the microfinance market.
The chief executive officer, King Solomon’s Microfinance Bank, Mr. Ugo Umeseanka said 2010 is going to be a tough and busy year. He said that happenings in the banking sector would also indirectly affect microfinance institutions, especially those who have account in their corresponding banks.
Pointing the way forward, he noted that CBN needs to do a lot especially in the area of redeeming the image of microfinance institutions.
He called on the apex bank to publish the list of the licenced MFBs that would be made available to the public in form of pamphlets. This he said would distinguish the licenced MFIs and sake ones.
Passion, patience and commitment, he said is the only instrument operators need to adopt to survive in this tough time.
In a related development, the chairman, Lagos State Association of Microfinance Banks, Olutayo Adenekan, said, though the harsh economic scenario in the country would not augur well for smooth operations of the industry, adding that operators should embrace low cost measure.
Flamboyant ways of living, he said is not ideal for an industry that is just three years old, as this would affect the financial standing of banks.
“Building of gigantic structure, buying of exotic cars, and bumper package for directors, among others is not good especially for banks that are facing liquidity challenges. These are expenditure and assets that could not bring profit”, he said.
He however warned his colleagues not to be the architect of their misfortune by cutting corners in a bid to make quick profits.
Another operator, Lanre Abiola chairman, Gold Microfinance Bank whose view is a little different, stated that 2010 would be positive and better more than the out-gone year “because we have learnt our lessons and a lot of operators are also making efforts toward increasing the capital base”.
He noted that to ease the operating environment in the current year, government needs to provide adequate infrastructure such as electricity to reduce operating cost. Most microfinance institutions are running on generators and all those affect the profitability of microfinance firms. He continued that, unless this is addressed, he foresees harsh operating environment in the current year.
The chairman further said that banks would be compelled to reduce staff strength in a bid to employ lost measure which CBN have bee sensitising operators about in the current year.
Edun made the call while speaking at the 2025 Fellowship Investiture of the Chartered Institute of Bankers of Nigeria (CIBN) in Lagos, where he reaffirmed the federal government’s commitment to sustaining ongoing reforms and expanding access to finance as key drivers of economic growth beyond four per cent.
“We all know that monetary policy under Cardoso has stabilised the financial system in a most commendable way. Of course, it is a team effort, and those eye-watering interest rates have to be paid by the fiscal side. But the fight against inflation is one we all have to participate in,” he said.
The minister stressed the need for banks to broaden credit access and finance innovation-driven enterprises that can create jobs for young Nigerians.
“The finance and banking industry has more work to do because we must finance their ideas, deepen the capital and credit markets down to SMEs. They should not have to go to Silicon Valley,” he said.
The minister who described the private sector as the engine of growth, said the government’s reform agenda aims to create an enabling environment where businesses can thrive, access funding, and contribute meaningfully to job creation.
The facility, known as the Nigeria Actions for Investment and Jobs Acceleration (P512892), is a Development Policy Financing (DPF) operation scheduled for World Bank Board consideration on December 16, 2025.
According to the Bank’s concept note , the financing would comprise $500m in International Development Association (IDA) credit and $500m in International Bank for Reconstruction and Development (IBRD) loan.
If approved, it would be the second-largest single loan Nigeria has received from the World Bank under President Bola Tinubu’s administration, following the $1.5 billion facility granted in June 2024 under the Reforms for Economic Stabilisation to Enable Transformation (RESET) initiative.
The World Bank said the new programme aims to support Nigeria’s shift from short-term macroeconomic stabilisation to sustainable, private sector–led growth.
“The proposed Development Policy Financing (DPF) supports Nigeria’s pivot from stabilization to inclusive growth and job creation. Structured as a two-tranche standalone operation of US$1.0 billion (US$500 million IDA credit and US$500 million IBRD loan), it seeks to catalyse private sector–led investment by expanding access to credit, deepening capital markets and digital services, easing inflationary pressures, and promoting export diversification,” the document read.
The document further stated that Nigeria’s private sector credit-to-GDP ratio stood at only 21.3 per cent in 2024, significantly below that of emerging-market peers, while capital markets remain shallow, with sovereign securities dominating the bond market.
To address these weaknesses, the DPF will support the implementation of the Investment and Securities Act 2025, operationalisation of credit-enhancement facilities, and introduction of a comprehensive Central Bank of Nigeria rulebook to strengthen risk-based regulation and consumer protection.
The operation also includes measures to deepen digital inclusion through the passage of the National Digital Economy and E-Governance Bill 2025, which will establish a legal framework for electronic transactions, authentication services, and digital records.
Beyond the financial and digital sectors, the programme targets reforms to lower production and living costs by tackling Nigeria’s restrictive trade regime. High tariffs and import bans have long driven up consumer prices and constrained competitiveness, particularly for manufacturers and farmers.
Under the proposed reforms, Nigeria would adopt AfCFTA tariff concessions, rationalise import restrictions, and simplify agricultural seed certification to increase the supply of high-quality varieties for maize, rice, and soybeans. The World Bank projects that these measures will help reduce food inflation, attract private investment, and enhance export potential.
The operation is part of a broader World Bank FY26 package that includes three complementary projects—Fostering Inclusive Finance for MSMEs (FINCLUDE), Building Resilient Digital Infrastructure for Growth (BRIDGE), and Nigeria Sustainable Agricultural Value-Chains for Growth (AGROW)—all focused on expanding access to finance, strengthening institutions, and mobilising private capital.
