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Agusto & Co. sees 400 MfBs in Nigeria on recapitalisation failure

June 30, 2021996 views0 comments

 

  • CBN reports say total MFB assets stands at N1.01trn by end 2020

 

Agusto & Co., indigenous research and credit rating firm, has stated it expects Nigeria’s microfinance industry to outperform its 2020 rally, supported by the global roll-out of COVID-19 vaccines, accelerated digital transformation of microfinance banks and businesses in general, the renewed focus on essential sectors and government support for MSME businesses, even as it predicted that the number of MfBs in Nigeria to fall to 400 on the back of failure to meet recapitalisation deadline.

Agusto & Co. sees 400 MfBs in Nigeria on recapitalisation failureIn its report on the pandemic-induced accelerated digital transformation and impact on the microfinance industry in Nigeria, Agusto & Co. said the inability of some microfinance banks to meet the recapitalization requirements before the deadline may lead to a decline in the number of MfBs in the country to 400. It expressed regrets that the microfinance banking sector in Nigeria has remained heavily reliant on brick-and-mortar branches for the acquisition of customers and disbursement of loans and the collection of notes and coins for repayment, despite the N5 billion spent by the major national and state microfinance banks in Nigeria on the implementation of Internet, mobile and USSD banking services.

As the MfBs move towards achieving their recapitalization requirements, the Central Bank of Nigeria’s quarterly bulletin on Microfinance banks’ account (2SR) Assets reported that the total assets of Nigeria’s microfinance banks stood at N1.01 trillion as of December 2020, rising by N251.02 billion from N758.98 billion as of the close of July a year ago.

 

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The CBN report revealed that the apex bank made a revision to the deadline for compliance with the minimum capital requirements for microfinance banks in Nigeria after it put into consideration the impact of the COVID-19 pandemic on economic activities in April 2020.

 

“The Central Bank of Nigeria has extended the deadlines for compliance with the revised minimum capital requirements for all categories of the MfBs by one year as follows:

 

“The MfBs operating in rural, unbanked, and under-banked areas (Tier two) shall meet the N35 million capital threshold by April 2021 and N50 million by April 2022. The MfBs operating in urban and high-density banked areas (Tier one) are expected to meet the NI00 million capital threshold by April 2021 and N200 million by April 2022.

 

“State MfBs shall increase their capital to N500 million by April 2021 and N1 billion by April 2022. And national MfBs are expected to meet a minimum capital of N3.5 billion by April 2021 and N5 billion by April 2022,” the CBN said.

 

Meanwhile, the CBN also stated that as of December 2020, a total of 874 microfinance banks had licenses to operate in the country.

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