Nigeria MfBs post positive indicators as assets up 91% to N2.8trn in Q2’24

Business a.m.

The microfinance banking sector in Nigeria has recorded significant improvements in all key assessment parameters, despite the challenging economic conditions.

Recent data from the industry shows that total assets have grown by 91 percent to N2.795 trillion year-on-year, while  total deposits have surged by 168 percent to N1.25 trillion at the end of Q2 2024.

Joshua Ukute, the national president of the National Association of Microfinance Banks (NAMBs), revealed an encouraging picture of the sub-sector’s performance during the association’s annual general meeting held recently in Abuja.

Ukute reported that not only did deposits and assets experience impressive growth, but efficiency metrics also showed improvement, as performing assets ratio (PAR) increased by 13.09 percent to 12.25 percent, and the liquidity ratio was at 65.46 percent due to a rise in lending activity.

Acknowledging the remarkable performance of the microfinance banks during the period under review, the NAMBs president attributed the success largely to the revolutionary Visibility Impact Capacity Building and Self-Regulation (VICS) programme launched at the helm of his presidency. This move was hailed as a milestone in the history of the MfB subsector, enabling the banks to deliver impressive financial and operational results over the past two years.

“The last 12 months have been exciting as the microfinance sub-sector witnessed significant growth. Reports from the Central Bank of Nigeria as of 30th June 2024 stated that the total assets of the sub-sector increased by 91 percent to N2.795 trillion.

“Total deposits increased by 168 percent to N1.25 trillion and total loans increased by 34 percent to N1.382 trillion. Efficiency in the sub-sector improved as PAR improved by 13.09 percent to 12.25 percent and the liquidity ratio was 65.46 percent due to increased lending.” Ukute stated.

Reflecting on his tenure, Ukute recalled the association’s fruitful collaborations with various stakeholders such as the Nigeria Financial Intelligence Unit (NFIU), the Federal Inland Revenue Service (FIRS), the Bank of Industry (BOI), and the Development Bank of Nigeria (DBN), among others. These partnerships, he asserted, significantly contributed to the impact of MfBs on all stakeholders and enhanced the symbiotic relationships between the association and its members.

Speaking on his leadership priorities over the last year, the NAMBs president, outlined that his focus has been on programmes with tangible, direct benefits to MfBs. He noted that under his watch, the secretariat facilitated initiatives that strengthened MfBs’ compliance, improved staff skills, and fostered relationships with regulators. The primary objective, Ukute explained, has been to positively impact member-banks across various critical areas.

Ukute acknowledged that while the sector had indeed recorded noteworthy achievements, it faced several pressing challenges. These include: inflation, high energy costs, and a shortage of skilled employees combined to put pressure on members’ businesses.  He noted further that the CBN’s compliance regime and Heritage Bank’s licence revocation compounded the difficulties, leaving some MfBs struggling to recover funds trapped in the now-defunct bank.

Looking to the future, the NAMBs president reassured the members that the leadership of the association was fully committed to implementing initiatives designed to foster long-term growth in the sector and prevent MFB failures in the years to come.