The decision by the Central Bank of Nigeria (CBN) to revoke the licenses of some microfinance banks (MFBs) has prompted the National Association of Microfinance Banks (NAMB) to take action.
The CBN stated that the licenses of the MFBs were revoked because they failed to fulfill the conditions under which their licenses were granted and did not comply with the obligations imposed on them by the apex bank, as stipulated in the Banks and Other Financial Institutions Act (BOFIA) 2020.
The license revocations serve as a regulatory measure to enforce compliance and ensure the stability and integrity of the microfinance sector.
In view of this, NAMB has initiated a review of the recapitalization status of all MFBs that are members of the association.
The objective is to assess the recapitalization status of licensed MFBs nationwide and take follow-up actions in collaboration with regulatory authorities.
Mr. Shikir Caleb, the Executive Secretary of NAMB, emphasized the importance of preventing further license revocations and rebuilding the trust of Nigerians in microfinance banks.
The association directed its state chapters to categorize the affected micro-lenders into different groups, which include MFBs that have fully recapitalized but are awaiting CBN approval, MFBs that are in ongoing discussions for funding but have not fully recapitalized, MFBs that have not fully recapitalized, and MFBs that have permanently closed.
MFBs that have completed the recapitalization process but are awaiting CBN approval were instructed to submit their recapitalization status to the NAMB Secretariat.
The association plans to review the submissions and hold a meeting with all MFBs to collate the information and engage with the CBN management.
Mr. Joshua Ukute, the NAMB National President, expressed his concern over the license revocations and pledged that the association’s leadership would intensify self-regulation activities in MFBs across the country to prevent similar occurrences.
He also emphasized the importance of public enlightenment and building confidence in the microfinance sub-sector by engaging stakeholders in the association’s financial inclusion efforts.
Microfinance banks have been instrumental in implementing the financial inclusion strategy, particularly in underserved remote communities where larger financial institutions are less inclined to operate.
