1. Background
The microfinance industry in Nigeria had been confronted with numerous challenges since the launch of the Microfinance Policy Framework in December, 2005. A significant number of the microfinance banks (MFBs), were deficient in their understanding of the microfinance concept and the methodology for delivery of microfinance services to the target groups. Many of them lost focus and began to compete with deposit money banks for customers and deposits, leaving their target market unattended, in spite of efforts of the regulatory authorities to put them back on track.
Unfortunately, the impact of the global financial crisis on MFBs had been more severe than anticipated. Credit lines dried up, competition became more intense and credit risk increased, as many customers of MFBs were unable to pay back their credit facilities owing to the hostile economic environment. The combination of these factors had significantly weakened the microfinance sub-sector and its ability to achieve the policy objective of economic empowerment at the lower end of the market.
Given this scenario and following market reports about the failure of some MFBs to meet their matured obligations as well as several petitions received from aggrieved depositors, the Central Bank of Nigeria (CBN) and Nigeria Deposit Insurance Corporation (NDIC) embarked on a Target Examination of all MFBs in Nigeria, to identify the problem and ascertain the scope as well as the extent of damage done to the affected institutions. The exercise started in February 2010 and was concluded in June 2010.
2. Outcome of the Target Examination
The Target Examination was conducted on 820 MFBs across the country. A total of 224 (27%) MFBs were found to be ‘Terminally Distressed’ and ‘Technically Insolvent’ and/or had closed shop for at least six months.
The factors that contributed to the unsoundness of the MFBs were attributable to some or all of the following:
i) High level of non-performing loans, resulting in high portfolio at risk (PAR), which had impaired their capital;
ii) Gross undercapitalization in relation to the level of operations;
iii) Poor corporate governance and incompetent boards;
iv) High level of non-performing insider-related credits, and other forms of insider abuse;
v) Heavy investments in the capital market, with the resultant diminution in the value of the investment after the meltdown;
vi) Poor asset-liability management owing to portfolio mismatch;
vii) Heavy investments in fixed assets beyond the maximum limit prescribed;
viii) Operating losses sustained as a result of high expenditure on staff and other overheads;
ix) Weak management evidenced by poor asset quality, poor credit administration, inadequate controls, high rate of fraud and labour turnover;
x) Failure to meet matured obligations to customers.
3. Regulatory Action Taken
i) The operating licences of the 224 MFBs that were found to be ‘Terminally Distressed’ and ‘Technically Insolvent’ have been revoked pursuant to S.12 of BOFIA 1991 (as amended). The list of the affected MFBs is attached.
ii) As insured institutions, NDIC in line with its statutory responsibility shall pay up to the maximum insurance coverage of N100,000 per depositor.
iii) The bank directors and management of the closed banks that have abused their positions would be handed over to the Law Enforcement Agencies for investigation and prosecution, and those found culpable would be blacklisted accordingly.
4. Concluding Remarks
Ladies and Gentlemen, the Regulatory Authorities hereby assure the public that they would not allow the activities of few individuals that ran their institutions aground to derail the noble objectives of the microfinance policy. All necessary steps have been taken to protect depositors of the affected banks.
Thank you for your attention.
Microfinance Banks whose Licences are recommended for revocation
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S/N Name of Microfinance Bank State
1 ABIGI Microfinance Bank LIMITED OGUN
2 ABIRIBA Microfinance Bank ABIA
3 ACME TRUST Microfinance Bank LAGOS
4 ADAIGBO Microfinance Bank DELTA
5 ADIF Microfinance Bank LAGOS
6 AFAM Microfinance Bank RIVERS
7 AGBELO Microfinance Bank EDO
8 AGULERI Microfinance Bank Ltd ANAMBRA
9 AJASE-IPO Microfinance Bank KWARA
10 AKESAN Microfinance Bank OYO
11 AKIN Microfinance Bank CR. RIVER
12 AKPOR-COE Microfinance Bank RIVERS
13 AKUDIEWA Microfinance Bank ENUGU
14 AKWENGWU Microfinance Bank KOGI
15 ALLIANCE Microfinance Bank ABUJA
16 ALLOVER Microfinance Bank LTD LAGOS
17 ALSTAR Microfinance Bank LTD LAGOS
18 ALTITUDE Microfinance Bank LAGOS
19 AMAIFEKE Microfinance Bank IMO
20 AMAZING GRACE Microfinance Bank OGUN
21 APEX GOLDEN Microfinance Bank LAGOS
22 APPLE Microfinance Bank LIMITED OGUN
23 ASABARI Microfinance Bank OYO
24 ASAGA-UKWU Microfinance Bank ABIA
25 ASCENT Microfinance Bank OGUN
26 ATTA NWAMBIRI Microfinance Bank IMO
27 BABURA Microfinance Bank EKITI
28 BALERA Microfinance Bank LTD KADUNA
29 BARNAWA Microfinance Bank LTD KADUNA
30 BERACHAH Microfinance Bank LAGOS
31 BEULAH Microfinance Bank LTD LAGOS
32 BIRAIDU Microfinance Bank KOGI
33 BIRNINN KUDU Microfinance Bank JIGAWA
34 BONNY Microfinance Bank RIVERS
35 BRISTOL Microfinance Bank LAGOS
36 BROADBASE Microfinance Bank Ltd DELTA
37 BROADVIEW Microfinance Bank LAGOS
38 CAPITAL Microfinance Bank Ltd ADAMAWA
39 CASHJET Microfinance Bank DELTA
40 CEDEP Microfinance Bank Ltd BAUCHI
41 CENTURY Microfinance Bank LAGOS
42 CHAT Microfinance Bank LTD KADUNA
43 CHIBUEZE Microfinance Bank ABIA
44 CIRCULAR Microfinance Bank EDO
45 CITIGATE Microfinance Bank LAGOS
46 CKC Microfinance Bank RIVERS
47 CLASSIC Microfinance Bank OGUN
48 COASTLINE Microfinance Bank DELTA
49 COMBINED BENEFITS Microfinance Bank OGUN
50 COMMON BENEFIT Microfinance Bank LAGOS
51 COMMONWEALTH Microfinance Bank LTD KADUNA
52 COMPLETE TRUS
T Microfinance Bank LAGOS
53 CONFLUENCE Microfinance Bank KOGI
54 CREDIT EXPRESS Microfinance Bank LAGOS
55 CROWNED EAGLE Microfinance Bank LAGOS
56 CUBIC Microfinance Bank EDO
57 CUTTING EDGE Microfinance Bank EDO
58 DAILY CAPITAL Microfinance Bank LAGOS
59 DANELS GLOBAL Microfinance Bank ABUJA
60 DANMUSA Microfinance Bank Ltd KATSINA
61 DIVINE Microfinance Bank RIVERS
62 DOGON DAJI Microfinance Bank SOKOTO
63 DUNAMIS Microfinance Bank LAGOS
64 DYNAMIC Microfinance Bank LAGOS
65 EAGLE FLIGHT Microfinance Bank DELTA
66 E-BARCLAYS Microfinance Bank ABUJA
67 EBEM-OHA Microfinance Bank ABIA
68 EBENATOR Microfinance Bank Ltd. IMO
69 ECB Microfinance Bank OSUN
70 EDS Microfinance Bank LAGOS
71 EDUEK Microfinance Bank Ltd A. IBOM
72 EKWEMA Microfinance Bank Ltd IMO
73 EMBRACE Microfinance Bank BAYELSA
74 EMEVOR Microfinance Bank Ltd DELTA
75 ENTERPRISE Microfinance Bank LAGOS
76 EQUATOR Microfinance Bank BAYELSA
77 ESTATE Microfinance Bank LAGOS
78 ETITI Microfinance Bank IMO
79 EVEREST Microfinance Bank Ltd ANAMBRA
80 EVO Microfinance Bank RIVERS
81 EWT Microfinance Bank ABUJA
82 EXCELLENT Microfinance Bank BENUE
83 EXPRESS Microfinance Bank ABIA
84 EZIMUZO Microfinance Bank Ltd ANAMBRA
85 FESTAC 77 Microfinance Bank LAGOS
86 FIELDREAMS Microfinance Bank LAGOS
87 FIRST HERITAL Microfinance Bank LAGOS
88 FIRST OMASI Microfinance Bank ENUGU
89 FREEDOM Microfinance Bank LAGOS
90 FUND EXPRESS Microfinance Bank LAGOS
91 FUT Minna Microfinance Bank Ltd NIGER
92 FUTO Microfinance Bank IMO
93 GALAXY Microfinance Bank Ltd DELTA
94 GAMJI Microfinance Bank Ltd KEBBI
95 GARDEN CITY Microfinance Bank RIVERS
96 GBOKO Microfinance Bank BENUE
97 GITICOM Microfinance Bank RIVERS
98 GOLDEN CHOICE Microfinance Bank RIVERS
99 GTI Microfinance Bank LAGOS
100 GWOROK Microfinance Bank LTD KADUNA
101 HARBOUR Microfinance Bank Ltd ANAMBRA
102 HAZONWAO Microfinance Bank LAGOS
103 HILLTOP Microfinance Bank EKITI
104 HOMELAND Microfinance Bank BAYELSA
105 I.C GLOBAL Microfinance Bank DELTA
106 IC Microfinance Bank LAGOS
107 IDAH Microfinance Bank KOGI
108 IDEAL TRUST Microfinance Bank Ltd ANAMBRA
109 IFONYIN Microfinance Bank OGUN
110 IGANGAN Microfinance Bank OYO
111 IHECHIOWA Microfinance Bank ABIA
112 IHIMA Microfinance Bank KOGI
113 IHITTE Microfinance Bank Ltd. IMO
114 IJARE Microfinance Bank ONDO
115 IKORODU DIVISION Microfinance Bank LAGOS
116 IKWUANO Microfinance Bank ABIA
117 IMPACT Microfinance Bank LAGOS
118 IMPERIAL Microfinance Bank LAGOS
119 IMSU Microfinance Bank IMO
120 INTEGRATED Microfinance Bank LAGOS
121 INVESTMENT Microfinance Bank ABIA
122 IPE Microfinance Bank ONDO
123 ISHIAGU Microfinance Bank Ltd ANAMBRA
124 ISUOFIA Microfinance Bank Ltd ANAMBRA
125 ITELE Microfinance Bank OGUN
126 IVIE Microfinance Bank EDO
127 IYEDE Microfinance Bank Ltd DELTA
128 JEGA Microfinance Bank Ltd KEBBI
129 JHN Microfinance Bank ABUJA
130 KARIS Microfinance Bank OGUN
131 KBS Microfinance Bank LAGOS
132 KERANA Microfinance Bank PLATEAU
133 KFC Microfinance Bank LAGOS
134 KOGI Microfinance Bank KOGI
135 KOREDE Microfinance Bank ONDO
136 KSF Microfinance Bank LAGOS
137 LALUPON Microfinance Bank OYO
138 LANDGOLD Microfinance Bank OGUN
139 LEGEND Microfinance Bank OSUN
140 LEKKI Microfinance Bank LAGOS
141 LIFT Microfinance Bank EDO
142 LOFTY HEIGHTS Microfinance Bank EDO
143 MARMARA Microfinance Bank TARABA
144 MAXITRUST Microfinance Bank RIVERS
145 MAYFIELD Microfinance Bank LAGOS
146 MCB Microfinance Bank LAGOS
147 MIC Microfinance Bank LAGOS
148 MILESTONE Microfinance Bank LAGOS
149 MOORGATE Microfinance Bank LAGOS
150 MULTIVEST Microfinance Bank OYO
151 MUNICIPAL Microfinance Bank ABUJA
152 MUSTASONS Microfinance Bank LAGOS
153 NAKOWA Microfinance Bank KADUNA
154 NATEX Microfinance Bank Ltd ANAMBRA
155 NDIOLU Microfinance Bank Ltd ANAMBRA
156 NEIGHBOURHOOD Microfinance Bank RIVERS
157 NEW GATE Microfinance Bank LAGOS
158 NEW IMAGE Microfinance Bank OGUN
159 NEWAGE Microfinance Bank ONDO
160 NEW-LIFE Microfinance Bank LAGOS
161 NEXUS Microfinance Bank Ltd NIGER
162 NGAS Microfinance Bank PLATEAU
163 NKPA Microfinance Bank ABIA
164 NKPOLU-UST Microfinance Bank RIVERS
165 NKPOR Microfinance Bank ANAMBRA
166 NSU Microfinance Bank Ltd. IMO
167 NSUKKA Microfinance Bank ENUGU
168 OBIOMA Microfinance Bank ABIA
169 OBOKUN Microfinance Bank OSUN
170 OBOSI Microfinance Bank Ltd ANAMBRA
171 OCON SUCCESS Microfinance Bank OGUN
172 ODU Microfinance Bank KOGI
173 ODUDUWA Microfinance Bank OSUN
174 OLIVE Microfinance Bank LAGOS
175 OLOMI Microfinance Bank OYO
176 OLOMOYOYO Microfinance Bank OYO
177 OMNI Microfinance Bank LAGOS
178 OMUMA Microfinance Bank IMO
179 OPENGATE Microfinance Bank AB
UJA
180 ORAEZUE Microfinance Bank Ltd ANAMBRA
181 ORIE-ORBA Microfinance Bank ENUGU
182 OSINA Microfinance Bank IMO
183 OSOMHE Microfinance Bank EDO
184 OTUN EKITI Microfinance Bank Ltd EKITI
185 OWENA Microfinance Bank OSUN
186 OWHOWHA Microfinance Bank Ltd DELTA
187 OYAN Microfinance Bank OSUN
188 PARALLEX Microfinance Bank LAGOS
189 PET Microfinance Bank RIVERS
190 PLANNET Microfinance Bank LAGOS
191 PRIMATE Microfinance Bank LAGOS
192 PRIME Microfinance Bank Ltd A. IBOM
193 PROLIFIC Microfinance Bank LAGOS
194 PROSPERITY Microfinance Bank EDO
195 REALITY Microfinance Bank OYO
196 RIGGS Microfinance Bank LAGOS
197 ROYAL Microfinance Bank RIVERS
198 SAMINAKA Microfinance Bank LTD KADUNA
199 SHIMAZ Microfinance Bank OSUN
200 SOLACE Microfinance Bank DELTA
201 SOUTH WEST IKOYI Microfinance Bank LAGOS
202 SOVEREIGN Microfinance Bank LAGOS
203 STANDEX Microfinance Bank ANAMBRA
204 TOKI RAINBOW Microfinance Bank RIVERS
205 TOUCHSTONE Microfinance Bank LAGOS
206 TRADERS Microfinance Bank LAGOS
207 TREASURES Microfinance Bank LAGOS
208 TRINITY Microfinance Bank Ltd A. IBOM
209 TRI-STAR Microfinance Bank ENUGU
210 UDEZUKA Microfinance Bank Ltd ANAMBRA
211 UFUMA Microfinance Bank Ltd ANAMBRA
212 UGHIEVWEN Microfinance Bank DELTA
213 UJOELEN Microfinance Bank EDO
214 ULI Microfinance Bank Ltd ANAMBRA
215 ULTIMATE Microfinance Bank LAGOS
216 UMUHU OKABIA Microfinance Bank IMO
217 UMUNZE Microfinance Bank Ltd ANAMBRA
218 UNIQUE Microfinance Bank LAGOS
219 UNIQUE TRUST Microfinance Bank Ltd. DELTA
220 URUALLA Microfinance Bank Ltd IMO
221 UTUGWANG Microfinance Bank CR. RIVER
222 UVWIE Microfinance Bank Ltd DELTA
223 VENTURE SUPPORT Microfinance Bank LAGOS
224 WIZETRADE Microfinance Bank LAGOS
