Business a.m.

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

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

- Charles Abuede

AGUSTO & CO., INDIG ENOUS RE SEARCH 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.

In 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 banking sector in Nigeria has remained heavily reliant on brick-andmortar 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.

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 underbanke­d 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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