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Number of licensed microfinance banks reduces by 12.7% in 1 year

The number of licensed microfinance banks in Nigeria dropped by 12.7 per over the past t one year.

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CBN, Key lending rate, CBN to boost creative industry with N22 billion , CBN increases LDR to 65%, sets December deadline, External reserves drop by $3.2 billion in Q3’19 , Banks' loans to Oil and Gas, Power, other sectors drop by N411.8 billion 

The number of licensed microfinance banks across the 36 states of the country and Federal Capital Territory (FCT), have dropped by 12.7 per cent in almost one year.

According to report that was published recently on the CBN website, the number of licensed microfinance banks in the country dropped from 1,028 in May 2018, to 898.

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What may have influenced the drop?

Recall that the apex bank had earlier made known its intention to revoke the licences of some microfinance banks. As earlier reported by Nairametrics, the CBN, last year announced its plans to revoke the operating licences of 182 financial institutions operating in the country.

This announcement came barely a week after its revoke Skye Bank’s operating license.

The affected MFBs, according to the apex bank, cut across different states of the country include. A total of 154 microfinance banks were affected, as were 6 primary mortgage banks, and 22 finance companies.

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The apex bank had gone on to state that 62 of the microfinance banks had already closed shops; seventy four became insolvent, twelve were terminally distressed, while while six voluntarily liquidated.

Why microfinance banks can’t be sidelined

Robust economic growth cannot be achieved without putting in place well-focused programmes that increase access of poor and low-income earners to factors of production, especially credit. Microfinance is about providing financial services to the poor who are traditionally not served by conventional financial institutions.

In Nigeria, a large percentage of the population is still excluded from financial services. The Lagos Business School had revealed in a study that 43 per cent of Nigerians are financially excluded.

In its financial inclusion report, which was launched in Lagos, the LBS noted that only 49 per cent of Nigerians owned bank accounts. It said eight per cent of Nigerians owned a mobile money account, while 36 per cent used informal financial tools.

Addressing the need for every meaningful Nigerian to get financial inclusion, Bowen Microfinance Bank said sidelining microfinance banks will undermine Nigeria’s financial inclusion strategy.

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Meanwhile, the CBN had set a financial inclusion target of reaching 80 per cent of the total adult population by 2020, but presently, Nigeria is not on track to meet this target which was set out in the National Financial Inclusion Strategy (NFIS) of 2012.

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Famuyiwa Damilare is a trained journalist. He holds a Higher National Diploma (HND) in Mass Communication at the prestigious Nigerian Institute of Journalism (NIJ). Damilare is an innovative and transformational leader with broad-based expertise in journalism and media practice at large. He has explored his proven ability in the areas of reporting, curating and generating contents, creatively establishing social media engagements, and mobile editing of videos. It is safe to say he’s a multimedia journalist.

1 Comment

1 Comment

  1. Rotimi

    March 19, 2019 at 12:40 am

    “but presently, Nigeria is not on track to meet this target which was set out in the National Financial Inclusion Strategy (NFIS) of 2012.”

    To say the CBN is not on track to meet its 2020 target of 80% Financial Inclusion in my opinion is a deliberate attempt at not telling the whole story. Its like saying the CBN has no programmes or strategies of onboarding the financially excluded adults in nigeria, this will be misleading.

    Recently, precisely October 2018 the apex bank rolled out it’s guidelines for the licensing and regulation of PSBs (that is, Payment Service Banks). PSBs by design are the FINTECH equivalents of nigerian commercial banks. Like all other MDB, they will be allowed to generate deposits amongst the unbanked using technology. Unlike commercial banks, PSBs according to tje CBN guidelines are not allowed to grant credit / loans. So risk of default is zero.

    Also, we see their efforts at licensing MMO (Mobile Money Operators) and Agency Banking Operators. Already, these latter groups are onboarding otherwise excluded persons.

    Nigeria like any other emerging economies can do more and should do more, nonetheless we should give credit when due and hard knocks when necessary.

    It is my hope that the CBN will fast track the licensing of the PSBs so that the 2020 vision can stand a chance. Impact wise, the apex bank may not achieve its 80% target but conservatively I believe the PSBs can drive the National Financial Inclusion Strategy (NFIS) of 2012 from its current 43% to anywhere between 55-65%.

    Just my take.

    Rotimi

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Tech News

Tiktok’s In-App revenue surges amid lockdown

ByteDance Ltd’s brainchild, TikTok, together with Douyin ranking tops globally on mobile apps with the highest revenue generated for the month of April.

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TikTok announces $250 million pledge to aid combat coronavirus, Does YouTube stand a chance against TikTok?

The meme-making business has proven to be worth all the fuss, with TikTok, as well as its Chinese twin app, Douyin, ranking tops globally on mobile apps with the highest revenue generated for the month of April.

Sensor Tower, notes that just in the first quarter of this year, ByteDance Ltd’s brainchild, TikTok, together with Douyin which caters to the Chinese market, generated 315 million downloads globally, from the 187 million it had just a year earlier.

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The ranking, which was based on their in-app purchases, reveal a tenfold increase, as the companies garnered a whopping $78 million in revenue. The Chinese market is said to have contributed 86.6% of Douyin’s revenue, followed by the U.S market which contributed 8.2%.

This places them ahead of older names like Netflix & YouTube. As opposed to using subscriptions like these established brands, TikTok and Douyin allow users to purchase virtual currency to spend on their favorite content creators.

(READ MORE: Does YouTube stand a chance against TikTok?)

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While ByteDance is exploring the world of online commerce, it continues to rely on advertising as its primary income source. However, Emarketer projects that more than 75 million US social network users will make at least one purchase from a social channel in the year 2020.

 

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Business News

Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office

Some of the projects to be commissioned will be done virtually, while a few will be done on-site.

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COVID-19: Lagos State to begin curfew on Sunday to disinfect metropolis, Lagos state government discharges 7 more coronavirus patients, Lagos state will reverse to full lockdown, Sanwo-Olu to virtually inaugurate projects as he presents scorecard of first year in office

Lagos state governor, Babajide Sanwo-Olu, will virtually inaugurate housing, education, and road projects on May 29, as part of activities to mark his first year in office.

According to a report by NAN, the projects are part of the government’s efforts to renew infrastructure in critical sectors and to make the commercial centre a smart city.

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Some of the projects to be commissioned will be done virtually, while a few will be done on-site.

The projects

Lagos state Commissioner for Information and Strategy, Mr Gbenga Omotoso, listed some of the projects in an official statement. He said:

”In the education sector, Sanwo-Olu will conduct virtual inauguration of completed classroom blocks in Maya Secondary School, Ikorodu; Eva Adelaja Junior School, Bariga; and Saviour Primary School, Ifako-Ijaiye, among others. 

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“Virtual inauguration of completed works such as the Concrete Jetty in Baiyeku, Ikorodu, Aradagun-Ajido- Epeme Road in Badagry, and the Maryland Signalisation project also form part of the itinerary to commemorate the anniversary.”

(READ MORE: Lagos increases health workers’ allowances, commissions local production of face masks)

Omotoso also stated that the Governor would inaugurate the 360-unit Lagos Homes in Ikorodu, and then visit Igbogbo Baiyeku IIB Estate, Lekki, and the Courtland Villas on Femi Okunnu Estate during the week.

Plans for celebrating Children’s Day

 In a related development, Governor Sanwo-Olu will deliver an address on Wednesday May 27 to mark the children’s day celebration, and the 53rd anniversary of Lagos state.

Omotoso, however, noted that all celebrations would be kept on the low in reflection of the current challenges and realities of the COVID-19 pandemic.

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Presenting one-year scorecards

The activities for the week are expected to begin with press briefings at J.J.T Park in Alausa on May 27, where members of the State Executive Council will present their scorecards in line with the six pillars of the state’s T.H.E.M.E.S Agenda.

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(READ MORE: Lagos Medical workers call off strike, as IG sends strong warning to security agencies)

According to the information commissioner, there will be two sessions of press briefings daily from May 27 to June 3, as the Governor considers it expedient to render a stewardship account of the last one year.

“Three special publications highlighting the achievements of the Babajide Sanwo-Olu administration and testimonies of beneficiaries of various initiatives of the government are slated for presentation to the public by the governor and his Deputy, Dr Obafemi Hamzat,” he added.

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Around the World

Central banks digital currencies pose a threat against the U.S dollar

In general, digital currencies could weaken the power of U.S. sanctions and the ability of the U.S. Treasury to watch illicit financial flows.

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Central banks digital currencies pose a threat against the U.S dollar.

A new report by America’s biggest bank, JP Morgan Chase, said the U.S dollar is being faced with a major threat as many  central banks’ digital currencies continue to gain traction.

Analysts, including Josh Younger, the head of U.S. interest-rate derivatives strategy and Michael Feroli, the chief U.S. economist, wrote in a report saying this:

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“There is no country with more to lose from the disruptive potential of digital currency than the United States.

This revolves primarily around U.S. dollar hegemony. Issuing the global reserve currency and the medium of exchange for international trade in commodities, goods, and services convey immense advantages.” 

Aditi Kumar and Eric Rosenbach also recently penned an opinion piece for Foreign Affairs in which they noted that “Just recently, America’s arch-rival China became the first major economy to carry a real test of a national digital currency.”

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(READ MORE: Why the strong dollar is giving Nigeria headache)

In general, electronic currencies could weaken the power of U.S. sanctions and the ability of the U.S. Treasury to watch illicit financial flows. A digital Chinese currency (yuan) combined with China’s developed electronic payment systems may give China more future influence than it ever bargained for.  

What Nigerians should know about Digital currencies

A digital currency is a cash balance recorded electronically on a store value card or other physical devices, which could someday replace the physical notes of the naira, for instance.

Digital currencies can be decentralized, that is where the control over the cash supply can come from diverse sources. Digital  currencies can also be centralized, where there is a midway point of control over cash supply, just like the way central banks work.

Central banks digital currencies pose a threat against the U.S dollar.

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Although JP Morgan does not see the U.S dollar being overthrown as the world’s reserve currency anytime soon, experts warned that the U.S dollar dominance could weaken. This is because its processing trade settlement and the SWIFT system could make it more vulnerable.

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The American bank continued by saying:

“Offering a cross-border payment solution built on top of a digital dollar would, particularly if designed to be minimally disruptive to the structure of the domestic financial system, be a very modest investment to protect a key means to project power in the global economy,

“For high-income countries and the U.S. in particular, digital currency is an exercise in geopolitical risk management.” 

Federal Reserve Chairman Jerome Powell said months ago that the Federal Reserve was taking a critical view on the issues regarding a digital currency.

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