Central Bank of Nigeria:: Microfinance

Microfinance

Robust economic growth cannot be achieved without putting in place well focused programmes to reduce poverty through empowering the people by increasing their access to factors of production, especially credit. Microfinance is about providing financial services to the poor who are traditionally not served by the conventional financial institutions.

In Nigeria, the formal financial system provides services to about 35% of the economically active population while the remaining 65% are excluded from access to financial services. The 65% are often served by the informal financial sector, through Non Governmental Organisations (NGO) – microfinance institutions, money lenders, friends, relatives and credit unions. The regulation of the activities of some of these institutions will help to promote monetary stability and a sound financial system.

The microfinance policy was introduced in exercise of the powers conferred on the Central Bank of Nigeria by the provisions of Section 28, sub-section (1) (b) of the CBN Act 24 of 1991 [as amended] and in pursuance of the provisions of Sections 56-60(a) of the Bank and Other Financial Institutions Act [BOFIA] 25 of 1991 [as amended]. The policy recognizes existing informal institutions and brings them within the supervisory purview of the CBN creating a platform for the regulation and supervision of microfinance banks (MFBs) through specially crafted Regulatory Guidelines.

Facts : 1/1/1900

BOFIA:In 1991, the Bank s and Other Financial Institutions Act (BOFIA) formerly BOFI was promulgated to replace the CBN Act of 1958 and the Banking Decree of 1969 (including later amendments). The policy brought the non-bank financial intermediaries under the supervision of Central Bank of Nigeria.

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Microfinance