CBN Considers Capital Raise for Microfinance Banks

The Central Bank of Nigeria (CBN) is contemplating a capital raise for microfinance banks (MFBs), which has led operators to focus on strengthening corporate governance. Mr.

Franci Aki, the chairman of the FCT chapter of the National Association of Microfinance Banks (NAMB), highlighted that without robust corporate governance, MFBs would struggle to comply with basic regulatory requirements. He noted that the CBN is considering increasing the minimum share capital for MFBs, although no formal request for capital raising has been made yet.

Aki emphasized the need for proactive measures to prepare for potential capital increases. The NAMB chairman also pointed out that microfinance banks contribute 95% of total lending in the industry and account for 85% of point-of-sale transactions in Nigeria.

Dr. Victor Dare, founder and CEO, remarked that weak corporate governance has led to the collapse of financial institutions in the past.

The article stresses the importance of governance in ensuring sustainable profitability and compliance within the microfinance sector.