The Central Bank of Nigeria to Establish MFI Fund

Tuesday, January 18, 2011

The Central Bank of Nigeria (CBN) says it will establish a microfinance development fund to promote accessibility to financial services for low income earners, just as it is planning a review of the 2005 Microfinance Policy.

Kingsley Moghalu, the deputy governor, financial system stability, said this yesterday at the opening of the 5th Annual Microfinance Conference and Entrepreneurship Awards, adding that the policy review would be announced soon.

Mr. Moghalu said the policy is currently at the final stages of internal approval, to help deepen Central Bank support to microfinance institutions and promote financial inclusion services for micro, small, and medium enterprisers in the country.

Acknowledging the recent revocation of the operating licences of 224 microfinance banks as controversial decision, he, however, said it was a necessary action, describing the operational environment of microfinance as regulated space, which operators must learn to play by the rules to protect the interest of most Nigerians in the low income groups.

“Promoting micro credits and savings is what Nigeria should be doing. That is why the CBN has been promoting financial inclusion by initiating a number of steps in recent times to bring financial services closer to the people, including the new mobile banking licences, establishing the non-interest banking, publishing the framework for Islamic banking, introducing a new banking model that emphasises a wider spread of financial services to Nigerians, including regional banks,” he said.

He reminded government about the importance of vigorously pursuing the power sector reforms as well as development of a reliable transport infrastructure, pointing out that though these are related directly with CBN’s work, their absence will make the financial system unstable and credit unaffordable.

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