Nigerian Microfinance Banks Threatened by Call for Increase in Capital Base
Bangudu, O.

The banking industry may face another liquidity strain if microfinance banks are to implement the Central Bank's proposal to shore up their capital base. “That would be very difficult, especially for now because of what is happening in the financial industry,” said Francis Akpudi, managing director, Solace Microfinance Bank. He added that though the idea is a good one, it will be very challenging meeting it in view of the financial situation in the country.

The Other Financial Institutions Department (OFID) of the Central Bank of Nigeria (CBN) announced that microfinance banks should increase their capital base above the current NGN20 million (US$133,000). Olufemi Fabanwo, the acting director in charge of OFID said that the development became necessary due to the present challenges facing the microfinance banks in the country. While commending the CBN's decision, experts are however of the view that there is still more to be done to improve the services of the microfinance banks.

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