The Nigerian Legal and Regulatory Framework for Microfinance

Given the importance and growth of the fledgling microfinance industry in Nigeria, it has recently caught the attention of policymakers and the donor community. Recent efforts have been devoted to improving the policy, legal and regulatory framework for microfinance. The objective of this note is to highlight strengths and weaknesses of the current system as well as recent and ongoing changes in the legal and regulatory framework for microfinance, namely:

• The drafting of a national microfinance policy, specifically the draft national microfinance policy that has been under development for the last three years. The latest draft includes the basic legal underpinnings for regulation and supervision of microfinance providers. It is now under review by the Governor and Directors of the Central Bank of Nigeria (CBN);
• Proposed changes to the Small and Medium Industries Equity Investment Scheme (SMIEIS) Program in order to increase access to lending by farm and non-farm micro, small and medium-scale microenterprises;
• The introduction of measures to promote consolidation within the banking industry, including new capitalization requirements for commercial banks.