Microfinance banks target growth as CBN reforms gain traction

Financial institutions are adjusting their balance sheets to meet higher capital thresholds, aiming to enhance credit delivery to underserved sectors. Henry Obiekea, Managing Director of FairMoney Microfinance Bank, stated that while capital itself does not transform economies, its deployment does. The sector-wide overhaul, which includes revised minimum capital requirements for various financial institutions, is designed to protect the financial system from macroeconomic challenges such as inflation and currency volatility.

Obiekea emphasized that the CBN's recapitalization program is a strategic investment to strengthen financial stability, deepen credit access, improve investor confidence, and support a more inclusive economy. Stronger balance sheets will enable Microfinance Banks to scale operations, upgrade technology, and bolster risk management, providing a clearer path to long-term funding for small and medium-sized enterprises. The transition relies heavily on technology to reach nano-businesses, informal traders, and remote communities, with regulatory expectations focusing on capital adequacy, consumer protection, and operational governance.

Obiekea noted that achieving meaningful inclusion requires collaboration among commercial banks, microfinance banks, fintech companies, and regulators. Whil