The microfinance banking sector in Nigeria has demonstrated remarkable resilience and growth, despite prevailing economic headwinds. The sector’s total assets surged to N2.795 trillion, reflecting a 91% year-on-year increase as of the end of June 2024. This impressive performance was highlighted during the 2024 Annual General Meeting of the National Association of Microfinance Banks (NAMB), held over the weekend in Abuja.
Key Performance Indicators
Mr. Joshua Ukute, the National President of NAMB, shared the sector’s performance highlights in his address. Key indicators included:
Total Assets: Reached N2.795 trillion, marking a 91% increase year-on-year.
Total Deposits: Rose by 168% to N1.25 trillion by the end of the second quarter of 2024.
Portfolio at Risk (PAR): Improved by 13.09%, now standing at 12.25%.
Liquidity Ratio: Increased to 65.46%, driven by enhanced lending activities.
Strategic Initiatives
Mr. Ukute attributed the sector’s robust financial and operational results to the Visibility, Impact, Capacity Building, and Self-Regulation (VICS) project. This initiative, launched by the executive council of NAMB upon his assumption of office two years ago, has been instrumental in driving growth and efficiency within the microfinance sub-sector.
“The last 12 months have been exciting as the microfinance sub-sector witnessed significant growth,” Mr. Ukute remarked. He emphasized that the VICS project has enhanced the sector’s visibility, improved impact through better service delivery, built capacity among microfinance institutions, and ensured stringent self-regulation practices.
Sector Resilience
The growth in total assets and deposits indicates a strong trust in microfinance banks from depositors and investors alike. The improvement in PAR and liquidity ratio signifies better risk management and financial health, enabling microfinance banks to extend more credit to small and medium enterprises (SMEs) and other underserved segments of the economy.
Conclusion
The microfinance banking sector’s remarkable performance amidst economic challenges underscores its vital role in Nigeria’s financial ecosystem. By continually improving its financial metrics and operational efficiency, the sector is poised to contribute significantly to the nation’s economic growth and development. The success of the VICS project reflects the sector’s commitment to sustainable growth and enhanced service delivery, ensuring that microfinance institutions can effectively support their clients and communities.
