What You Need To Know About The Top Five Microfinance Banks In Nigeria

In the face of tough economic headwinds and operating business environment, there are Microfinance banks that have stood out in providing access to financial service and credit to individuals and businesses across different segments of the Nigerian economy.

Nigeria, with over 200 million population and only 64 per cent of the adult population that are financially-included, the microfinance industry is crucial in sustaining business and economic growth.

The number of Central Bank of Nigeria (CBN) licenced Microfinance Banks now stand at 916 comprising of National-licenced, State-licenced and Unit-licenced microfinance banks. The World Bank named Nigeria as one of the seven countries that contribute to half of the global unbanked population.

The demand for microfinance banking services in Nigeria is driven largely by the prevalence of the economically active poor population, the low literacy level, and the relatively high level of financial exclusion.

Microfinance Banks are licensed by the CBN to bring financial services closer to the low-income earners, unbanked and under-served groups like market women and unemployed youths through savings, lending, domestic fund transfers, among channels.

A report by BAA Consult titled: “Assessment of the Microfinance Market Dynamics and Competitive Landscape” listed five leading local Microfinance Bank players (Traditional and Fintechs) starting from LAPO Microfinance Bank Limited, NPF Microfinance Bank Plc, Accion Microfinance Bank Limited, Opay and Moniepoint Microfinance Bank Limited.

These Microfinance banks continue to provide essential financial services to low-income earners, the banked, unbanked and under-banked within the economy and are ranked in this order:

Number 1: LAPO Microfinance Bank Limited

On competitive advantage, LAPO Microfinance Bank remains an industry leader with huge access to funds, focuses on women-led MSMEs and public sector, using group lending methodology.

This bank was established in the 1980s, to help less-privileged Nigerians cope with the harsh economic realities that followed the Structural Adjustment Programme under General Ibrahim Babangida. Since then, LAPO Microfinance has grown into one of Nigeria’s most notable MFBs, thanks to its consistent effort at ensuring that low-income households in Nigeria are economically empowered.

The bank has over the years, instituted key strategic partnerships with Development Finance Institutions, USAID, The United Nations Sustainable Development Goals, Non- governmental organizations, other corporate firms.

The bank has disbursed N74 billion loan as of June 2023 and targets N200bn loans by this year-end. It has 24 per cent industry loans and advances, 12.8 per cent industry deposits and 15.6 per cent industry total assets.

Number 2: NPF Microfinance Bank Plc

NPF Microfinance Bank Plc which is largely serving a closed police community has carved a niche for providing low interest loans to MSMEs. Despite its large loan portfolio, the bank’s low non-performing loans rate shows the professionalism and sound judgement it brings to lending to wide range of clients in commercial centres.

Incorporated on 19th May 1993 as a Limited Liability Company under the Companies and Allied Matters Act Cap C20LFN 2014, the NPF Microfinance Bank (formerly NPF Community Bank Ltd) provides Banking services to both Serving and Retired Officers and Men of the Nigeria Police Force, its ancillary institutions and the general public.

International Finance Corporation estimated a sum of $32.2bn financing gap in Nigeria MMSEs, and that is part of the huge market that the NPF Microfinance Bank has continued to serve.
The NPF Microfinance Bank’s financial results for the first quarter of 2023, showed 171.5 per cent increase in profit to N645.94m, higher than N242.79m posted in the same period of 2022.

According to its financial results filed with the Nigerian Exchange Limited, the bank also grew its gross earnings by 62.79 per cent to N2.28bn from N1.47bn.
A breakdown of the interest income revealed that loans and advances rose to N2.052bn from N1.26bn within the period under review.

The financial institution grew its assets by 24.90 per cent to N43.09bn in the review period as total liabilities stood at N31.22bn from N23.92bn, a 30.53 per cent increase

NPF Microfinance Bank is listed on the Nigerian Stock Exchange (NGX) since December 1, 2010.

Over the years, it has expanded its services to include current & savings account, Treasury products and Services, electronic banking, non-financial services, remittances, salary advance and credit services.

Today, it is a full-service financial institution with a national presence with a total of 49 branches spread across all states in Nigeria; five electronic channels – cards, internet banking, mobile banking, USSD and agency banking.

The Managing Director of NPF Microfinance Bank, Akinwunmi Lawal, described the achievement of the bank as remarkable.

He said, “We marked our 30th years of existence growing from Community Bank to a National Microfinance Bank with a vision of transforming to DMB.

The Bank was rated ‘BBB+” for long term and ‘A2’ on short term respectively by GCR & Augusto & Co.”

He said the bank’s gross earnings improved significantly during the year, noting that it made contributions to charitable and non-political organisations in all our 3 regions.

“The Bank received several awards which includes ‘The Most Impactful MSMES Lending in the North -West of the Country’ presented by DBN; and Nigeria Microfinance Platform presented to NPF Microfinance Bank the ‘Most Supportive Microfinance Bank of the year’ – Capacity Building Category 2023.

“Our collective efforts have resulted in significant milestones, demonstrating our commitment to excellence,” he added.

Number 3: Accion Microfinance Bank Limited

Accion Microfinance Bank Limited has large pool foreign and local partners, is MSMEs focused, and has access to cheap funds through aggressive deposit mobilisation.

The market for Microfinance industry continues to grow as most countries design plans to eliminate extreme poverty by 2030.
The bank has 1.29 per cent of industry loans, 0.93 per cent of industry deposits, and N1.07bn Profit Before Tax in 2021.

Number 4: Opay

Opay is deepening financial inclusion through technology and enabling shared prosperity. It provides Swift operations, Point of Sale (PoS) merchant accounts and terminals to customers. Opay controls 563,262 PoS agents out of a total of 1.5 million agents in 2023.

Number 5: Moniepoint

Microfinance Bank Limited
Moniepoint Microfinance Bank Limited has wide-spread PoS terminals, loan services (10 per cent per annum), working capital loans, issued cards, digital wallets and payment gateway. Moniepoint is the second- largest network with 303,946 PoS out of a total of 1.5 million agents nationwide.

Global Microfinance Industry

According to the BAA Consult report, the global Microfinance industry was valued at $187.3bn in 2022 and is projected to reach a revised size of US$488.9bn by 2030, growing at a Compound Annual Growth Rate (CAGR) of 12.7 per cent over the analysis period 2022-2030.

The microfinance market continues to grow as most countries design plans to eliminate extreme poverty by 2030.