In 2009, Sanusi Lamido Sanusi was appointed the CBN governor and he introduced more reforms in the financial sector. He unveiled a ten-year reform blue print anchored on four cardinal reform programmes for the stabilisation of the banking sector and the finance sector in general. According to him, the four cardinal programmes for the sector's transformation involves enhancing the quality of banks; establishing financial stability; enabling healthy financial sector evolution and ensuring that financial sector contributes to the real economy.
Over the years, the government has drafted policy initiatives on the provision of microfinance services in Nigeria. In January 2008, the Central Bank of Nigeria (CBN) put into effect its new National Microfinance Policy which aims to enable microfinance institutions (MFIs) to act as new sources of development. The policy is part of the reforms designed to ensure that operators are better positioned to perform their primary role of financial intermediation.
Under the regulatory and supervisory framework for microfinance banks, the CBN stated that there shall be two categories of licenses available for promoters (both local and foreign) of Micro Finance Banks based on geographical coverage.
The first category would be Micro Finance Banks licensed to operate as a unit bank (also known as community banks) and which shall operate and open branches within a specified local government area (LGA). The minimum capital requirement is N20 million or such amount as may be prescribed by the CBN from time to time.
The second category would be Micro Finance Bank licensed to operate in a state and open branches within a specified state or Federal capital territory and the minimum capital requirement of N1billion only is required or such an amount as maybe prescribed by the CBN from time to time.
As at the end of 2009, there were over 900 Micro Finance Banks registered with the CBN but a significant percentage of the banks are no longer in business. The problems of the Micro Finance Banks range from corporate governance issues to corruption on the part of management, to poor capacity, high overhead costs some of which are borne from the banks operating like universal banks with large workforces and offers of unsustainable remuneration and benefits to their staff.
In the insurance sector, capital base requirement for life insurers was raised from 150m Naira to 2bn Naira, general insurers to 3bn Naira from 200m Naira, and for re-insurers it moved from 350m to 10bn Naira. This sub-sector offers insurance cover for various types of risks. Most non-life businesses cover risks such as fire, burglary, marine, accident, engineering, workmen's compensation and loss of income; while most life businesses offer life assurance.
The composite business, which has a new minimum capital base of N5bn Naira (2bn Naira for life assurance and 3bn Naira for general insurance), is growing rapidly with significant number of insurance companies now underwriting both life and non-life risks. The business is expected to grow even more with the passage of the oil and gas local content policy, as the insurance companies are expected to handle a huge part of the underwriting in Nigeria.The financial services industry is highly regulated by the following bodies: The Nigerian Accounting Standard Board, Central Bank of Nigeria, Nigerian Deposit Insurance Corporation, National Insurance Commission, amongst others.
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