Microfinance banks register slowdown in loan growth – Nairametrics

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The microfinance banks in Nigeria (MFB) collectively recorded a total private sector loan of 761.4 trillion naira as of June 2021. According to provisional data from the Central Bank of Nigeria. This follows a similar contraction in February and the second in about 10 months.

The slowdown is a sign that the aggressive growth of microfinance bank loans is entering the maturity phase as borrowers go into debt without increasing their income accordingly. Microfinance banks have continued to aggressively generate loans in recent years, reaching N 567 billion in 2020, more than 80% more than reported in 2019. Leverage technology to perform profiling , boost marketing and advertising, targeting working class Nigerians.

However, the latest drop is the first slowdown this year and since we started tracking the data. In May, the CBN reported a total loan to the private sector of 761.4 billion naira compared to 798.3 billion naira in March, an increase of 38.6% and the highest monthly gain since June 2020. However, the April figures were 847.6 naira. billion, the highest on record. The central bank has not disclosed the reasons for the slowdown.

Microfinance banks do not disclose their data either.

Why this is important: A slowdown in loan growth could be due to a number of reasons. However, this suggests that borrowers are worried about the state of the economy and their finances. Interest rates on loans are also on the rise as the central bank adjusts monetary policy targets to reduce the impact of negative real interest rates on risk-free public investment.


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