2022 Microfinance Industry Report

Overview of the Report

Agusto & Co.’s Microfinance Industry Report is the most comprehensive and up-to-date report on the activities of microfinance banks in Nigeria with an in-depth review of the Industry’s operations, key trends, risk areas and how the macroeconomic climate influences the lending activities of players. Our report also examines the Industry’s competitive landscape, regulatory environment and financial conditions of selected operators.

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. With an estimated 39.9% of the adult population excluded from financial services and about 40.1% of the Nigerian populace living below the poverty level, the demand for microfinance services has maintained an upward trajectory over the last five years. Thus, the Industry plays a crucial role in achieving Nigeria’s financial inclusion goals and eradicating poverty by assisting the economically disadvantaged segments of the population, whose financial needs typically range between ₦10,000 and ₦1.5 million, and fall below the targeted client base for commercial banks. The Industry also provides financial services to MSMEs, across numerous industries such as trade, commerce, education, tailoring, carpentry, fishing, and transportation, that account for an estimated 96% of businesses in Nigeria.

We anticipate an increase in the size of the Industry’s loan portfolio in the near term, as operators continue to invest in technology to drive penetration in the relatively large financially excluded segment of the Nigerian population which will be supported by the rebound in business activity following the pandemic. Given that MFBs primarily serve low-income earners, the active poor, and micro, small, and medium-sized enterprises (MSMEs), who have historically been at the bottom of the income pyramid and are typically affected by adverse macroeconomic variables, the Industry’s portfolio at risk is expected to remain above our 5% benchmark in the short to medium term. This is largely attributable to the rapid origination of loans in a high-risk environment in 2021 and the challenging macroeconomic climate.

Our Microfinance Banking Industry Report answers questions on:

  • Industry structure and operating dynamics
  • Strengths, weaknesses, opportunities and threats within the Industry
  • Key success factors
  • Regulation and regulatory developments
  • Outlook for the Microfinance Industry
  • In-depth review of the important role played by the Microfinance Banking Industry in Nigeria
  • Examines the Industry’s structure, focusing on the various segments.
  • Analyses the competitive profile of key operators within the industry
  • Examines prevalent risks within the Industry
  • Tracks key regulations, industry trends and opportunities