2025 Nigeria’s Microfinance Industry Report

Overview of the Report

Microfinance banks (MFBs) in Nigeria play a vital role in the country’s economic development by providing small loans, savings accounts, and other essential financial products to low-income earners, micro-entrepreneurs, and small businesses that are typically excluded from traditional banking systems. Through these services, MFBs empower the ‘excluded’ to enhance their livelihoods, foster economic growth, and contribute to the nation’s financial inclusion efforts.

According to the data gathered by the Central Bank of Nigeria, the Industry’s total assets stood at ₦2.8 trillion as at the end of June 2024. This represented a considerable 91.3% growth from ₦1.5 trillion in the corresponding period of the prior year, largely driven by the significant 168% increase in deposit liabilities to ₦1.3 trillion, which funded the bulk (44.7%) of the Industry’s total assets as at 30 June 2024. Agusto & Co. attributes the significant growth in the Industry’s deposit liabilities to the greater reliance on term deposits in 2024, which operators priced aggressively to attract financiers in a period of elevated investors’ appetite for fixed-income instruments due to rising yields in the financial markets. This is coupled with the increasing use of technology in the Industry to drive cheaper savings and demands deposits. The considerable growth in the Industry’s funding base also translated to a notable expansion in the loan portfolio, with net loans and advances rising to ₦1.3 trillion as of 30 June 2024, which represented a 27.5% year-on-year increase.

However, we note that in the 2024 FY, macroeconomic headwinds especially inflation significantly constrained growth in the Industry. Simultaneously, in response to the heightened inflationary pressure, the CBN has continued to raise its monetary policy rate (MPR), which sits at 27.25% as at 28 February 2025. This has led to a sustained rise in borrowing costs for both MFBs and the clients, which we do not expect to subside in the near term.

This report provides information on the Nigerian Microfinance Banking Industry. Our report reviews the size, structure, trends and performance of the Industry; competitive landscape and market opportunities and the regulatory environment.