Many Nigerians are nervous about putting their money into Microfinance Banks (MFBs). We often hear stories of small banks closing their doors or “disappearing” with people’s hard-earned cash. However, when we look at the safety of Microfinance Banks in Nigeria, it is important to separate the regulated, professional banks from the informal “money lenders” who operate without a license.
Regulation and Insurance
The first thing to know is that legitimate Microfinance Banks are licensed and supervised by the Central Bank of Nigeria (CBN). Just like the big commercial banks (like Zenith or GTBank), MFBs are also covered by the Nigeria Deposit Insurance Corporation (NDIC). This means that if a licensed MFB fails, the NDIC will step in to pay depositors up to a certain amount. To stay safe, always check if the bank has a physical office and if their license is displayed on the wall. If a “bank” only exists on a WhatsApp group or a shady website, stay away.
The Role of MFBs in the Community
MFBs are designed to help small traders, farmers, and artisans who might find it hard to get service from big banks. They are generally safe for daily savings and small business loans. However, the safety of Microfinance Banks in Nigeria also depends on the customer’s common sense. Be wary of any MFB promising “double your money” in one month. Real banks don’t offer magical returns. They offer standard interest rates. If the profit sounds too good to be true, it is likely a scam, not a real bank.
Microfinance banks are safe as long as they are licensed by the CBN and insured by the NDIC. They play a vital role in helping small businesses grow. As long as you do your “due diligence”—meaning you check their reputation and avoid “get-rich-quick” schemes—your money is as secure there as it is anywhere els