Regulatory Alerts2018-10-26 | FPR/DIR/GEN/CIR/07/017Code of Corporate Governance for Microfinance Banks in Nigeria
The Central Bank of Nigeria (CBN) issued a circular on corporate governance codes for financial institutions, including microfinance banks. The CBN's Microfinance Policy and Regulatory Framework, introduced in 2005, aimed to support the development of the sub-sector. However, by 2014, some licensed Microfinance Banks (MFBs) faced insolvency due to poor governance and insider abuses. To address this, the CBN issued a Code of Corporate Governance for MFBs, defining minimum standards, promoting ethical practices, and enhancing public confidence. The code covers board responsibilities, shareholder rights, disclosure, risk management, ethics, and compliance, with sanctions for non-compliance. It emphasizes the separation of Chairman and MD/CEO roles and limits board tenure. MFBs must have a risk management framework and an approved conflict of interest policy. The CBN encourages timely and robust disclosures beyond statutory requirements and MFBs must establish a code of conduct.