CSOs Urge CBN to Review Revocation of 46 Microfinance Banks Over Financial Exclusion Fears

CSOs Sound Alarm: Kano Bears Brunt as CBN Revokes Licences of 46 Microfinance Banks

Civil society groups warn that the mass closure of 46 microfinance banks—13 in Kano alone—threatens to push thousands back into the hands of predatory lenders and reverse hard-won financial inclusion gains across northern Nigeria.

Kano, Nigeria – A coalition of civil society organizations (CSOs) has issued an urgent plea to the Central Bank of Nigeria (CBN), asking the apex bank to reconsider the socio-economic fallout of its recent mass revocation of 46 microfinance bank licences . With the northern state of Kano bearing the heaviest brunt of the regulator's crackdown, activists are warning that the move could deepen poverty and cripple small-scale enterprise in some of the nation's most underserved communities .

The CBN's decision to wield the big stick—which took effect on July 1, 2026—was aimed at "safeguarding the stability of the financial sector" and purging the system of insolvent and inactive operators . However, for ordinary Nigerians who rely on these lenders for daily survival, the decision is a recipe for a financial shockwave that could expose millions to the risk of predatory informal lending.

The Kano Conundrum

According to the joint statement signed by Bashir Shehu of the African Centre for Civil Rights and Hajiya Lami Garba of the Centre for Women Development Initiative, the impact is deeply uneven . Kano State previously hosted 40 licensed microfinance banks. The loss of 13 of them, including notable lenders like Bompai MFB, Now Now Digital MFB, and Kanopoly MFB, represents a devastating 32% loss of formal banking access points in the region .

The coalition argues that this decision effectively "cripples an already underserved zone" . In local government areas where conventional commercial banks refuse to set up branches, microfinance banks are the only lifeline for farmers, petty traders, and low-income families looking to save or access credit .

"The closure of these branches effectively cripples an already underserved zone, leaving thousands of low-income earners, rural dwellers, and small-scale entrepreneurs without viable banking options," the coalition warned in their statement .

A Regulatory Headache

The CBN, which announced the revocation under the powers conferred by Sections 12 and 13 of the Banks and Other Financial Institutions Act (BOFIA) 2020, cited damning infractions . A statement issued by the Acting Director of Corporate Communications, Mrs. Hakama Sidi-Ali, confirmed that the affected banks had failed to meet minimum capital requirements, were inactive, had insufficient assets to meet liabilities, or failed to start operations entirely .

The regulator justified the move as a necessary evil for the protection of depositors and the enforcement of compliance, stressing that "institutions that consistently fail to uphold these standards cannot expect to retain their licences indefinitely" .

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The Human Cost

Despite the regulatory rationale, the CSOs are pleading for a balance between enforcement and empathy . They fear that the rush to close these institutions will trigger a series of devastating socio-economic consequences:

• Erosion of Public Trust: The sudden closure of banks risks scaring away depositors from the microfinance sector entirely .

• The Predator's Gain: With formal doors shut, desperate rural residents will be forced to turn to informal "money lenders" charging exorbitant, often predatory, interest rates .

• Micro-Enterprise Collapse: The lifeblood of rural commerce—small business loans—is being severed, potentially stunting economic growth in the agricultural heartlands.

"While the CBN has a mandate to ensure financial stability, its actions must be balanced against the socio-economic realities of vulnerable populations," the groups argued .

What Happens Next?

Amid the chaos, the Nigeria Deposit Insurance Corporation (NDIC) has stepped in as the official liquidator, promising an "orderly resolution process" and "prompt" verification and reimbursement of insured deposits . The CSOs are pushing the Kano State Government, lawmakers, and the NDIC to ensure these reimbursements are transparent and immediate .

Meanwhile, industry leaders are using the situation to call for a "refresh" of the regulatory frameworks governing microfinance, suggesting that the current thresholds are outdated against the backdrop of inflation and naira devaluation . They argue that "preventive reforms and technical support for MFBs are far more beneficial than corrective actions that inadvertently widen the financial exclusion gap" .