Nigeria Microfinance Banks Face Pressure as Fintech Grows

In Short

Nigeria microfinance banks are facing new pressure as fintech platforms grow fast in payments and lending. A key trigger is the Central Bank of Nigeria revoking 46 microfinance bank licences on July 1, 2026.

What Happened

Nigeria microfinance banks sit at the hardest end of “financial inclusion”, meaning serving people who have limited phones, limited internet, and long distances to bank branches.

This matters because Nigeria’s fintech boom is often measured by app sign-ups and digital transactions, but many rural customers still rely on human-led banking. A typical example is a farmer saving through a visiting loan officer, using a paper ledger and trust-based checks like character references, not app data.

The CBN action in July is not isolated. The regulator also revoked 179 microfinance bank licences in May 2023, alongside licences for four primary mortgage banks and three finance companies.

At the same time, Nigeria’s fintech platforms have scaled quickly. Moniepoint has been credited with a large share of digital payment volume and in-person PoS (point of sale, the card terminal used in shops) payments, and it processed hundreds of trillions of naira in 2025 while also disbursing over ₦1 trillion in small business loans. OPay reported over 45 million registered users and one million merchants. PalmPay also reported about 40 million users and one million merchants. FairMoney reported over ₦150 billion in SME loans in 2025.

Why It Matters

Nigeria’s financial inclusion rate reached 74% in 2023, up from 64% in 2020, and fintech deserves real credit for expanding access.

But inclusion is not only about digital rails. Many microfinance banks were set up to serve subsistence farmers, market women, and rural traders using community presence, local language support, and character-based collateral, which is lending based on trust and repayment history rather than formal assets.

If more microfinance banks shut down, the risk is that Nigeria grows digital payments in cities while losing the last-mile infrastructure that reaches people who are already “included” in practice, just not through apps.