Legal Framework for Microfinance Regulation in Nigeria: Protecting Low-Income Borrowers in Ogun State

Microfinance institutions play a critical role in extending financial services to the underserved segments of the Nigerian economy, particularly low-income households and small enterprises that lack access to commercial banking. However, regulatory lapses in the microfinance sector have resulted in predatory lending practices, abusive debt collection, and institutional failures that have devastated borrower communities. This study examines the legal framework for microfinance regulation in Nigeria, assessing its effectiveness in protecting low-income borrowers with specific reference to Ogun State, South West Nigeria. A professional practitioner methodology was adopted, combining analysis of the CBN Microfinance Policy, Regulatory and Supervisory Framework of 2011 (as amended) with structured interviews conducted with microfinance bank compliance officers, CBN examiners, and borrower welfare advocates in Abeokuta and Sagamu. Secondary sources include CBN regulatory circulars, National Microfinance Policy publications, and academic literature from 2019 to 2024. Findings reveal significant gaps in borrower disclosure requirements, interest rate transparency, and enforcement of responsible lending standards. Many microfinance institutions operating in Ogun State operate with insufficient paid-up capital and inadequate credit risk management systems. Recommendations include mandatory borrower rights disclosure cards, interest rate caps for consumer microloans, and enhanced CBN supervisory presence in state-level microfinance markets. This research provides professional guidance for microfinance compliance management and regulatory policy in South West Nigeria. Keywords: microfinance regulation, low-income borrowers, CBN framework, Ogun State, responsible lending.