Field Assessment Report of the Nigerian Microfinance Industry
This paper is based on a study carried out on microfinance (MF) in Nigeria and presents a brief background of the growth and development of the MF sector in Nigeria. The MF sector in the country is dominated by two microfinance institutions (MFIs), the Farmers Development Union (FADU) and Countrywomen's Association of Nigeria (COWAN) who have more MF clients than all but a handful of MFIs worldwide.
Some of the findings of MFI sector that this paper presents are:
- Most pursue multi-sector, socially oriented approaches to community development, offering training, education and health services, in addition to MF lending and business development services;
- MF strategies are based on traditional informal and semi-formal savings and credit;
- Large areas, particularly north-west and north-east Nigeria, are unserved by MFIs;
- Savings mobilization remains under developed.
The authors recommend:
- Expand and improve service delivery by retail institutions:
- Provide performance based support,
- Encourage specialization,
- Develop systems.
- Improve MFI sector and support Nigerian MFI network:
- Develop best practices framework,
- Provide technical assistance and training,
- Support market research and new product development.
- Improve Donor coordination:
- Coordinate support to retail and wholesale MFIs,
- Support implementation best practice.
The authors conclude that existing contracting mechanism and resources should lay based for expanded long-term involvement by USAID. The focus should be on business development services, umbrella capacity building contract, grants and cooperative agreements and technical and financial support.
