Microfinance Banking in Nigeria: How We Have Faired and the Challenges for the Future
This paper assesses the lack of progress of microfinance banking in Nigeria. It urges Nigerians to give efficient microfinance a fair chance.
Microfinance has not been successful in Nigeria due to rejection by the elite and middle class, government insincerity and involvement in microfinance funds disbursement, competition from commercial banks, lack of regulatory support, dishonesty of the population, dearth of collateral security and negative media publicity.
For effective microfinance banking in Nigeria, the paper recommends government support in ensuring that only microfinance banks disburse and collect poverty alleviation funds. It also recommends that:
- Central Bank of Nigeria (CBN) only give licences to those microfinance banks that have stood the test of time and stop licensing commercial banks for microfinancing;
- CBN find ways to control microfunds activities of various state governments that misappropriate funds;
- Microfinance lenders tighten their lending standards;
- Small and medium scale entrepreneurs be empowered to provide jobs and contracts to the poor;
- Nigerian borrowers become accountable and start taking advantage of group borrowing opportunities;
- Elite in Nigeria invest their wealth in poverty alleviation;
- Borrowers be honest;
- Press be positive when writing about microfinance.