Finance for the Poor: An Assessment of the Performance of Microfinance Institutions in Nigeria
The introduction of microfinance in the Nigerian financial system is an attempt to provide the poor with access to micro-financial services. Micro-banks that are supposed to provide these services are faced with many challenges. Among these are: inability to reach a greater number of the poor; funding of commercial sectors at the expense of the poor‟s activities; lack of sufficient knowledge of the financial needs of the poor and in-depth understanding of the financial services requirements of the poor; lack of capacity of the clients to utilize the credit facilities and lack of institutional capacity of micro-banks for their own management and operations; the urban-biased location of these micro-banks across the country; the financial unsoundness of the MFBs. These challenges can be addressed by taking the following measures: adoption of more flexible credit procurement procedures by microfinance institutions; establishment of credit guarantee scheme by the federal government for the poor; building the capacity of micro-bank and that of the poor and their confidence in the formal financial institutions and making microfinance universal for commercial banks to participate.
Keywords: Microfinance, Assessment, Poor, Challenges