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Finance for the Poor: An Assessment of the Performance of Microfinance Institutions in Nigeria

WA Ademu

Abstract


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




http://dx.doi.org/10.4314/afrrev.v6i2.28
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