Microfinance institutions in Nigeria have been accused of neglecting the people they were set up to help: the country’s impoverished majority. How can the situation be rectified so that the needs of the nation’s poorest are best served? Hughes Nneike investigates
The long term target of the Central Bank of Nigeria (CBN) in floating the Microfinance Policy, Regulatory and Supervisory Framework in 2005 was to stimulate economic growth and create funding for the nation’s economically active poorer people. This was further emphasised in the 2011 revised policy document, which states that the potential of microfinance banks in poverty reduction, economic growth and development remains high and potent.
The policy document, which led to the emergence of fast-growing microfinance institutions (MFIs) across the nation, effectively put the issue of microfinance banks on the political agenda of Nigeria. Nothing short of a policy like this is required in a country where a 2007 survey by the Federal Bureau of Statistics showed that 92.4 per cent of Nigerians survive on less than $2 a day.
In the same vein, the Millennium Development Goal report of 2008 also showed that 54.4 per cent of the Nigerian population is “poor”, while 35 per cent are “extremely poor”. Generally, the two separate surveys revealed that increasing Nigerian poverty was traceable to the absence of social infrastructure and adequate and structured financing for those poorer Nigerians with entrepreneurial spirit.
Available statistics also revealed that in spite of the 1,020 microfinance banks and institutions licensed between 2006 and 2010 by the CBN, cumulative micro-credit services remain at less than 10 per cent of the aggregate national demands. This throws up a number of questions, such as: how many microfinance banks are needed to meet the needs of the poor? Are the existing microfinance banks really practicing microfinancing? Other issues revolve around whether the regulatory bodies are looking at the proportion of poor clients being funded by the dedicated microfinance banks.