Microfinance in Nigeria – part three
Microfinance institutions in Nigeria have been accused of neglecting the people they were set up to help: the country’s impoverished majority. Hughes Nneike investigates
Adesoji Tayo, the Grooming People for Better Livelihood Centre’s executive director, also identifies the hurdles that MFBs and MFIs face in being able to meet the need of critically poor Nigerians. According to Tayo, these institutions must ensure that loans and savings products must be simple enough to meet the needs of the poor: there must be simplicity in the repayment pattern; and lenders must ensure that they do not borrow more than they need.
The methodology employed must be one that will meet the needs of the poor; the office location and structure must be accessible to them and the staff must be friendly and transparent in order to encourage their clients. Pricing must be transparent enough for the poorest woman to understand, there must be no hidden costs; collateral should not be a consideration for a loan and repayment should be adapted to the frequency of income generation of the client.
Tayo further adds that the institutions must migrate to the next level in sourcing development seed funds, stressing that gone are the days when microfinance depended on grants and donations, as donors are now fatigued. The executive director says that nowadays financial institutions should be sustainable and they should meet the loan needs of their clients in a profitable manner and still serve a large number of the excluded poor. In his analysis he notes that Nigerian MFBs should develop to a point whereby they can attract funds from international microfinance vehicles.
He advises that there is no way grants can be enough to meet the needs of poor Nigerians except through the introduction of commercial funds. “While the poor people require our empathy, they do not require sympathy, it has been proven that they can make use of commercial funds and still marshal their ways out of poverty.”