Microfinance Bank What roles have they played in Nigeria?

It is the prime objective of a good microfinance bank to enhance the improvement of poor living conditions.

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Ogbete market, Enugu. play

Ogbete market, Enugu.

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To a greater extent, the possibility of poverty eradication in Nigeria might come to be upon the effectiveness of well-funded microfinance banks.

Admittedly, It is true that the transformation of rural environment is all about seeking to bring improvement in the living condition of fellow compatriots living within the confines of dilapidated and rustic economies of the rural towns and urban slums. The basis for employment generation and entrepreneurship development in the afore-mentioned areas, therefore, is to enhance the improvement of the living condition of the people.

Undoubtedly, this is the prime objective of the microfinance bank.

And, because it is also true that the importance of microfinance bank cannot be overemphasized, we have decided to highlight the roles they have played so far in Nigeria.

What are the roles of microfinance banks in Nigeria?

Microfinance Bank, What roles have they played in Nigeria?

1. Small scale enterprises booster: Based on statistics, 60 percent of the needful people in the country live in the rural areas and about 80 percent of them are farmers and artisans. The microfinance banks have therefore been the main sources of funding to these less privileged groups. Rural people are empowered through microfinance loans and services, and with this, small-scale agricultural practice and microenterprise are developed. And in other to increase and sustain the number of people going into small business, it has become necessary for the government to go into co-operatives to partner with the microfinance banks to raise bulk loans to be disbursed to the beneficiaries.

2. Improvement in skill acquisition: It can not be denied that as a result of the played role by microfinance banks, there has been an improvement in the conditions of women through the provision of skills acquisition and adult literacy. This has been achieved through building capacities for wealth creation among enterprising poor people and promoting sustainable livelihood by strengthening rural responsive banking methodology and the introduction of simple cost-benefit analysis in the conduct of businesses. In most cases an agreement of sharing profit is reached between the bank and the entrepreneur; and new methods and innovations are passed to the prospective entrepreneur by the banks professionals, while at the end of the production period the profit is being shared and the entrepreneur, if so wishes can continue on his own after the necessary skills and production techniques, are acquired.

Small/medium scale business play

Small/medium scale business

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3. The facilitation of poverty alleviation: When it comes to the effort of poverty alleviation, the two important factors that cannot be disdained are: employment and income generation. Thus, microfinance banks have accelerated the operation of government poverty alleviation programmes and in doing so, promising entrepreneurs are supported and new ones have been born. Also, other roles played by microfinance banks include; reorientation of the rural populace on a sound financial practice, as well as issues such as reproductive health care, and girl child education. All these areas have a direct link with entrepreneurial capabilities of the rural people.

4. Credit distribution: The art of credit distribution is the major act for which the microfinance banks are known for. With this process, the loans extended are used to expand existing businesses and in some cases to start new ones. According to the Central Bank of Nigeria, loans granted by microfinance to clients is increasing from 2007 to date and most of it goes to financing microenterprises in rural areas. Outstanding records have been made based on microfinance credit support. With this in mind, it is right to say that agricultural output will up shoot with the increase in funding.

ALSO READ: Governor to build microfinance bank for artisans, SMEs

 

 

 

 

 

 

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