Microfinance Banks as Panacea for Poverty Alleviation in Nigeria: A Critical Analysis

International Journal of Research and Innovation in Social Science (IJRISS) | Volume III, Issue VII, July 2019 | ISSN 2454–6186

Microfinance Banks as Panacea for Poverty Alleviation in Nigeria: A Critical Analysis

Chief Ajugwe, Chukwu Alphonsus PhD.
Ajugwe Chukwu and Associates, Nigeria

Abstract: It is instructive to emphasis that Microfinance Banks (MFBs) by offering microcredits facilities and other banking services to the poor households which hitherto have been denied them by the Deposit Money Banks (DMBs) have helped to a very great extent to alleviate poverty to appreciable level. The importance of the MFBs is much more pronounced when such banking services are delivered to them seamlessly, devoid of rigidities, affordable and timely. The value driven strategy is a critical success factor of ensuring constant stream of income to the very poor. Furthermore, it is envisaged that such financial assistance will help them to provide their basic needs of their families and to educate their children as well and offer them the necessary impetus to break away from the vicious circle of poverty they are currently trapped. However, underpinning the fact that such banking services are not delivered to the beneficiaries at exorbitant costs, which may alternatively lead them to debt-trap. The above arguments as presented have offered the opportunity for the research of Microfinance Scheme to receive a significant boast from the research community.
In view of the above, the article will critically examine the positive impacts of the MFBs, the challenges that are preventing MFBs not achieving the loft objectives and the key suggestions and recommendations to ameliorate the challenges will be highlighted in this paper as well.

I. INTRODUCTION

One of the core objectives of the Developing Countries of which Nigeria is inclusive is to reduce poverty to the barest minimum, with the intention to prevent social upheaval, install social harmony and engender even distribution of income. Closely related to this, is the believe by the Developmental Economists that growth without development cannot impart positively on the people, more especially to the poverty stricken populace which constitutes the majority of the population in Nigeria. This is despite the huge mineral resources Nigeria endured with.
One of the strategies to achieve these loft objectives is the introduction of the Micro –finance Banks in Nigeria (MFBs). The Central Bank of Nigeria (CBN) in December, 2005 introduced Microfinance Policy Framework whose main thrust is to enhance the access of micro-entrepreneurs and low income households to financial services required to put them on track to economic productions.

Read More