Challenges of Microfinance Banking in Nigeria

Topics: Microfinance, Muhammad Yunus, Grameen Bank Pages: 5 (1597 words) Published: January 26, 2012

Nigerians, like many other Africans are generally known as their brother’s keepers in view of the extended family system. But when truly analyzed, there is a possibility that this may not be so? Perhaps a hypothetical deep may reveal that not up to 10% of Nigerians would invest in ventures or people that would yield them nothing in return and here I mean, “Returns in the short run or in the immediate”. The returns may be financial, emotional, spiritual, relational or social. But fact is, there is something the investors expect in return when they give and these could include being worshipped as personal heroes, fear of harassments, fear of being harmed, for family ties, religious ties, being perceived as a caring corporate organization with the intent of bigger business tickets etc. Hardly do the “Nigerian rich” set aside a portion of their riches for the “unknown poor” or for true charity except such gifts are meant to make them be seen by the Society or Divinity as good or circumvent some threatening harms etc.

This anti-poor behavior is projected into organizations; corporate, social, religious and sometimes even Government and parastatals as people see only the short end of developments without heeding the social woes of economic imbalance and insecurity.

Consequent upon my above beliefs, I may classify the challenges of Microfinance banking in Nigeria under five (5) main headings:


As a background to the undeniable problem of communication for effective microfinance, listen to this quote by Stan Paris on his article on Microfinance As A Means of Reaching The People “Problems of communication are endemic in the industry, dating back to what could be considered the first micro-loan. In 1976, Muhammad Yunus, a young economics professor at Chittagong University, Bangladesh, took his students into a small village where he discovered a woman crafting beautiful stools out of bamboo. He inquired what the woman earned for her work after repaying the trader from whom she borrowed. She told him she earned the equivalent of 2 cents in net profit. Yunus was appalled. He wanted to help her find a means of financing that would allow her to make more net profit. But, first, Yunus had an enormous communication barrier to overcome. That was a time in Bangladesh when women didn't touch money and didn't talk to men, explains Sam Daley-Harris, director of the Microcredit Summit Campaign, an important facilitator of dialogue in the industry. Yunus had to have a female student ask the woman a question, then return to tell him the answer. There were barriers of communication even in explaining the value proposition." Truth is that today, communication barriers exists heavily in Nigeria particularly given that even within a State, there exist as many languages and dialects as exists ethnic groups. Also, high level of illiteracy even among the educated who fails to read important things that would enable them take positive steps towards personal, interpersonal and national development. I recall given many flyers of Elim Kit “n” Kin to a friend of mine who is well educated and is on a billion naira business locally and international. This guy was in a church service when a play-lets on Kit “n” Kin was delivered by a group of young people. But after the service, he approached me on how to go about empowering a friend he wants to help and when I suggested kit “n” Kin, he asked me what that was? Obviously, my educated friend neither read the flyer which is comprehensive and explanatory nor listened to the play… lies the problem of many Nigerians of all classes, hence my concern for communication on micro financing.

Lets now look at some of areas of specific communication challenges in Nigerian Microbanking
In adequate awareness campaigns and supports by the regulators: The CBN and the NDIC as Federal Government’s engine of...
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