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Since the launching of the microfinance policy in 2005 by the Central Bank of Nigeria, it has brought about change in the financial landscape in the country. Though with its challenges, hues and cries it is undoubtedly true that the application of the microfinance concept can really make a change in terms of supporting micro, small and medium enterprises.


However, critics of the policy implementation process have argued that analysis of the share of bank credit to MSME’s have continued to decline from about 7.5 percent in 2003 to less than 1 percent in 2006 and a further decline in 2012 to 0.14 percent.


In a recent presentation by global human resources consultants and microdevelopment consulting, the growth of microfinance banks in Nigeria is tilted towards the south west zone with the highest concentration of microfinance banks and institutions while the north east zone has the lowest number of microfinance banks/institutions.


The presentation also revealed that 2007/2008 recorded the highest number of microfinance banks/institutions establishment increasing the total number of microfinance banks in the country to about 888 and microfinance institution to over 400.


Furthermore, the analysis show that microfinance banks clients rose from 273, 094 in 2005 to 1.7million in 2012 with female clients dominating transactions by a total of 46.2 percent growth between 2011 and 2012.


According to the report, sources of loans for MSME’s in Nigeria is put at Microfinance banks providing about 20 percent of loans while the cooperatives provides 31 percent, 27.6 percent from family members while friends provide the least with 21.5 percent, making financial cooperatives, financial NGI’s and trade associations – MFI’s the highest provider of loans in the economy.


More so, depositors in the microfinance subsector of the economy continued to remain on the rise from 200, 000 in 2005 to about 1.2million in 2012 increasing the value of deposits from 47 billion in 2005 to 86 billion by the end of 2011.


Equally on the rise is the employment generated by the microfinance subsector. At an modest estimation of 32 employees per microfinance bank, the total number of employees of the microfinance banks stands at 28, 416 direct jobs while Mfb clients are assumed to have created a total of 1.9million employees or more in the past 7 years.


From the foregoing, it is clear as the report also suggested that 93 percent of household enterprises reported a positive impact of microfinance on their activities and livelihoods.


However, sustainability issues in the microfinance subsector remain a challenge with staff efficiency, high administration costs and loan defaults needing urgent attention. On the overall the clients of microfinance gave an overwhelming pass mark in the performance of microfinance banks and institutions.


Interestingly, the participation of states in terms of providing the banks and institutions with productive policies and support funds is still a mirage.


Speaking to www.microfinance.ng Media Team, Comrade Ossai Ilome, Special Assistant on Media to ANMFIN’s National President expressed optimism in the future of microfinance in Nigeria but averred that the interest rates been given by the microfinance sector as indicated in the report might not be feasible. 


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