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The Month of Microfinance, April, claimed as an international day for microfinance clients gives the opportunity to highlight the contribution of Microfinance Institutions (MFIs), MFI’s in Nigeria, particularly, as it has to do with the recent rebasing of the Nigeria GDP viz a viz their impact on poverty reduction, job creation and social integration.


The fact that 2.5 billion individuals, according to World Bank report, still do not have an account in a formal financial institution while back home, Nigeria’s adult financial exclusion is put at 46.3% out of 84.7 million adults is a matter that transcend theoretical theatrics and hangs on practical pangs of living in Nigeria.


As the largest economy in Africa, having a millionth number of youth unemployment cast a shadow on whatever gains Nigeria ought to achieve with the rebasing of the economy if we don’t fold up our sleeves and get down to work. Thankfully, the Association of Non-Bank Microfinance Institutions in Nigeria, ANMFIN, and its members are currently targeting this important segment of the society by utilising the Group Risk Sharing and Guarantee formula, GRSG to provide loans to start-ups and enhance the youth’s micro economic activities thereby expanding the macroeconomic indicators.


Much more than a simple alternative to the conventional banking model the ANMFIN Group Risk Sharing and Guarantee formula promotes an essential contribution to social development and improved living conditions in communities and companies. Like all enterprises in the private sector, ANMFIN members constantly draw on their capacity for innovation and networking in order to meet the challenges they face.


If Nigeria must leapfrog from the parlous state of mass unemployment and experience practical GDP growth, the importance and the specific nature of ANMFIN members must be empowered with legal and legislative teeth by promulgating the Microfinance Act to support the CBN microfinance policy in order for them to fully assume their role in redefining the Nigeria economic development.


ANMFIN members as mostly represented by Cooperatives and NGO MFI’s have proven to be very resilient, for instance, it is on record that microfinance institutions weathered the financial crisis of 2008-2009 better than private banks. Nowhere, was microfinance institutions obliged to seek government aid. It is important to mention that during the entire crisis, microfinance institutions remained accessible and attractive to all.


While banks were slowing down their lending activities, microfinance institutions were able to continue lending which is essential for recovery, for example,  in the United States, credit volume increased by 6.7% in cooperatives while it decreased by 0.4% for banks while in Nigeria, sources of loans for MSME’s in Nigeria was put at Microfinance banks providing about 20% of loans while the cooperatives provided 31 percent, 27.6 percent from family members while friends provide the least with 21.5 percent, making financial cooperatives, financial NGO’s and trade associations – MFI’s the highest provider of loans in the economy.


A guarantee of financial inclusion and financial literacy, the ANMFIN members relies on collective ownership, local management and roots in the community and companies. As the age long practice of the Cooperatives, ANMFIN members are concerned above all with the welfare of their members and therefore do not seek profit at any price, but rather a fair price for quality services.


Most importantly, governance of ANMFIN members’ financial transactions is carried out by the members, in a democratic and transparent manner, contributing to educating, training and informing members and thereby helping them to better understand credit, evaluate their borrowing capacity and understand the commitments they make when they take out a loan.


A model worldly acclaimed as a major contribution to global socio-economic development, ANMFIN member institutions constitutes Inalienable collective wealth which creates sustainable local prosperity. They make it possible for all individuals, including the poorest, to take charge of their development and become independent.


A number of studies show that microfinance institutions participate in the creation of quality jobs and are a major driving force for economic growth due to their penchant to tilt their operations towards the needs of their members and clients.


For instance, in Burkina Faso, over 75% of individuals with access to financial services do business with the RCPB network of microfinance institutions. The biggest inclusive financial institution in the country, the RCPB provides 1.6 million members in both rural and urban areas with diversified and quality financial services.


Lithuanian Central Credit Union, the network of Lithuanian microfinance institutions or financial cooperatives is the only locally-owned financial institution in Lithuania, since all banks operating there are foreign owned. It therefore provides key leverage for the country’s socio-economic development.


Also, the Vietnam Association of People’s Credit Funds took inspiration from the cooperative model promoted by the Desjardins Group to set up a financial institution that could improve access to financial services. Today, the People’s Credit Funds constitute the biggest microfinance network in Vietnam. It has over 1,071 service outlets, most of which are in rural areas, reaching 1.6 million Vietnamese.


Available reports submits that sound practices and reliance on the savings and capital of their members as sources of financing gives these associations of microfinance institutions an independence which makes them more resilient to external shocks and is a guarantee of stability on the global financial landscape even as their roots in the community serves as a safeguard against excesses, risks and overly aggressive practices.


From the foregoing, I sincerely submit that it behoves on all Nigerians to encourage our millions of unemployed youths to seek for a way to belong to the large network of ANMFIN members in order to avail them the support required to overcome unemployment particularly as the network has set up the ANMFIN Trust Fund which is in furtherance of their ability to guarantee loans from commercial banks and other loan portfolios for its members.



Comrade Ossai Ilome is Media Assistant to Hon. Hamid Giwa Afolabi, the National President, Association of Non-Bank Microfinance Institutions in Nigeria and Honourable member, Kwara State House of Assembly.


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