Abstract
Economic reforms have been implemented in Nigeria since 1980s which essentially entailed the shift from an administratively managed and public sector led economy to a market oriented and private sector led economy. Financial sector reforms were part of these broader economic reforms. A successful financial sector reform was expected to generate a dynamic process involving substantial changes in the country’s real activities of production, exchange (trade) and finance. Sustainability of the reforms was expected to result in financial deepening, increase in the range of financial products in order to better serve the needs of the economy and enhance transformation of the economy (urban as well as rural) so that production, exchange and other economic activities take place in different ways and in the context of new or reformed institutions. However the progress being made as a result of financial sector reform, financial services to the rural population have been slow to develop. The financial sector reforms are still in progress, but there is increasing concern that the majority of the rural population which constitutes 70-80% of the population and comprise 90% of all the poor in Nigeria have not benefited from the financial reforms. They have largely been bypassed by these reforms. The need to enhance accessibility of financial services to the rural poor in Nigeria deserves high priority on the agenda of the on-going financial sector reforms. In recognition of the need for improving access to financial services by the rural population, this paper will address the experience and lessons learned to date in the development of rural finance with a view to facilitating appropriate design of rural finance and develop sustainable financial services for the needs of rural population in Nigeria, in order to reduce the increasing rate of poverty. The survey research design was adopted and data collected through questionnaires. The impact of rural financing as a panacea for poverty reduction in Nigeria was analyzed using the OLS regression method. The study revealed the existence of positive relationship between rural financing and poverty reduction in Nigeria. The study recommended that adequate measure must put in place to continue encouragement of rural financing in Nigeria.
Highlights
The important role played by credit in financial leverage and poverty reduction was realized early in the history of Nigeria
In spite of all these efforts aimed at poverty reduction, poverty level index according to the National Bureau for Statistics (NBS) has remained high especially in the rural areas [25, 30]
It is estimated that 54% of Nigerians are poor out of a population of 140 million or 75.60 million people are poor and this is in spite of the fact that since independence in 1960 that Nigeria has embarked on several poverty alleviation measures and said to have earned a lot of revenue from the sale of oil and gas from among other sources [29]
Summary
The important role played by credit in financial leverage and poverty reduction was realized early in the history of Nigeria. This realization has made governments at all levels to reach the poor with one form of credit or the other, through the numerous credit and agricultural policies [6]. It is estimated that 54% of Nigerians are poor out of a population of 140 million or 75.60 million people are poor and this is in spite of the fact that since independence in 1960 that Nigeria has embarked on several poverty alleviation measures and said to have earned a lot of revenue from the sale of oil and gas from among other sources [29]
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