Title: Financial Exclusion of Small and Medium Enterprise and Poverty Alleviation: Nigeria Experience

Abstract

The role of banks especially sourcing from the surplus units and supplying to the deficit units of the economy (which is no other than the poor that have been denied access to the financial services by the banks) is mostly needed for the alleviation of poverty in Nigeria . Banks, instead of supplying to the deficit units, ended up in supplying funds to the surplus unit believing that the poor as well as rural dwellers cannot repay if loans are granted to them. Robust economic growth cannot be achieved without putting in place well focused programmes to reduce poverty through empowering the people by increasing their access to factors of production, especially credit (CBN, 2005). This paper sets out to assess how poverty can be alleviated through banks’ roles and the level of poverty experienced by people. Based on our research findings we posit that allowing access to financial services at a reduced interest rate will enhance in poverty reduction in the country and make most active poor self reliance. Again, due to the large population of the country and the state of the Nation’s economy, the role of the financial institutions alone would not be sufficient in alleviation poverty in the country. Therefore, provision and maintenance of social amenities by government for populace in the country is required. The implication of this study is that government should design a policy for banks that focus on including the poor on the financial services instead of multiplication of programmes to reach the poor which have never been successful.