Microfinance In Nigeria Research Articles

An Appraisal of Women Targeted Microfinance in Nigeria: A Review of the Activities of Yamdu Multipurpose Cooperative Society in Ankpa Kogi State.

An Appraisal of Women Targeted Microfinance in Nigeria: A Review of the Activities of Yamdu Multipurpose Cooperative Society in Ankpa Kogi State.

Financial inclusion enhancement through the adoption of Islamic microfinance in Nigeria

Purpose This paper aims to examine the determinants of intention to adopt Islamic microfinance among prospective customers in Nigeria, to enhance access to formal financial services. Design/methodology/approach The quantitative study used the proportionate stratified random sampling technique to collect data from 450 respondents, using close-ended questionnaires. The data was analyzed using analysis of moment structures-structural equation modeling. The decomposed theory of planned behavior (DTPB) was used as the underlying theory to test 10 hypotheses. Findings Results showed the intention toward the adoption of Islamic microfinance is high in Nigeria. In total, 8 of the 10 study hypotheses were supported, out of which attitude, subjective norm and perceived behavioral control were found to have a positive and significant influence on the behavioral intention to adopt Islamic microfinance. Consequently, the study recommends the need for stakeholders in the Nigerian financial system to embark on enlightenment campaigns that will improve the public attitude on the role of Islamic microfinance banks in the promotion of financial inclusion and poverty reduction. Research limitations/implications The study focused specifically on three selected states in Northern Nigeria that are predominantly Muslim. The findings and indeed the conclusions of the study, may not be suitable for generalization to other parts of the country. Practical implications The study found that three constructs: attitude, subjective norms and perceived behavioral control were found to affect behavioral intention. Thus, the Central Bank of Nigeria and Islamic financial institutions should tailor their enlightenment campaigns toward improving public attitude on the need to adopt Islamic microfinance banks to further enhance financial inclusion, and thus reduce the incidence of poverty. Islamic microfinance banks should complement their commercial products and services with Islamic social finance products such as Sadaqat, Zakat and benevolent loan, as is the practice in jurisdictions where Islamic finance is institutionalized. Social implications The social implication of the study is its ability to determine factors that will enhance financial inclusion in Nigeria. This will assist in reducing poverty and income inequality. Originality/value The study was also able to extend the DTPB by introducing awareness as an additional latent construct in explaining attitude.

EXPLORING THE ADVANCEMENT AND ROLES OF ISLAMIC MICROFINANCE INSTITUTIONS IN MICROENTERPRISE DEVELOPMENT IN NIGERIA

This paper discusses the advancement and roles of microfinance institutions, specifically Islamic microfinance institutions in microenterprise development in Nigeria. Microfinance institutions play a key role in financial inclusion and microenterprise development, especially in developing countries. The key aim of microfinance initiatives is to eradicate poverty by providing access to a wide range of financial products and services for those who are financially excluded. The emergence of microfinance in Nigeria appears to be promising, as these institutions support Nigerians of average or poor means by improving their living conditions. However, the nature and conditions of the schemes do not satisfy the sensitivities and requirements of a substantial number of people including poor Muslims who need funding but are unable to take advantage of conventional microfinance services, as loan conditions are seen as being contradictory to Islamic teachings. Islamic microfinance, therefore, can alleviate poverty through the development of microenterprises.

A comparative analysis of the practice and performance of microfinance institutions in Nigeria

PurposeThe successful story of microfinance institutions is often tied to the practice and methods of credit delivery as evidence among international world class microfinance institutions across the globe. The purpose of this paper is to examine the impact of practice and methods of credit delivery employed by “non- profit” and “for-profit” microfinance institutions on financial sustainability and outreach programmes of the microfinance institutions in Nigeria.Design/methodology/approachThe study adopts the survey research design and multi-stage stratified random sampling procedure to collect data from 372 senior management staff, managing directors and board members of microfinance institutions of both groups in Nigeria. Data collected were analyzed using descriptive statistics and multiple regressions analysis.FindingsThe findings suggest that the current practice and methods of credit delivery of microfinance in both “non-profit” and “for-profit” microfinance institutions have an inverse relationship with the financial sustainability and outreach programmes of the institutions. This study provides empirical evidence for the incessant failure of microfinance institutions in Nigeria.Research limitations/implicationsThe study therefore recommends an immediate overhaul of the methodology and practice of microfinance institutions in the country to align with international best practice.Originality/valueIn spite of the huge literature on microfinance in Nigeria, there is not enough evidence to empirically prove that the practice of microfinance has affected the performance of the industry in Nigeria. This study sets out to fill that gap in the literature. The paper examines the practice of microfinancing in Nigeria vis-à-vis the performance of the microfinance institutions, categorized into NGO and microfinance bank “for-profit” institutions using international best practices from countries where microfinance is highly successful as a benchmark for deployment of microfinance in Nigeria, in order to proffer policy direction to stakeholders on steps to take to ensure viability in the microfinance subsector in Nigeria.

Implementing Islamic microfinance in Nigeria: a matter of equity and social justice

Many hardworking people from unprivileged backgrounds are automatically disadvantaged simply because they lack access to financial capital. Observably, microfinance provides a way out of the poverty trap if it is deployed appropriately. Nigeria, like many other developing countries, has thus taken up the challenge of developing inclusive microfinancing initiatives. In the country, funding for small-scale businesses is available from both the government and the private sector. Unfortunately, the nature and conditions of the schemes fail to meet the sensitivities of a substantial group who would otherwise have been eligible for the grants and loans. The practical implication is that such group would be twice excluded from the financial system. These potentially excluded groups are those poor Muslims who might desire funding but are unable to benefit from the government schemes because the loan conditions contradict their faith. It is argued that the effect of the status quo is that it breeds further inequality and inequity and could even amount to outright (or indirect) discrimination. This contention is substantiated through constitutional analysis and also in light of a contemporary economic welfare theory – the Capability Approach. The article argues that this marginalized group has a right to Islamic microfinance. This right, it is further contended, places justiciable (positive and negative) duty on the government. It, therefore, calls that Islamic microfinance should forthwith be embedded into the fabric of public governance in the country. The article demonstrates the exclusionary problem by analysing some of the existing schemes, and it proffers alternative sharia-compliant conditions for existing schemes. Keywords: Islamic microfinance; social development, distributive justice; indirect discrimination; constitutional law/human right, capability approach

Regulatory and Operational Challenges of Islamic Microfinance in Nigeria

The adequacy or otherwise of the guidelines for the regulation and supervision of Non Interest Financial Institutions (NIFIs) released by the Central Bank of Nigeria (CBN) in 2011 to among other things facilitate the emergence of Islamic microfinance banks along other mainstream banks in the country has been a subject of debate among academics, bankers, finance experts and members of the public. Four years into the release of the guidelines that is expected to serve as an impetus for microfinance banks to provide Islamic microfinance products and services in the country, only one (1) bank was so far licensed by the CBN to provide Islamic microfinance services. Preliminary investigation has shown that Microfinance banks (MFBs) are still not comfortable with the guidelines, which seem to emphasise more on deposit money banks without regard for the peculiarity and modus operandi of microfinance business. This paper discusses the regulatory and operational challenges of Islamic microfinance in Nigeria. The paper, which is exploratory identifies regulatory inadequacies, manpower-related challenges, lack of commitment and challenge of its successful introduction into an existing interest-based system as the main challenges facing Islamic microfinance in the country. In view of these challenges, the paper suggests that the CBN should come up with a separate NIFI guidelines for microfinance banks. In addition, the CBN, microfinance bank operators and professional bodies should provide a lead in the areas of training and development of skilled and qualified manpower in Islamic microfinance processes and procedures. Furthermore, stakeholders, particularly academics and religious scholars should continue to mobilise well to do members of the society to establish microfinance banks that would provide non interest financial services in the country.

Islamic Development Bank’s Microfinance Support Programme and the Growth of Small Scale Enterprises in Nigeria

It is obvious that poverty is endemic in Nigeria. One of the reasons contributing to this uncomplimentary situation is lack of employment for the majority of Nigerians. Several attempts aimed at creating employment have been embarked upon at governmental and non-governmental levels, with little effect. On the other side, the Islamic Development Bank (IDB), to which Nigeria is a key member, has been actively involved in the support of Small Scale Enterprises in some member countries through skilfully carved sustainable non-interest-based microfinance programme. Most studies on microfinance in Nigeria have not paid attention to the application of the IDB’s Microfinance Support Programme to Nigeria. Hence, this paper fills the gap through examining some of the past and present attempts of the government at providing microcredit and microfinance to Nigerians. It also considers the operational strategy utilised by the IDB at bringing sustainable microfinance scheme to the doorsteps of the poor in member countries. Consequently, it advocates this laudable microfinance scheme for Nigeria, arguing that if this is done, mass employment accompanied by best practices capable of reducing poverty would be injected into Nigeria.

Islamic Micro-Investment Model as an Alternative to Conventional Microfinance in Nigeria

Islamic Micro-Investment Model as an Alternative to Conventional Microfinance in Nigeria

Micro Finance in Nigeria: Problems and Prospects

This paper set to provide an overview of microfinance in Nigeria and examine its problems and prospects. The data collected form secondary sources, were analysed descriptively. The microfinance scheme holds a lot of prospects for the Nigerian economy as it is expected to empower of Low- Income Earners, reduce poverty, generate employment, among others. However, the paper observed that among the problems faced in the micro finance industry are inadequate finance, high risk, heavy transaction cost, mounting loan losses, low capacity and low technical skills on micro financing. As a result of some of these problems, some micro finance institutions in Nigeria have collapsed. Consequent upon the problems noted, the following recommendations given, among others, are: the supervisory authorities should enforce standards so as to address the issue of poor management of funds meant for credit disbursement, the capital base of micro finance institutions should be strengthened in order to mobilize domestic savings and promote banking culture among low-income groups and the issue of private participation should seriously be encouraged.