Challenges of microfinance access in Nigeria: implications for entrepreneurship development
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Date
2013
Journal Title
Journal ISSN
Volume Title
Publisher
MCSER-CEMAS-Sapienza University of Rome
Abstract
Small and Medium Enterprises (SMEs) are increasingly being accepted as valuable platforms to create jobs and improve livelihoods. The Nigerian government has enacted favorable laws and regulations on contracts, leasing, and corporate tax to encourage the development of SMEs. Nonetheless, many entrepreneurs in Nigeria cannot access loans given the high levels of poverty. The paper argues that microenterprise finance cannot be financially viable because small loans are too costly to administer and the profits from such lending too meager to permit profitability. Based on content analysis of available literature, it is found that microfinance institutions have collapsed in Nigeria due to poor loan quality, default in loan repayment, high transaction costs, widespread delinquency, and management deficiencies. Given these challenges, the paper recommends savings by microfinance institutions and measures from successful initiatives from countries such as Indonesia and Bangladesh. These will enable microfinance institutions to be self-sustaining and to increase outreach.
Description
Keywords
Small medium enterprises (SMEs), Finance access, Nigeria, Microfinance savings
Citation
Ogujiuba, K. & Jumare, F. et al. (2013) Challenges of microfinance access in Nigeria: implications for entrepreneurship development. Mediterranean Journal of Social Sciences. Volume 4, No. (6), Pages 611-618.