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Tuesday, November 21, 2017.

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Nigerian News » Politics

Microfinance institutions needed to drive financial inclusion

THERE is a need for microfinance institutions to spearhead the drive for financial literacy and inclusion in the country so as to harness the untapped potential of individuals and businesses currently excluded from the formal financial sector, enabling them develop their capacity to engage in income generating activities.

According to Vanguard findings, most people at the bottom of the pyramid, especially, small business owners, micro entrepreneurs have the impression that saving money, either in a water tank or pit is safer than banks.

A small business owner, Mr. Kelechi,  who spoke with vanguard in a commuter bus, said: “I am 37 years old, I have never saved money in the bank all my life, I cannot trust my money in any bank. I am following my father’s footstep and I think it is safer to keep money in the pit.”

Vanguard findings further shows that access to funding is a major bottleneck affecting small business owners and micro entrepreneurs in the country, which is now a challenge to the banking sector. According to Mrs. Deborah Eze, “we must give particular attention to specific portions of the population that have been historically excluded from the formal financial sector either because of their income levels, gender, location, or level of financial literacy especially through the microfinance sector.” She urged the microfinance institutions to boost the financial position of the public, through financial literacy deepening, to help them come output of poverty and participate in the formal financial sector.

Recall that the Bank of Industry,  BOI, unveiled the Bottom of the Pyramid (BOP) scheme in collaboration with the microfinance banks to serve as a vehicle for credit delivery to the under-served and under-banked micro-entrepreneurs.

According to BOI, the BOP scheme is essentially aimed at poverty reduction through job and wealth creation focusing on the rural micro-enterprise operators with a view to extending financial inclusion to them. Managing Director of BoI, Mr. Waheed Olaguunju, said: “BOI’s BOP model is consistent with the operating models of some of the world’s best Development Finance Institutions that deliver their services indirectly through intermediary retail finance that have extensive branch network”.

The bank commenced granting loans to micro entrepreneurs in the economy through 14 microfinance banks with branches nationwide. Micro entrepreneurs include the likes of shoemakers, tailors, snacks producers, furniture makers, people in bakery business, among others.

Meanwhile, The mobile money scheme established by the Central Bank of Nigeria (CBN) to enhance financial inclusion is yet to achieve the objective, according to Managing Director/CEO, Nigeria Interbank Settlement System (NIBSS) Mr. Ade Shonubi.
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