Microfinance and National Prosperity
When governments are putting together financial strategies to ensure future prosperity, they are now increasingly conscious of how microfinance banking can contribute to their plans. This is especially true of developing nations, where a number of different factors typically cause problems that microfinance can certainly help to resolve. Where other initiatives have proven unequal to the task, microfinance banking can help to shape a cohesive national financial policy while stimulating economic and social advancement. A closer look at Nigeria’s ongoing attempts to give microfinance an important role within its financial strategy should shed some light on this topical and important topic. The Nigerian case shows us how widespread access to microfinance loans can help developing countries to overcome serious problems posed by low incomes and geographical remoteness.
The Importance of Fully Integrated Planning
It’s important, first of all, to appreciate the real significance of what might otherwise seem like a technical topic. The essential fact is that Nigeria, like other developing nations, needs a cohesive financial strategy that can fully integrate all of the country’s citizens into its financial life. Only in this way can the ongoing problems of unemployment and poverty be effectively addressed. Microfinance can intervene here by providing the loans that will enable new enterprises to get off the ground, turning their founders’ dreams into living realities. The vital point is that microfinance can make the necessary funding available to those who have in the past been deprived of access to conventional banking arrangements, either because of their low-income status or because of the remote locations in which they live. Seen within a larger, national perspective, this means that microfinance can provide much-needed integration and cohesion for national financial strategies.
A national financial strategy needs to be cohesive and all-embracing. This is why the Central Bank of Nigeria (CBN) initiated its microfinance strategy in 2005. The aim was to establish a fully licensed and satisfactorily regulated microfinance that would provide a firm foundation for monetary stability while also facilitating liquidity management. The realisation of the CBN’s scheme has had to overcome serious challenges along the way, but the prospects for a properly organized and regulated microfinance sector in Nigeria remain very bright. When microfinance banking is properly established, which will require all of those involved to have a firm grasp of its objectives as part of a national financial strategy, the sector can make a decisive contribution to the great task of bringing social advancement and economic health to Nigeria.
The Road to Progress
Other economies can certainly learn from how microfinance is enabling Nigeria to confront the logistical and planning difficulties it has experienced due to the presence of an unofficial financial sector that operates beside the officially approved financial sector. The unofficial sector has grown largely because many Nigerians, particularly in remote areas, have been unable to avail of traditional loans from banks. The availability of microfinance loans will enable budding entrepreneurs in such locations to set up new businesses and create new jobs. This will ultimately benefit not only these remote parts of Nigeria but also the country as a whole. Let’s look forward to a story of hope and progress.