The Evolution Of Micro Finance

1651 WordsJun 16, 20157 Pages
CHAPTER 3: THE EVOLUTION OF MICRO FINANCE IN NIGERIA 3.0. Introduction: In this section the need for Microfinance is discussed; the emergence and development of microfinance in Nigeria is also reviewed. Finally the chapter discuss the ownership and beneficiaries of microfinance in Nigeria. 3.1. The Need for Microfinance: The unwillingness or inability of the formal financial institutions to provide financial services to the urban and rural poor, coupled with the un-sustainability of government sponsored development financial schemes contributed to the growth of private sector-led microfinance in Nigeria. Before the emergence of formal microfinance institutions, informal microfinance activities flourished all over the country. Informal microfinance is provided by traditional groups that work together for the mutual benefits of their members. These groups provide savings and credit services to their members. The informal microfinance arrangements operate under different names: ‘esusu’ among the Yorubas of Western Nigeria, ‘etoto’ for the Igbos in the East and ‘adashi’ in the North for the Hausas (CBN, 2000). The key features of these informal schemes are savings and credit components, informality of operations and higher interest rates in relation to the formal banking sector. The informal associations that operate traditional microfinance in various forms are found in all the rural communities in Nigeria (Otu, et al, 2003) . They also operate in the urban centers. The
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