The Millennium Development Programme of the United Nations has as its number one goal poverty alleviation and eradication. When these eight goals are critically reviewed, there is no gainsaying the fact that poverty is a major factor that has the capacity to militate against the achievement of the other goals.

The UN Secretary General, Mr. Ban Ki-Moon, gave credence to this when he said, ”Eradicating extreme poverty continues to be one of the main challenges of our time, and is a major concern of the international community. Ending this scourge will require the combined efforts of governments, civil society organisations and the private sector. The goals are ambitious but feasible, and together with the comprehensive agenda, will set the course for the world‘s effort to alleviate extreme poverty by 2015.”

From recent progress report of the MDG, countries that have made great progress are those where poverty has been tremendously reduced.

The Central Bank of Nigeria was not unmindful of the importance of the microfinance sub-sector when in 2005 it formulated the microfinance policy, regulatory and supervisory framework for the country.

According to the policy, robust economic growth cannot be fully achieved without putting in place well focused programmes. This, the apex bank noted would help to reduce poverty through empowering the people by increasing their access to factors of production, especially credit.

It also added that the latent capacity of the poor for entrepreneurship would be significantly enhanced through the provision of microfinance services to enable them to engage in economic activities and be more self-reliant.

Since 2005, there has been tremendous interest in the MFBs in the country. The interest in this sub-sector was further heightened in mid 2007 when it became obvious that the apex bank was bent on liquidating community banks that did not convert to MFBs by the end of 2007.

At the end of December last year, Nigeria had 815 licensed MFBs, putting itself in the first position globally on the number of practicing MFBs.

However, the Managing Director, Elim MFB, Mrs. Ifeoma Ana, said that in spite the number of licensed MFBs operating in the country, micro financing would remain a mirage to the people except positive steps were taken to ensure that the sub-sector was effective in alleviating poverty.

She said that in most developing countries, about 90 per cent of funds utilised by MFBs came from government, international funding agencies and various individual but in Nigeria, the MFBs were expected to be raised almost only from equity investors.

The implication of this, she noted, ”is that in spite of the 815 operating, MFBs have not been fully rooted in the country.”

In order to ensure that the sub-sector creates the needed impact, the Chairman, Board of Directors, Crowned Eagle MFB, Mr. Ben Ojomo, called on the Federal Government to focus more on SMEs since its potential in the country still remained largely unexploited.

He frowned on the inability of SMEs to access funds which the CBN mandated commercial banks to set aside from their net profits as a result of bottlenecks before it was scrapped.

”Such funds could have been disbursed to the end users through MFBs established for this purpose. It is clear that any conscious effort to mitigate poverty that is not routed through the MFBs will be misdirected.

”Now is the time to beam the economic searchlight on the SMEs, the mega banks are jittery and are no longer lending because of the uncertainties of the effects of the economic crisis. This sector needs urgent support through the creation of a broad base structure plan,” he said.

He pointed out that by utilising new methods and initiatives to deliver fund to the poor, MFBs were properly positioned to bridge the gap between the rich and the poor.

Describing poverty as multi-dimensional, Ojomo said that many countries had resorted to provision of micro funding as a strategy to help lift the poor out of the poverty trap.

Commenting on the challenges facing he sub-sector, the founding partner Goodwell Investments, Mr. Wim Van Beek, said the microfinance sub-sector had huge potential, adding that the major growth constraint was the amount of fund available to them.

According to him, by 2013 the sub-sector is expected to hold cumulative gross loan portfolios of $3.1bn.

He added that MFBs required about $1.6bn of fresh capital over the next five years, of which $450m would be in equity, while $1.2bn was expected to be financed through debt.

He said, ”The opportunities for the microfinance sector in West Africa are huge. Our partners have strong teams with relevant experience and we look forward to working with them to pursue attractive equity investment opportunities and support to entrepreneurial microfinance operators.”

Source: The Punch, Udeme Ekwere and Ifeanyi Onuba