Microfinance as a panacea to Nigeria’s unemployment challenge
Tuesday, August 26, 2014
Despite Nigeria’s relatively strong economic growth over the years, the country has been weighed down by several economic challenges such as insecurity, corruption, poor infrastructure, poverty and unemployment. The implication of this trend is that economic growth in Nigeria has not resulted in the desired structural changes that would make manufacturing the engine of growth, create employment, promote technological development and induce poverty alleviation. Available data has put the national poverty level at over 50 per cent and rising unemployment put at 25 per cent.
The importance of financial services in the economic growth and development of any society is well known. These services provide businesses with access to credit and a means for saving and investing money. The concept of microcredit was first introduced in Bangladesh by Nobel Peace Prize winner, Professor Muhammad Yunus more than 30 years ago with the aim of reducing poverty by providing small loans to the country’s rural poor. Hence, microcredit has evolved over the years and does not only provide credit to the poor, but also now spans numerous other services including savings, insurance, remittances and non-financial services such as financial literacy training and skills development programmes. Microfinance is a holistic approach that has been used in different countries to alleviate the plight of micro and small scale enterprises (MSSE) both in the rural and urban areas in accessing fund as at when needed which was not possible from the conventional banks. The is why the N220 billion Micro Small and Medium Enterprises Development fund just flagged off by the Central Bank of Nigeria (CBN) to catalyze financing to Nigeria’s MSMEs sector and facilitate commercial and microfinance banks to lend to the sector is a good development.