Micro Finance in Nigeria: Problems and Prospects

This paper set to provide an overview of microfinance in Nigeria andexamine its problems and prospects. The data collected form secondarysources, were analysed descriptively. The microfinance scheme holds a lot ofprospects for the Nigerian economy as it is expected to empower of Low-Income Earners, reduce poverty, generate employment, among others.However, the paper observed that among the problems faced in the microfinance industry are inadequate finance, high risk, heavy transaction cost,mounting loan losses, low capacity and low technical skills on microfinancing. As a result of some of these problems, some micro financeinstitutions in Nigeria have collapsed. Consequent upon the problems noted,the following recommendations given, among others, are: the supervisoryauthorities should enforce standards so as to address the issue of poormanagement of funds meant for credit disbursement, the capital base ofmicro finance institutions should be strengthened in order to mobilizedomestic savings and promote banking culture among low-income groupsand the issue of private participation should seriously be encouraged.