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Ibasa: Where micro-finance is a myth

By Amaka Agwuegbo
Ibasa village is a riverine community in Oriade Local Council Development Area of Lagos State which reflects the failure of micro-finance banks in the country to connect and serve the active poor. The micro-finance policy which led to the creation of micro-finance banks was aimed at reducing poverty and proving access to financial services for the economically active poor.

But five years after the policy was introduced, the ‘active poor’ of Ibasa village, which constitute majority, have not even heard about micro-finance bank nor enjoyed their services despite been located near Satellite Town, one of the most developed urban centers in Lagos State.

The village is populated by fishermen, canoe builders and mat weavers _ the people micro-finance banks are created to serve. Yet, there is no sign of the presence of any micro-finance bank or any other financial institution for that matter.
Little wonder most of these ‘active poor’ residents of Ibasa are still unaware of the services rendered by MFBs and how to secure loans from them to grow their businesses.

Grandma Sheri Sani, one of the residents of Ibasa, is a mat weaver who learnt the trade as a little girl. After years of sitting at her mother’s feet and watching her weave mats for sale, Grandma Sheri took over the trade and is now a renowned mat weaver.

Due to her mastery  of the craft, she weaves three mats daily and when she goes to Ojo market, she is usually armed with 24 pieces of mats which she sells for N500 a piece.

Due to her age, Grandma Sheri doesn’t go far in search of raw materials for her mat weaving as she gets them from the village and Imore, a neighbouring village.

Grandma Sheri has mastered the craft so well that she can produced mats having multiple colours.  But, her only regret is that the younger generations of girls are not interested in the craft, preferring to learn fashion designing or schooling.

When asked if she has been approached any MFB for a loan to boost her mat weaving business, she asked what an MFB is.

“My pickin, abeg wetin be this micro-finance bank wey you dey talk about because I never hear am before. Na name of a bank?”

When she got to understand what an MFB is, she retorted “who go give old woman like me money to do im business since I no get house to give the bank? I no get power to dey do that kind wahala.”

For Blessing Akojenu, a canoe builder in  Ibasa village, accessing loans from MFBs is not the issue, but getting buyers for his goods.

Blessing, who ventured into the trade because his elder brother whom he was staying with is also into it, said it takes him about two weeks to build a canoe.

“It takes me two weeks to build a canoe from start to finish and it consumes 55 planks, consisting twelve 6 x 6 and four 2 x 4.”

He sells an average of two canoes weekly, with one canoe going for N 300,000, adding that he makes a profit of N 40,000 on each sale.

Giving his reason for not seeking for loans from MFBs to boost his canoe building business, Blessing, who is in his mid 20s, said the business is on request basis since he is trying to avoid situations whereby nobody would buy the finished canoe.

“This our job is not easy and is not so much in demand, so what is the use of borrowing money from the bank to build canoes and they end up not being bought from me?”

Commenting on the zero presence of a micro-finance bank in Ibasa, Chairman, Lagos State Chapter, National Association of Micro-finance Banks (NAMB), Chief Olutayo Adenekan, said the major cause of such a situation is lack of awareness campaign and education about the objectives of micro-financing.

“This all boils down to lack of adequate awareness campaign to educate the people about the essence of micro-financing so as to enable them take advantage of the services being offered by these MFBs.

Even if it is not possible to open a business unit there due to the capital and difficulty in getting CBN’s approval, but these are the people that microfinance banks are meant to cater for _ the ‘active poor’ of the society”, he said

Adenekan said it is a minus on the part of MFB operators that the residents of Ibasa community and other such communities lack access to MFBs, adding that after the association’s elective AGM, members of the association would visit Ibasa since these are the types of businesses and handiworks that MFBs are supposed to help grow.

The Enhancing Financial Innovation & Access’s (EFInA) survey on access to financial services in Nigeria 2008 holds that 46 per cent of the adult population know next to nothing about micro-finance/community banks, 41 per cent have never heard of the word ‘savings account’, 79 per cent know nothing about internet banking, 78 per cent of the same population have no idea what mobile phone banking entails, even as 76 per cent have never heard of credit cards, and 75 per cent cannot spell out what debit cards are.

These situations have proved that the widening gap between the served and unserved market by financial institutions is still on the increase as most rural dwellers are still in the dark about micro-financing and the services offered by micro-finance banks, MFBs.

The size of the unserved market by commercial banks is large. Before the advent of MFBs, the average banking density in Nigeria is one financial institution outlet to 32,700 inhabitants, while in rural areas, it is 1:57,000, that is less than 2% of rural households have access to financial services.

This reveals the existence of a huge gap in the provision of financial services to a large number of active but poor and low income groups.

One of the hallmarks of the National Economic Empowerment and Development Strategy (NEEDS) is the empowerment of the poor and the private sector through the provision of needed financial services that would enable them engage or expand their present scope of economic activities and generate employment.

Also, delivering the needed services, as contained in the Strategy, would be remarkably enhanced through additional channels which the MFB framework would provide as it would assist the small and medium enterprises, SMEs, in raising their productive capacity and level of employment generation.

Among the goals of micro-financing is to provide diversified, affordable and dependable financial services to the active poor in a timely and competitive manner that would enable them to undertake and develop long_term, sustainable entrepreneurial activities; mobilize savings for intermediation; and create employment opportunities and increase the productivity of the active poor in the country, thereby increasing their individual household income and uplifting their standard of living.

For majority of the ‘active poor’ to be covered by 2020, thereby creating millions of jobs and reducing poverty and to increase the share of micro credit as percentage of total credit to the economy from 0.9 percent in 2005 to at least 20 percent in 2020, these situations ought to be address, else, the nation risks facing acute poverty and stagnant growth and development.

But going by the lack of access to financial services by most rural dwellers, this goal stands the risk of being a lofty one if measures are to taken to remedy the situation.


Disclaimer

Comments expressed here do not reflect the opinions of vanguard newspapers or any employee thereof.