By Providence Emmanuel
MICROFINANCE Banks (MfBs) are sources of financial services for entrepreneurs, small businesses lacking access to banking and related services, yet many fall victim due to inability to pay back debt even as it worked  for others. .

Two major mechanism for the delivery of financial services are: relationship-based banking for individual entrepreneurs and small businesses; and group-based models, where several entrepreneurs come together to apply for loans and other services as a group.

There are over 900 MfBs in the country and each of these banks have a repayment plan for every loan,  done either via daily contribution, which is applicable to especially small businesses operated by both men and women.

This is the traditional daily contribution also known as Esusu, the account enables a customer to save on daily basis, a certain amount for 30 or 31 days and make withdrawal at the end of the month.  The repayment plan makes it easier for the bank customers to pay back their loan.

Managing Director, Nigeria Deposit Insurance Corporation, NDIC, Alhaji Umaru Ibrahim, not too long said that some directors and staff of the banks are responsible for about 40 percent of the non-performing loans in the banking system, disclosing that there were 978 MfBs in existence as at December 2016, with total deposits liabilities of N158 billion and total loans and advances amounting to N195 billion out of which N87.75 billion or 45 percent were Non Performing Loans with N68.25 billion or 35 percent constituting Insider related/directors loans.

So many businesses have grown as a result of loans from MfBs, yet, a woman, last week, jumped into the Lagos Lagoon because of the N150,000 loan she obtained from a micro finance bank to boost her  business, but which she could not pay back.

Luck was on her side, she was rescued by maritime Samaritans around when a lady that followed her quickly informed the Police. She asked the girl to follow her so that she could inform everyone, particularly her creditors that “I have not run away.”

She was reported to have said that it was the embarrassment of the debt that made her to decide taking her own life.

Also, another women was said to have committed suicide in her Orege, Ajegunle home after sending her children on errand as a result of her inability to repay loan she obtained from a popular microfinance bank in the country in 2016.

When Vanguard spoke with some traders at the popular Ajegunle market also known as Boundary, a trader, Mrs. Grace Afam, said that “microfinance loans as they were originally intended, are there to empower small business owners to grow their enterprises and generate more income, access to credit can be a game-changer and not suicidal .

“But on the other side of the coin, those who rely on loans for purchases of non-productive goods, like motorbikes, for everyday household consumption or for seeds and fertilizer in the hope that the harvest will provide a return, it is a very different story. I don’t want to use microfinance any more because I always worry thinking about it and cannot sleep when I owe money,” she said

Another trader, identified as Adegoke, said the MfBs are sustained by loan repayment, stating, “The success of borrowers are the MfBs success.

“The economy is down, things are hard and it is difficult to find money, everybody is facing one money trouble or the other. But that does not mean we should kill our self, I am not in support of that.

“If I must tell you the truth, the pressure microfinance banks mount on people when they have not paid back their loan can force people who do not have strong will to do otherwise.

“The bottom line is that paying off your loan save you money in interest and decrease the overall term of the loan. Just imagine what you would do with your extra money, you would save for other needs, make home improvements and be able to pay off other debts,” he said.