By Providence Emmanuel

Microfinance is a vehicle for extending small loans, involves savings and other basic financial services to people that do not have access to capital, seeking to acquire a loan from a micro-finance bank  who must meet all of the requirements for acquiring such loan.

It’s a key strategy which tends to target women borrowers who are statistically less likely to default on their loans than men to become financially independent and   more resilient and better able to provide for their families in times of economic difficulty

The 2015 Annual Report for National Financial Inclusion Strategy shows that the number of microfinance banks, following the issuance of additional 45 licenses in 2015 rose to 958 at the end of December 2015 compared with 913 in 2014 with a non-interest microfinance bank in the year.

Total assets within the microfinance industry rose to N343.9 billion in 2015 from N300.7 billion recorded in December 2014, representing a growth of 14.4 per cent above the level attained in the previous year.   Similarly, deposit liabilities within the sector increased by 9.3 per cent from N145.8 billion in 2014 to N159.5 billion as at December 2015. Loans and advances also rose from N162.9 billion in 2014 to N173.7 billion at end of December 2015 representing an increase of 6.6 per cent during the period under review, while investments grew by 12.4 per cent from N15.8 billion in 2014 to N17.7 billion in 2015.

The report also states that financial literacy is an enabler of financial inclusion as it tries to reduce the key barrier of lack of understanding of financial products and its benefits.

To enjoy microfinance, there is a need for financial education which is basically the process of building the knowledge, skills and attitudes to becoming financially literate.

Financial education is meant to educate people on good money management practices with respect to earning, spending, saving, borrowing, investing and donating to charity and thereby enabling people shift from reactive to proactive decision-making so as to work towards fulfilling financial goals.

To this end, testimonials from different microfinance bank customers reveal that microfinance has not only helped people out of poverty but has also added value to lives.

A typical example is a cloth seller, Mrs. Juliana Inouagwa, leader of Queens Union with 25 active members at Berger Branch, Lagos. She joined Grooming Centre in the year 2010, after a close friend recommended their services. Her first loan was N20, 000, gradually she moved to the 6th stage where she is able to collect N80, 000. Presently the proceeds from her business afforded her a Tricycle (Keke Napep) for her husband, which he now uses for commercial transportation to augment family income.

According to her, “I have also been able to raise my business from a small corner shop to a boutique. Together with my husband, we can now pay our children’s school fees with less stress and we have been able to put a roof over our house in Imo State.”

For Mr. Benjamin Ogunkanmbi, “With support from  LAPO  Microfinance Bank, my electrical appliance business improved the standard of living for my family. The business grew from a capital base of N9, 000 to N300, 000 to date. I make an average profit of N70, 000 monthly from which I save N1, 500.”

Mrs. Aminat Abioye, has this to say: “On the advice of a friend in 2007, I joined LAPO  MfB  and haven’t looked back since. I am now in my 7th stage of regular loan. My timber business has grown rapidly with a corresponding increase in profit margin. Now I am economically empowered to assist in my children’s education, feeding and clothing, unlike before.”

Recall, in 2014, Enhancing Financial Innovation & Access (EFInA) revealed that 57.1 million adults have never had a deposit money bank account, 16.3 percent indicated that they did not operate an account because commercial banks were far away from them. The study also found out that 42.7 percent of women are financially excluded as compared to 35.8 percent of the men.