Central Bank of Nigeria (CBN), has reiterated its commitment to reduce the rate of poverty in Nigeria, through micro-financing and empowerment of micro-entrepreneurs.
While speaking at the 27th Seminar for Finance Correspondents and Business Editors, the CBN’s Emefiele, who was represented by CBN Deputy Governor Edward Adamu, said the apex bank is committed increasing access to financial services for the economically active poor. This is expected to help enhance job creation as well as reduce poverty.
How CBN is approaching the poverty reduction commitment
According to Emefiele, the CBN had recently carried out some reforms in the microfinance sub-sector, with the aim of increasing the share of microcredit to at least 20 percent by 2020.
Emefiele stated that by increasing access to credit and related services to the economically active segment of the low-income population, microfinance directly contributes to expanding the production base of the economy.
“IN A DEVELOPING COUNTRY LIKE OURS, THE LINK BETWEEN MICROFINANCE AND THE REAL SECTOR IS QUITE STRONG. MICROFINANCE BANKS ARE CONCEIVED TO SERVE AS CRITICAL FINANCIAL LUBRICANTS FOR THE REAL SECTOR, WHICH IS THE PILLAR OF SUSTAINED ECONOMIC GROWTH.
“AT THE MOMENT, ECONOMIC POLICY IN NIGERIA FACES A MAJOR CHALLENGE OF REVIVING GROWTH WHICH IS THE ONLY SURE PATH TO ENDING PERVASIVE POVERTY. MICROFINANCE HAS WORKED IN THIS REGARD IN MANY CLIMES AND PROMISES TO WORK IN NIGERIA IF WE GET THIS RIGHT.”
Why microfinance banks can’t be sidelined in reducing poverty
Robust economic growth cannot be achieved without putting in place well-focused programmes that increase access of poor and low-income earners to factors of production, especially credit. Microfinance is about providing financial services to the poor who are traditionally not served by conventional financial institutions.
In Nigeria, a large percentage of the population is still excluded from financial services. The Lagos Business School (LBS) had revealed in a study that 43 percent of Nigerians are financially excluded.
In its financial inclusion report, which was launched in Lagos, the LBS noted that only 49 per cent of Nigerians owned bank accounts. It said eight per cent of Nigerians owned a mobile money account, while 36 per cent used informal financial tools.