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Poverty to reduce in Lagos as MFBs plan to disburse N100bn loan

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It is expected that poverty, especially in Lagos State will reduce to the barest minimum if the National Association of Microfinance Banks (NAMB) Lagos chapter disburses the N100 billion loan it targeted this year.

About 70 percent of 150 million Nigerians live below the poverty line, this figure rose from 54 percent previously. Poverty in Nigeria remains endemic in spite of poverty alleviation works. Experts have criticised the development, describing it as unacceptable because of the risk it poses to economic growth.

However, the association plans to grow loan in Lagos to N100 billion to about four million poor but economic active people.

Last year, it disbursed about N30 billion loan to about 1.2 million out of about nine million people.

The projection would be possible if there is support from government and other local and foreign agencies.

It was contained in the microfinance policy guideline that Microfinance Development Fund will be established by the Government, CBN and other stakeholders to support the MFBs in rendering financial services to their clients on a sustainable basis. The Fund shall comprise two windows - Commercial and Social.  Early last year, President Goodluck Jonathan said the fund would accelerate the nation’s real Gross Domestic Product (GDP) growth, register increased investment, revive and grow the agricultural sector, create additional employment opportunities and particularly reduce the rising poverty rate in the country.

Expectations of stakeholders has long been on implementation of this so pronounced fund as it will enable them access cheap funds for on lending to the poor but economically active people. Till date, the fund has not yet been established.
The Association has put in place a Trust Fund that provides funds to microfinance banks in Lagos. It provides short term liquidity to microfinance banks whenever the need arises.

In the medium term, it provides finance and refinancing facilities to microfinance banks. The fund is managed by three financials which include trust fund manager, trust fund custodian, and executive committee of the fund. The fund will be contributory by members.

This will offer the micro business operators the opportunity to have access to cheaper funds which is one of the objectives for setting up the scheme by the Federal Government.

With the trust fund, Olufemi Babajide, chairman NAMB Lagos chapter, said there is no reason for any microfinance bank to say it has short term liquidity.

The size of the fund is expected to be in hundreds of millions in the short run, hit units of billions in the medium term and in the long run be in tens of billions.

Furthermore, the trust fund will attract funds from its members, government agencies, donor agencies, deposit money banks, institutional investors, non governmental agencies (NGOs) and individuals who are willing to support the empowerment of the active poor.

He noted that there is a dearth of funding support for microfinance banks in Lagos State. The funds provided by the promoters and shareholders of microfinance banks are not adequate to increase the outreach of the association to all the active poor it meant to provide banking services to.  “We therefore, as a matter of urgency, need funding from the Central Bank of Nigeria (CBN)’s microfinance development fund, Women Affairs and Poverty Alleviation (WAPA), Lagos State Microfinance Institution (LASMI), local and international funds providers,” Babajide said.

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Updated 7 Years ago

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Tags:     Poverty Lagos MFBs plan disburse N100bn loan poverty