PROSPECTS AND CHALLENGES OF MICROFINANCE BANKS IN ZARIA METROPOLIS

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PROSPECTS AND CHALLENGES OF MICROFINANCE BANKS IN ZARIA METROPOLIS

Abstract:

A vibrant microfinance institution is capable of eliminating income disparities and creation of opportunities leading to increase in employment generation as was noticed in Grameen Bank in Bangladesh. Although, several studies have been conducted on the institution of Microfinance Bank in Nigeria, but very few of these works did justice to the distinctive pattern of operation of the three categories of Microfinance Banks in Nigeria. Therefore, this research investigated the prospects and challenges of Microfinance Bank in Zaria metropolis in terms of its pattern of credit disbursement to its clients the extent to which microfinance banks comply with the legal framework that established them and the peculiar challenges of the institution. The political economy theory of class conflict and welfare state theory were used. Purposive and systematic sampling techniques were adopted to draw 300 clients across the three categories of microfinance banks (Nakowa, Microcred and Lapo) within Zaria metropolis. Six in-depth interview sessions were conducted with the staff and clients of each of these microfinance banks and the Secretary of National Association of Microfinance Bank, Kaduna Chapter. The results of the quantitative data were analyzed through frequency distribution, tables and percentages and these showed that majority of the clients engaged in Small and Medium Scale businesses, while the qualitative data revealed the various conditions and criteria required by various microfinance banks before loan disbursement to the client. The result of the research established that, the clients of microfinance banks were individuals engaging in various forms of Small and Medium Scale business with no special attention given to any gender in accessing the microfinance credit facilities. High rate of interest, low business turns out are the major challenges faced by clients of microfinance banks, while high rate of loan delinquencies, low level of savings and unconducive business environment represent the precarious challenges of these microfinance banks in the study area. Hence, the research recommended that arrangement should be made by the various microfinance banks to educate the clients and sensitize them on the use and implications of microfinance credit facilities and that government should ensure that the activities of microfinance banks are subjected to close and periodic monitoring by the Central Bank of Nigeria.

PROSPECTS AND CHALLENGES OF MICROFINANCE BANKS IN ZARIA METROPOLIS

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