National Microfinance Policy and Credit Accessibility by Micro, Small and Medium Entrepreneurs in Nigeria

Abstract

This paper examines the impact of the Microfinance policy on credit accessibility and financial inclusion by micro entrepreneurs, low income household, economically active poor, being denied access to financial services. This study therefore seeks to establish why the economically active poor, micro entrepreneurs in Nigeria are excluded from financial services. From findings only 35 percent of the economically active poor have access to financial services while 65 percent are denied access to financial inclusion. The reason is as a result of the CBN high Monetary Policy Rate of 12 percent, compelling commercial banks and microfinance banks to lend as high as 19 and 22 percent while the latter 30 percent and above, discouraging borrowers and posing threat to the development of the MSMES sector. Findings also reveal that the uneven spread of microfinance institutions across the country also accounts for the poor financial accessibility by micro entrepreneurs. Statistically, the South-west geopolitical zone has 343 microfinance banks (39.4%), North-East only has 32 (3.7%), South-South has 117 (13.4%), North-West has 58 (6.7%), North-Central 151(17.4%), South-East 169 (19.4%). Thus, those in South-West have more access to financial services than those in the North-East and North-West part of the country. The study therefore observed and recommended that the CBN reduced its 12% Monetary Policy Rate to 9 percent, to enhance financial inclusiveness and accessibility   by the economically active poor. The study also recommended that more microfinance institutions be established in zones that has less. States like Yobe has only 1, microfinance bank, Bayelsa 4, Borno (4), while Lagos has 180, Anambra (75). The study also recommends that microfinance institutions should not demand for tangible assets and financial instruments as collateral security, it accounts for the poor financial inclusion and accessibility by micro entrepreneurs.