Exploration of Micro-Finance Banking Policies and Strategies for Poverty Reduction in Nigeria

  • Umar Farouk Musa Department of Political Science, Faculty of Social and Management Sciences,Bauchi State University, Gadau, Nigeria
  • Inuwa Baba Abubakar Bauchi state Debt Management Agency, Gadau, Nigeria
Keywords: Poverty Reduction, Microfinance Institutions, Types, Policies, Challenges, Strategies.


Poverty is one of the socioeconomic challenges bed evilling many families, particularly the northern states of Nigeria. This study applied qualitative research paradigm and generated the perceptions of informants via convinience sampling. We analyzed the data through thematic, narrative and interactional apparoach. Our objective is to explore microfinance institutions strategic policies for poverty reduction and recommend to policy makers. The results exposed that micro financial institutions were classified into formal, informal, development and those with mortgage outlook.The Central Bank of Nigeria issue the certificate for authorization, the licensing and ownership. The Paid-up capital requirements, the permissible and acceptance of deposits, savings from individuals, groups and associations were the policies which propel these institutions. The non-permissible policies are restrictions on acceptance of public sector deposits. The study identified inadequate supervsions and loans defaults, poor infrasturectural facilities in rural areas, pitiable communication and derisory banking experience among the poor and low income earners, limited standardization and operating system as well hampered their services in the quest to mitigate poverty in the study area.The re-capitalization, efffective regulatory control via financial control, regularly supervision, checks and balances. Capacity building programs and Proper staffing.Provision of appropriate business model; strategies and creation of awareness. The provision of door to door banking marketing awareness, establishment of financial literacy; consumer protection programs and Provision of non-interest banking programs were perceived to overcome the perils of these institutions respectively. The study recommended for establishment of Islamic financial institutions and Takaful insurance scheme.


Acha Ikechukwu, A. (2012). Microfinance banking in Nigeria: Problems and prospects. International Journal of Finance and Accounting, 1(5), 106-111.
Adeyemi, K. S. (2008). Institutional reforms for efficient micro finance operations in Nigeria. Publication of the Central Bank of Nigeria, 26.
Ako, R. M. (2017). The Poverty-Democracy Nexus: Evidence from Nigeria. International Journal of Advanced Studies in Economics and Public Sector Management, 5(1), 2354-4228.
Alkire, S., & Seth, S. (2015). Multidimensional poverty reduction in India between 1999 and 2006: Where and how?. World Development, 72, 93-108.
Akinwale, A. A. (2010). The menace of inadequate infrastructure in Nigeria. African Journal of Science, Technology, Innovation and Development, 2(3), 207-228.
Anyanwu, C. M. (2004, November). Microfinance institutions in Nigeria: policy, practice and potentials. In G24 Workshop on “Constraints to Growth in Sub Saharan Africa,” Pretoria, South Africa.
Bakhtiari, S. (2011). Microfinance and poverty reduction: some international evidence. International Business & Economics Research Journal (IBER), 5(12).
Creswell, J. W. (1994). Research design: Qualitative and quantitative: London, United Kingdom. Sage publishers.
Ebomuche, N. C., Ihugba, O. A., & Bankong, B. (2014). The Impact of Nigeria Microfinance Banks on Poverty Reduction: Imo State Experience. International Letters of Social and Humanistic Sciences, (16), 92-113.
Edwin, A. M., Taiwo, J. N., Yewande, O. A., & Benson, K. N. (2016). The Role of Microfinance Institutions in Financing Small Businesses. The Journal of Internet Banking and Commerce, 21(1).
Ezeanata Walter, C., & Parimoo, D. (2016). Leadership Development In The Nigerian Micro Finance Banks And Its Effects On The Banks Performances. Leadership, 1(2), 15-24.
Foster, J. E. (1998). Absolute versus relative poverty. The American Economic Review, 88(2), 335-341.
Ikeanyibe, O. M. (2009). Human resource management for sustainable microfinance institutions in Nigeria. Global Journal of Social Sciences, 8(1), 119.
Imai, K. S., Arun, T., & Annim, S. K. (2010). Microfinance and household poverty reduction:New evidence from India. World Development, 38(12), 1760-1774.
Kamili, S. J. I.(2016) Impact of Microfinance on Self Help Groups in Developing Countries with special reference to India. International Journal of Business and Social Science, 7 (10), 2219-1933.
Kanu, C. (2017). The Problems, Prospects and Social Consequences of Sustainable Rural Business in Nigeria. International Journal, 5(1).
Khan, A., & Cheri, L. (2016). An Examination of Poverty as the Foundation of Crisis in Northern Nigeria. Insight on Africa, 8(1), 59-71.
Liman, N., Hashim, M. K., & Arshad, D. (2017). A Study on the Types of Microfinance Institutions in Nigeria. MAYFEB Journal of Business and Management, 2.
Ogujiuba, K., Jumare, F., & Stiegler, N. (2013). Challenges of microfinance access in Nigeria:Implications for entrepreneurship development. Mediterranean Journal of Social Sciences, 4 (6), 2039-2117
Okpara, G. C. (2010). Microfinance banks and poverty alleviation in Nigeria. Journal of Sustainable development in Africa, 12(6), 177-191.
Olomola, A. S. (2002). Social capital, microfinance group performance and poverty implications in Nigeria. Ibadan, Nigeria: Nigerian Institute of Social and Economic Research, 1-25.
Panjaitan-Drioadisuryo, R. D., & Cloud, K. (1999). Gender, self-employment and microcredit programs An Indonesian case study. The Quarterly Review of Economics and Finance, 39(5), 769-779.
Riessman, C. K. (1993). Narrative analysis (Vol. 30). Sage.Riessman, C. K. (2005). Narrative analysis. Narrative, memory & everyday life, 1-7.
Sanusi, L. S. (2012). Banking reform and its impact on the Nigerian economy. CebBN Journal of Applied Statistics, 2(2), 115-122.
Saravanan, S., & Dash, D. P. (2017). Growth and distribution of microfinance in India: A panel data analysis. Theoretical and Applied Economics, 22(1 (610), Spring), 127-146.
Siwale, J., & Okoye, N. (2017). Microfinance regulation and social sustainability of microfinance institutions: the case of Nigeria and Zambia. Annals of Public and Cooperative Economics.
Taiwo, J. N., Alege, P. O., & Olokoyo, F. O. (2016). Microfinancing and micro-enterprises growth in Nigeria. Lagos Journal of Banking, Finance & Economic, 3(1), 87-119.
Taiwo, J. N., Yewande, O. A., Edwin, A. M., & Benson, K. N. (2016). The role of microfinance institutions in financing small businesses. Journal of Internet Banking and Commerce, 21(1), 1.
Tansey, O. (2007). Process tracing and elite interviewing: a case for non-probability: Political Science and Politics, 40, (4).
Yahaya, K. A., & Osemene, O. F. (2011). Effectiveness of microfinance banks in alleviating poverty in Kwara State Nigeria. Global Journal of Management and Business Research, 11(4).
How to Cite
Musa, U. F., & Abubakar, I. B. (2017). Exploration of Micro-Finance Banking Policies and Strategies for Poverty Reduction in Nigeria. Australian Finance & Banking Review, 1(1), 1-13. https://doi.org/10.46281/afbr.v1i1.70
Research Articles