Financial Institutions Micro Loans: A Strategy for Reducing Poverty in Nigeria

Abstract

This article summarizes the arguments and counter-arguments in the scientific debate on the use of microcredit by financial institutions as a strategic direction for poverty reduction in Nigeria. This study is aimed at studying the impact of microcredit operations provided by commercial banks to business entities, poverty indicators of the country. Five commercial and five microfinance banks of the state of Nigeria were selected as the object of the study. Methodological support of this work includes a survey method (for accumulating primary information on obtaining correct data of respondents on the dynamics of poverty indicators, reducing unemployment, training, skills, expanding income opportunities, etc.). The article presents the results of empirical analysis, showed a significant impact of microcredit processes of financial institutions to reduce poverty indicators in Nigeria.The author notes the need for banks in Nigeria to introduce less aggressive mechanisms for profit, that is, formed on a socialist basis. Based on the results of the study, the author proposed the following recommendations: financial and institutional promotion of major microfinance banks in Nigeria; the increase in government spending on the organization of seminars to prepare and expand business opportunities for community representatives to establish their own business, simplification of mechanisms for the provision of microcredit (on the principles of gender sensitivity, in particular for women entrepreneurs) and reduction of interest rates for entrepreneurs, which will improve both the indicators of financial and economic development of the country, and will contribute to the well-being of society as a whole. Keywords: financial institutions, microfinance banks, microcredit, poverty reduction.