Microfinance has been there for a while, the concept which explains the kind of financial services to the poor and gives a positive effect on the local economy. In this column on microfinance, I do everything to put the concept to the understanding of the poor class and how they can use the services of microfinance banks to improve the living standards. Basically microfinance seeks to get the poor masses which are also classified as unbanked population to begin to enjoy the banking services at their levels. From CBN’s analysis, this class has about 65% content of the entire over 140million people in Nigeria.  If we further break the percentage into approximated figure, we shall talk about over 91million people who are yet to enjoy banking services in Nigeria.

Microfinance banking  in the  shortest explanation helps and encourages poor people to cultivate the habit of  savings and also makes micro credit available to them without rigors. This column is also meant to discuss in details the concept of how the poor handle their money and how they can be helped  to channel this money into useful investment products that will change and possibly translate the poor  to the rich class. Ideally no one should be poor forever. The structure of microfinance banking is just perfectly designed so that those who would  take advantage of the various services and products available can use it to their benefit.

Fundamentals such as; that poor people do not repay loans; poor people cannot pay interest rates necessary to cover the cost of delivering the services are all myths. In various write ups for this column, I shall do every thing through our research department to discuss them.

Microfinance is a structure that will affect the local economy by enhancing the development of micro enterprise. The increase in micro enterprise will definitely lead to the creation of jobs. This will raise the standard of living in the class of the poor; certainly many will migrate from the kingdom of poverty to that of the low-income. Population is  also going to increase. As the poor person who once did not know how to channel his resources into productive use, being to utilize the principles of savings; we shall be discussing in this column to his advantage & there shall be an increase in productive use of capital.

The poor or low income person also complains of lack of capital to start his micro business, we have lined up: strategies to help the poor to start building up capital and also have access to micro credit that would enhance their business. With this in mind the poor person does not need to keep his savings under his pillow or under the floor board. In the microfinance world, the poor person is intended to become the king who receives a state of the art financial services that will build confidence in him to build his micro business until it becomes a mega business.

Microfinance banking in Nigeria is in its adolescence with great potentials to make tremendous impact.
Poor people are able to save and also actually want to save. The lack  of savings culture by the poor is not because of the lack of capacity but rather the opportunity. Take an okada rider for instance, having interacted with them in my research, I discovered that why most of them are not rich today has been as a result of lack of opportunity to save and so the vicious cycle continues.
The poor, during their life time have many occasions when they need money that are far greater than what they have saved. The practical way of meeting this lump sum requirement is by finding some avenues to build them up from their savings.

The lump sum helps out in many different ways to meet life cycle needs such as emergencies, taking up opportunity to acquire assets, develop a business, buy household items, educate self or family members.  This list goes on and on. Microfinance banking has the basic task of providing financial services for the poor and should provide them the mechanism to convert savings into lump sums for a wide variety of needs. This is what microfinance banks will do for the poor in the safest, most convenient, most flexible and also most affordable way.

With CBN involvement in microfinance banking regulations, it is obvious the poor is set for a catapult. This is because those who seek to turn their saving into lump sums by finding a reliable saving deposit takers, those who seek advances against their deposit and/or savings, those who seek to be a part of investment clubs or associations now have veritable structures in microfinance banks in the country to put their savings and start planning on how the lump sum would be utilized in the future.

In the other edition that would be published, I will commence the process of detailing some of the products and services that will make the poor to transform his fortune. For all that to take place, microfinance banks need products that suit the capacity of the poor to save and product delivery systems that are convenient for the poor which brooks microfinance bank has provided in several forms to her customers.. In subsequent  editions, we shall discuss how such products and services shall be accelerated. Before I end up this piece today, who is the poor? A popular and useful definition of a poor person is someone who does not have money. This is academically inclined and the aid industry, out  of fashion though it suits our context. When I talk about the poor, I mean therefore people who compare to fellow Nigerians do not have much money. In Nigeria there is no body that does not have money at all; it’s only that when compared to others, the poor man does not have as much money as thee others.

Therefore in the absence of much money, it’s imperative that you manage well the money you have. How? By hanging on to what you have, avoiding unnecessary expenditure and finding a safe place  to store whatever money you have. To make that choice to save than consume everything is the foundation of money management. Talk to a microfinance banker today and seek ways of saving up.

Script by:
CHRISTIAN MBOHO
VICE CHAIRMAN

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