By Ladi Patrick-Okwoli

A renowned financial expert, Dr Chris Itsede, has called for the strengthening of the operations of microfinance banks to enable them to play a more effective role in the implementation of the current administration’s 8-point agenda to boost the economy, and reduce multidimensional poverty.

The co-founder of Osomhe Microfinance Bank Limited, who made the call while delivering a lecture at the opening ceremony of the ninth conference on Microfinance and Enterprise Development organized by LAPO Institute for Microfinance and Management Studies at the weekend in Benin City, the Edo State capital, noted that Nigeria stands to reap tremendous benefits from leveraging microfinance interventions.

According to Dr Itsede, “microfinance institutions play a vital role in providing access to finance, particularly to small and medium scale enterprises (MSMEs), the unbanked, and underprivileged population in Nigeria. With robust governance frameworks in place, microfinance institutions can effectively contribute to economic development and poverty reduction”.

He observed that, like other subsectors, microfinance has its fair share of challenges that impede its operations. These include inadequate capital, poor and inefficient infrastructure, multiple and burdensome regulation, low financial literacy, and weak management capacity of many operators of MSMEs. Despite these obstacles, according to the finance expert, the prospects for microfinance in Nigeria look good. He called on governments at all levels to leverage microfinance banks and related institutions that are closest to the grassroots to lift the affected 133 million Nigerians from the multidimensional poverty. As the country progresses towards achieving its developmental goals outlined in Nigeria Agenda 2050 and National Development Plan (2021-2025), he posited that the role of microfinance institutions will be thrust into bolder relief.

He called on the ecosystem’s stakeholders – government, regulatory bodies, financial institutions, development organizations and the private sector – to work hand in hand to create a stable and conducive environment for the operation of microfinance banks in Nigeria.

“Fostering partnerships, sharing best practices, leveraging technological innovations and capacity building support can help overcome these obstacles and promote the growth, scalability and sustainability of microfinance banks”.

The expert said “We must promote transparency, accountability and good governance in microfinance institutions. These principles will not only enhance the credibility of the sector but ensure that finance is channeled towards productive and sustainable ventures.” He called for increased funding of microfinance institutions from domestic and international sources to meet the growing demand for their services.

Dr Itsede called for implementation of robust capacity building programmes to enhance the skills and knowledge of microfinance practitioners. He stressed the need to develop innovative products and delivery channels to reduce operational costs and expand their outreach, particularly in rural areas. The needed innovations include but are not limited to Digital Transformation, Social Performance Management, Product Diversification, Data Analytics and Artificial Intelligence, and Green Microfinance, among others.

In his remarks, the Chairman of the occasion, Professor John Igene, said the conference was aimed at bringing stakeholders together to brainstorm on the way forward for SMEs in Nigeria.

According to him, “the theme of this conference ‘Strategies to Optimize Microfinance Institutions for Alleviating Poverty, Enhancing Financial Inclusion, and Stimulating Economic Growth in Nigeria’, is relevant and topical against the backdrop of the ongoing national conversation to relaunch the economy towards inclusive growth.” He enjoined the participants to come up with implementable ideas at the end of their deliberations.

The conference was attended by hundreds of microfinance operators, regulatory agencies, NGOs, participants from the academia, and MSMEs.