Impact assessment of microfinance institutions in Nigeria: gaps, inefficiencies and emerging solutions

Microfinance has received a lot of attention recently, both from policy makers as well as in academic circles. Microfinance interventions have contributed significantly to small business development. The success story of microfinance schemes notwithstanding, they have the problem of excluding the poorest of the poor and at times do not have the characteristics that encourage entrepreneurial development. This paper reviews the achievements of the ‘microfinance revolution’, through reference to the now extensive literature. It finds that there are many opportunities to improve and innovate. The interpretation reveals that as more the number of years of formal education of respondents, the more the level of enlightenment which will determine the level of annual savings. It is also confirmed that there is negative relationship between the nature of business enterprises and social cultural expenses. This negative relationship could be explained as the more the expenditure on social and cultural issues the less the annual savings. To illustrate this finding, the paper concentrates on examining what we need to know to design and deliver better financial products to the poor, especially the poorest. It argues that financial services for the poor are essentially a matter of helping the poor turn their savings into sums large enough to satisfy a wide range of business, consumption, personal, social and asset-building needs.