Evaluating the Performance of the Microfinance Sub – Sector of the Nigerian Economy

Julius Edeghawe Ofanson .

Abstract


The paper evaluates the performance of the microfinance sub-sector of the Nigerian economy. Using Lift above Poverty Organization (LAPO) as a case study, this paper settles for the outreach and sustainability criteria for evaluating the performance of microfinance institutions (MFIs). LAPO is one of the MFIs in Nigeria that has sufficiently addressed some of the practical challenges facing micro financing. In spite of the challenges of high operation costs, loan repayment problem, inadequate experienced credit staff, inadequate refinancing facilities, client apathy and drop-out, internal control and so on facing most micro finance institutions in Nigeria, it was found that LAPO has been performing fairly well. This derives from the good performance of the outreach and sustainability indicators used. It was recommended that the formation of cooperatives should be encouraged so that a number of beneficiaries that are engaged in similar businesses could collectively enjoy the micro finance services and hence reduce operating costs as well as reduce the likelihood for borrowers to default. There is also the need to establish more microfinance institutions in rural areas so as to further promote and develop the entrepreneurial capacity that is needed for transforming the areas and accelerating economic growth.

Keywords


LAPO, microfinance, micro credit, micro enterprise, micro finance sub-sector and outreach.

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