Micro-financing as Poverty Reduction Strategy: a Case Study of Oredo and Egor Local Government Areas of Edo State, Nigeria

Abstract

Micro-finance is another source of credit facility being encouraged in Nigeria as anti-poverty strategy tool to assist the poor and low income group to enable them access credit (finance) so as to engage in meaningful commercial activities to pull them out of poverty. The paper attempts to find out if the strategy is helping the poor and low income group to access credit. The survey method was adopted for the study and the primary and secondary sources of data collection were used to elicit data for the study. In the two local governments used as case study, it was discovered that many people in the low income group and the poor have been able to access credit; and it is helping them to move out of poverty. However, it was discovered that there are many flaws that are militating against the strategy, among which are stringent collaterals, high cost of operations and high interest rate. The corrections of these flaws will help many poor and low income groups access credit and reduce poverty in the country. The paper recommends among others, that the interest rate of financial institutions be reduced and collateral requirements should be reduced to enable more low income earners benefit.