Problems and Prospects in Microfinance Banks in the Bauchi Metropolis, Nigeria

Abstract

The Microfinance Banking scheme was initiated by the Nigerian government back in 2005 with the purpose of providing funds to economically active, impoverished people who are unable to obtain credit through banking institutions to decrease poverty, create jobs and support rural development. This research examines the theoretical problems that have plagued these institutions from their inception. It also examines the business environment to determine the potential of microfinance institutions in Bauchi Metropolis. According to this study, microfinance financial sector in Bauchi faces major difficulties because of inadequate facilities, social misconceptions, a weak legal and regulatory framework, unrestricted competition from other financial institutions, abandonment of core microfinance functions, and a lack of skilled manpower. Despite the numerous challenges, the investigation found prospects for these institutes. Increasing government involvement, rural areas without banks, a sizable population of people living in poverty, and an increase in entrepreneurial knowledge are a few of these potentials. In accordance with the study, with the correct regulatory interventions and the dedication of other actors toward its main goal, issues with microfinance banking may be rectified and future prospects may be improved. To sum up, this research indicates that micro banking has a bright future in Bauchi and throughout Nigeria.