Public Policy and Grassroots Development Initiatives: A Review of Microfinance Bank in Nigeria

Abstract

The paper examines the impact of public policy on microfinance in Nigeria as a major prerequisite for
promoting grassroots development. To this end, it articulated some research questions and leveraged the
secondary sources of data such as online journals, industry report amongst others to analyse the issues.
The findings reveal that progress has been made in cutting down financial exclusion rate in the country
since the launch of the microfinance policy, regulatory and supervisory framework in 2005. However, there
remains a gap to be bridged in terms of realising the target of reducing the exclusion rate of adult citizen
to 20% set in the National Financial Inclusion Strategy which elapsed in 2020. The finding also identifies
inadequate Supervision by the Central Bank of Nigeria, inadequate funding, high risk and heavy
transaction cost and low technical skills in microfinancing as major factors affecting the financial inclusion
drive of microfinance banks in Nigeria. To beat the odds, the paper recommends that there is need to
streamline the regulatory structure, strengthen capital standards and build adequate capacity of
microfinance banks employees.