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The Roles Of Microfinance Banks


One of the factors that can hinder the growth of business or


Role of Micro Finance

banks are financial institutions that grant access to credit facilities

to individuals, small businesses and organization. The loans that

micro-finance banks give to people and small businesses are known as

micro loans.

Using Nigeria as a case study, there are two major forms of micro finance banks in Nigeria. They are:

unit and it can only create branches gradually, starting within its

state. it does not have to be gradual in opening its branches, so long

Granting Of Loans

primary role of micro-finance banks is to provide micro loans to

Poverty Alleviation


banks play an important role in the poverty alleviation of a particular

country. This is because, the primary objective of a government seeking

to alleviate poverty is to provide as many job opportunities as

possible, as well as creating a means of generating

income for

businesses. Micro-finance banks are key players in this aspect because

they specialize in the provision of credit facilities to individuals as

well as businesses.

For example, the Lift Above Poverty Level (LAPO) is an NGO that runs a micro-finance bank in Nigeria. LAPO is a pro-poor financial institution committed to the empowerment of low income earners

improving the quality of life of poor people by giving them access to

credit facilities without collateral. They grant loans on the basis of

small installment payments, making repayment of the loans less

stressful. LAPO has helped a lot of small scale business people in

Creation Of Employment Opportunities

Increasing Small And Micro Enterprises (SMEs)

banks provide a platform for people with business ideas to bring their

Take for instance, FBN microfinance bank, a

subsidiary of First Bank in Nigeria. This microfinance bank has credit

products that are meant for small scale businesses, artisans, petty

Promoting Agricultural Production

Category: Payday loans

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