Nigeria is a business-oriented economy, with an estimated 37 million micro, small and medium-sized companies (MSMEs). The entrepreneurial economy contributes roughly 48 percent of the country’s gross domestic product and employs over 60 million people, making Nigeria the largest economy in the sub-Saharan region.
Although these numbers look promising, few businesses are successful in obtaining loans from financial institutions. According to The Credit Crunch, a joint report by the Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC), of the 840 MSMEs surveyed in Nigeria, only 31 percent successfully obtained a loan from a bank or microfinance institution. MSMEs are often burdened by a myriad of challenges like multiple taxation systems and high costs. The risks associated with credit access in Nigeria stem from many causes.
Lack of Collateral
To secure a loan from financial institutions, collateral is one of the prerequisites. This protects the lending bank in case the borrower defaults on the loan. For MSMEs looking for small business loans, inadequate collateral is a major reason for not receiving loans.
Secure land is the most common collateral for banks in Nigeria, but only 5 percent of the land is formally titled, mostly consisting of urban land or commercial farms. Low-income households own a large portion of rural land, which does not have validated titles.
This acts as a major obstacle for microenterprise owners and low-income households that are keen to obtain affordable credit from formal financial institutions. Many analysts argue that the provisions and implementations of the Land Use Act of 1978 are largely responsible for limiting the authenticated titling of rural land. Since banks ask for land or buildings as collateral in 98 percent of loan applications, low-income loan seekers remain unable to secure loans.
But efforts are being made to allow greater use of moveable and reputational collateral in bank loans. The CBN recently established the National Collateral Registry to improve credit access in Nigeria. Additionally, it is supporting the development of a modern credit reporting system in Nigeria with backing from the World Bank.
No Awareness of Credit Reporting System
Many borrowers are unaware of their credit history, and despite having a good credit record, they are reluctant to apply for loans simply because they do not meet the collateral requirements.
This becomes a concern for borrowers, particularly rural dwellers looking for microloans for their small businesses. They have been reluctant to approach banks for loans, which in turn has slowed down the entrepreneurial growth of small businesses that may have had a promising growth but could rarely take off due to a lack of financing.
The country remains a part of a large-scale campaign, the Credit Reporting and National Collateral Registry Education and Awareness Campaign. The campaign’s goal is to create awareness of credit tools through the collateral registry and the credit reporting system and is a collaborative initiative of the CBN and IFC. Such efforts promise to promote responsible lending and borrowing among those borrowers.
CBN has also teamed up with other stakeholders to promote the Credit Awareness campaign. The campaign promises to educate consumers on rural financial services and shares information on issues that will improve and allow greater appreciation of the rights and responsibilities of microfinance institutions and other financial institutions, along with their clients and stakeholders. Subsequently, Credit Awareness Nigeria plans on launching another public campaign on credit awareness and financial literacy to bring together microfinance practitioner institutions, development partners, stakeholders and clients of microfinance institutions.
No Interaction with Financial Institutions
Of those surveyed, less than a third of MSMEs successfully acquired loans for their businesses. A reason for this is that rural borrowers do not have an established relationship with banks. Due to their lack of interaction with financial institutions, rural borrowers fail to understand the conditions of getting a loan or the required loan application procedures. This also causes problems for rural dwellers who do not have a credit history, resulting in borrowers resorting to informal savings and reinvested profits.
Nigerian Businesses Remain Hopeful
While there remain considerable concerns about inadequate credit access in Nigeria, not all hope is lost. MSMEs overall have confidence in Nigeria’s economy and feel that economic growth will improve in the next five years as financial lenders become more willing to lend to smaller-scale businesses.
Nigeria is one of the 25 priority countries to become a part of the World Bank Group’s Universal Financial Access 2020 initiatives. The World Bank project aims to extend access to financial services to all adults by 2020. Moreover, many projects are joining hands to ensure that the rural dwellers get credit access, with programs being introduced to overhaul the obsolete land registration system and paving way for more credit options for rural farmers.
– Deena Zaidi
Photo: Flickr
The Success of Humanitarian Aid to Argentina
As of 2016, the World Bank recorded that Argentina, a country located in South America, had a total population of 43.85 million and a national poverty headcount ratio of 30.3 percent. This indicated that 30.3 percent of the population lived in poverty at that time.
Humanitarian Aid to Argentina for HIV/AIDS
In 2014, the nonprofit organization UNAIDS approximated that 110,000 living people suffer from HIV/AIDS in Argentina. Of that number, about 5,400 new infections occurred. There were an estimated 2,300 deaths due to HIV/AIDS in that same year.
Increasing Disease Prevention
Humanitarian aid to Argentina has increased efforts for disease prevention. The AIDS Healthcare Foundation program partners with local hospitals and universities to educate and train health professionals in HIV treatment and services.
According to the World Bank, about 30 percent of those infected with HIV/AIDS are unaware of their condition. Fortunately, Argentina’s National AIDS Law required improved access to healthcare as HIV/AIDS treatment became accessible for free.
In 2016, UNAIDS recorded that the cases of HIV/AIDS-related illness increased to about 120,000 living people, 2,400 HIV/AIDS-related deaths and 5,500 new infections. Despite growth in cases, relief programs like the Aids Healthcare Foundation furthered efforts by operating in five clinics in Argentina.
Improving Water Sanitation
From 1991 to 2015, between 16 to 19 million diarrhea-related illnesses were linked to inadequate access to clean water and water services. This limited access mainly impacts Argentina’s northern regions which include Catamarca, Formo and Tucuman, among others.
In March 2017, the World Bank indicated approval of the Belgrano Water Supply and Sanitation Development Project. The project aims to provide humanitarian aid to Argentina by making clean water available to all. It also aims to create “75 percent access to wastewater services for those living in urban areas by the end of 2019.” This will make sanitary water available to 8.2 million people.
Recently Approved Housing Project
A 2017 report by the World Bank indicates a rise in the lack of affordable housing provided by the public. Approximately 18 percent of the population lives in informal housing with limited, or lack of, access to clean water and wastewater services. In this informal housing, residents also do not have adequate access to healthcare and schools.
The Integrated Habitat and Housing Project was approved and includes a $200 million commitment until 2022. The project aims to increase formal housing while also improving living conditions for households in selected precarious urban settlements.
Developing projects by both the World Bank and nonprofit organizations deliver humanitarian aid to Argentina, especially in regard to HIV/AIDS prevention, water sanitation and housing conditions. These concerns indicate that poverty takes many forms and still exists today. However, the continued efforts in Argentina are promising in the global mission to alleviate poverty.
– Christine Leung
Photo: Flickr
What Makes a Country Developed? Moving Past Poverty
The former Secretary of the United Nations, Kofi Annan, said that a developed country is “one that allows all its citizens to enjoy a free and healthy life in a safe environment.” While this may be an oversimplified statement, it highlights key issues that must be addressed in order for a country to develop. Here are some characteristics of underdeveloped countries.
Low life expectancy
While the life expectancy of developed countries is typically in the 70s and 80s, underdeveloped countries often have life expectancies in the low 50s. This is common in African nations and is due to high birthrates and low contraception use, poor access to health care and potable water, lack of education and disease. All of this can easily be prevented.
Many measures can raise life expectancy while decreasing overpopulation and deaths resulting from preventable diseases. This includes using technology to help medical clinics in rural areas, increasing the number of wells, utilizing solar sanitation systems, revamping national education standards and having a sharper focus on vaccines.
Poor education and literacy
Similarly to life expectancy, literacy rates and educational systems are telltale signs of a developed country. While countries like Norway consistently maintain a 100 percent literacy rate, underdeveloped countries, such as Niger, maintain an estimated 19 percent. While primary school is mandatory for most of the world’s children, many drop out in underdeveloped countries. The lack of secondary and vocational education for children prevents them from entering the workforce later in life. This can be combated by revamping curriculum and teacher training and by enforcing internationally recognized standards.
Poverty rates
The economy factors greatly into what makes a country developed. Lack of income prevents people from access to basic human rights such as clean water, food and preventable measures against disease. While only 15 percent of Americans live in poverty, over 60 percent in the Congo and neighboring countries do. With additional aid, underdeveloped countries can increase credit access and improve agricultural and infrastructural systems, which would produce food and create jobs simultaneously.
High fertility rates
Overpopulation is another characteristic of underdeveloped countries. Lack of education and birth control have contributed greatly to high fertility rates. In countries like Chad, for instance, only five percent utilize contraception. It has contributed to high birth rates, a population in which the majority are adolescents and have low life expectancies. Better education and access to birth control can balance the booming population in underdeveloped countries.
It is clear that the steps to helping underdeveloped countries are simple. Healthcare, education and credit access contribute to what makes a country developed. By addressing the aforementioned issues, underdeveloped countries can take steps to develop further and contribute to eliminating global poverty.
– Eric Paulsen
Photo: Flickr
Refugee Aid in Thailand
The History of Humanitarian Aid in Thailand
Over the past four decades, economic growth has been significant, with the formerly low-income country becoming an upper-income state. Poverty declined to 7.2 percent in 2015 from a high of 67 percent in 1986. This was in part because of the high growth rate and increased agricultural prices.
Seeking Asylum in Thailand
As of July 2017, 102,000 refugees from Myanmar have found asylum in Thailand. Many families have sought, or continue to seek, refuge in Thailand.
Nine camps situated along the border house refugees and provide basic needs such as healthcare, food, shelter, water, sanitation, education and protection. These camps function as small communities, limiting the livelihoods of the refugees to these areas but supplying protection from the state they fled.
In many circumstances, individuals get married, bear children and spend extensive time in these larger camps. Mae La is the largest refugee camp in Thailand.
Increasing Refugee Aid in Thailand
The International Rescue Committee (IRC) Support Center provides refugee aid in Thailand. Its programs help families and individuals locate documents to allow them to further their citizenship paperwork.
This foundation also supplies food, water and healthcare to people that live in the camps. Economic wellbeing is also one of the goals on the organization’s agenda to help displaced people.
Economic wellbeing, according to the International Rescue Committee, is meeting individuals’ basic needs and allowing individuals to find employment. Allowing refugees to work and earn an income encourages prosperity within the family unit and society.
Through the work that the IRC accomplishes, refugee aid in Thailand will benefit not only the refugees but allow for a country to gain further economic strength.
– Bronti DeRoche
Photo: Flickr
How Old Do You Have to Be to Run for Congress?
Despite the fact that Biden was extremely young when he first took office in the Senate, he is only the fifth-youngest senator in U.S. history. The youngest senator in U.S. history is John Henry Eaton of Tennessee, who was 28 years old when he became a senator. Though Eaton was elected after the age requirement for the Senate was established in 1787, birth records were poorly kept during this time so it was much harder to guarantee that all candidates were of age.
The age requirement for the Senate was debated after establishing the age requirement for the House of Representatives, which was originally 21 years old, or the voting age at the time. The age was later increased to 25 years old after a move by George Mason of Virginia, who claimed that to hold a seat in the House, one should have time to get his or her own affairs in order before trying to manage a nation. This fact helps to answer the question “how old do you have to be to run for Congress?”
However, the age requirement for the House remained lower than many other positions because the founders wanted this legislative chamber to be closer to the people than any other chamber. Due to this desire, the founders were a lot less restrictive when establishing the requirements for the House. The restriction on age for the Senate is different because the founders felt that the greater responsibilities of Senators required those in office to have more knowledge and greater character stability than Representatives.
While Eaton was the youngest Senator in US history at 28 years old, William Charles Claiborne, also from Tennessee, was the youngest Representative ever. Claiborne, born in 1775, was 22 when he was elected as a Representative. Claiborne was later elected again, at age 24, while he still did not meet the age requirement.
Though the U.S. has elected quite a few Congressmen who are under the age requirement, this trend has not continued, as the average age of a U.S. Senator is 60 years old. However, some young people who have run for Congress recently are trying to encourage more young people to run for office and get more involved in politics.
“How old do you have to be to run for Congress?” was a question that went through the mind of Erin Schrode. Schrode, a woman from Marin County, California, began a campaign for Congress when she was only 24. Schrode did not win the 2016 election for House of Representatives, but if she had, she would have been the youngest ever Congresswoman. This title is currently held by Elise Stefanik, who was 30 years old when she was elected to be a Representative in 2014.
Schrode claims that she never intended to get involved in politics, but after seeing her mother’s dedication to her work towards combating skyrocketing cancer rates, Schrode developed a passion for politics. She believes that more young people should run for Congress because 35 percent of the U.S. population is under the age of 30, but people under 30 rarely hold Congressional seats.
– Haley Rogers
Photo: Flickr
Drugs and Poverty in Albania: What it Means for Europe
On December 1, 2016, the BBC reported that Albania’s clandestine drug industry may be producing almost half of the nation’s total GDP on a yearly basis. The recent aspiration of the Albanian government to become admitted into the European Union, though, has successfully and drastically accelerated efforts to crack down on the mafias, corruption and poverty in Albania which allow these occurrences to take place.
But first, the events beg the question: how has the situation gotten so bad? Albania has been stable in recent decades, although not on a large enough scale. For instance, while the capital of Tirana had seen significant growth in services and order, most of the rest of the country was neglected. Poor and impoverished citizens in the rural regions were left to fend for themselves – and found a better life through the growth of illegal drugs. These are just a few examples of the effects of poverty in Albania backed by research.
In response to this, Prime Minister Edi Rama showed eagerness in establishing prosperous policies and projects. For instance, the government of Albania is attempting to curb issues mentioned heretofore by providing financial services to rural areas, establishing consumer protection and promoting tourism throughout the nation. Also, police salaries have risen between 10 and 17 percent to steer away bribery.
Of course, more turbulent methods are also being pursued — Rama has promised to deal with the more aggressive concerns by expanding currently existing assets. With the help of the Italian government, and significantly more senior officers, keeping track of and attacking these illicit organizations has become easier. For instance, Rama oversaw the besiege of Lazarat in 2014, a village in southern Albania, where civilians ineffectively utilized military-grade weaponry against police.
At this rate, the flow of certain drugs throughout Europe should significantly decrease since Albania is one of the root causes of this spread. Today, Albania has opened up more government jobs to citizens while it also works to rebuild and refurnish once-neglected regions. Programs to promote rehabilitation are also a must to not only help in reducing poverty in Albania, but to also further the nation as a whole. As a result of these efforts, Rama hopes Albania will be accepted into the EU in the early 2020s.
– Kristopher Nasse
Photo: Flickr
Progress of Road Infrastructure in Mali Drives Development
Mali is the eighth largest country in Africa bordering Algeria, Niger, Mauritania, Guinea, Senegal, Cote d’Ivoire and Burkina Faso and is located in the North-Western region of the continent.
Infrastructure Development
Most of the population in Mali is concentrated in the southern area with mostly nomads inhabiting farther north. In the south, there is easier access to resources, agriculture and the market for buying/selling goods.
Infrastructure greatly reflects the accommodation to this geographic and demographic distribution. Road infrastructure in Mali is particularly keen on creating a network of connectivity between people, resources and export ports. This is why Mali has one of the most spatially concentrated infrastructure networks in the continent.
There are three international corridors that link landlocked Mali to the sea: Tema-Ouagadougou-Bamako, Dakar-Bamako and Abidjan-Ferkesessedougou-Bamako. These routes help bring Malian exports to central ports for shipping as well as interregional trade between other nations. Both of these help build the economy in Mali rather than keeping it as a self-reliant country struggling with poverty.
Local and Global Connectivity
The connectivity of road infrastructure in Mali has greatly improved local and global business prospects. For example, there is a transnational intercity highway known as Kankan-Kourémalé-Bamako that is the only way to enter and exit between Conakry (a port city in Guinea) and Bamako (the capital city of Mali). The African Development Bank Group highlights how this highway has “revolutionized the daily lives of thousands of people.” The highway has seen an increase in traffic for commuting workers who are now able to travel longer distances for better work. Traders set up their stalls along the highway and have seen a significant increase in customers and profits.
Mali does excellent work to maintain their roads, especially the significant highways and interregional methods of transport. Road infrastructure in Mali has guaranteed excellent safety for all users; in fact, a newly generated Road Authority has allowed for necessary maintenance throughout the year.
Despite inadequate funding, road infrastructure in Mali has been a highlighted priority to pave the way for economic growth. The nation’s government has directed much of its national funds toward maintenance and development of the overall road network, and as a result, Mali has set an excellent example for neighboring countries for how to diversify the economy by expanding transportation networks.
– Caysi Simpson
Photo: Flickr
Sustainable Agriculture in Honduras Helping Rural Farmers
Honduras has long relied on U.S. trade and remittances for economic stability. Regarding agriculture specifically, in April 2015 the U.S. and Honduras signed an agreement to support the development of sustainable agriculture in Honduras. It will provide the government of Honduras with a vast amount of U.S. agriculture products valued at $17 million.
By selling these products, the government will then have the money to implement their own projects that focus on job creation and income opportunities for vulnerable citizens such as rural farmers. Similarly, it hopes to build a stronger agricultural sector that can begin to focus on sustainable forms of farming.
TechnoServe, a nonprofit that aims to help the impoverished, recognizes that climate change severely affects Honduras. Its Dry Corridor has had recent issues with flooding and droughts that are wreaking havoc on rural farming. TechnoServe decided to start the Sustainable Agricultural Improvement project (MAS in Spanish) to help build farmers’ resilience to climate change in their bean and coffee farms—two of the country’s major exports. It provides training on sustainable agriculture practices and access to high-quality products.
By learning from TechnoServe, farmers have been able to buy more drought-tolerant seeds than traditional varieties and organic fertilizers that increase water retention, all at a better price thanks to a marketing agreement that MAS facilitated. Similarly, 3,400 bean farmers and 16,000 coffee farmers have increased their incomes by an average of 50 percent.
The project has also helped these farmers access more than $15 million in funding during the past four years, which has allowed over 700 farmers to build solar-powered machinery to reduce regular fuel-based machines that are not as sustainable. As a result of these sustainable practices, participating coffee farmers have sold 14,500 tons directly to exporters.
With help from USAID and smaller programs and groups, sustainable agriculture in Honduras has slowly improved. As climate change increasingly wreaks havoc on poorer nations with droughts, extreme weather and varied agricultural productivity, these projects support Honduran farmers through loans, financing, knowledge and exceptional products.
Slowly, sustainable agricultural in Honduras is gaining ground in a manner that similarly sustains economic growth and stability for farmers. With international support, Honduras as a nation can sustain and improve its agricultural market.
– Nick McGuire
Photo: Flickr
Success of Humanitarian Aid to Malawi Visible in 2018
Malawi, a country in eastern Africa, has long battled with issues of governmental corruption, famine and widespread disease. However, in recent years, Malawi has seen vast improvement in important areas of societal life, with most of that improvement being a result of focused effort of international aid programs that increase the successful return of humanitarian aid to Malawi.
With 2017 having drawn to a close, the success of humanitarian aid efforts and investments to the country of Malawi are most noticeable in two distinct categories: technological advancements and food security.
Technology
In regard to technology, the most recent “hot-button” word in Malawi is drones. As of this month, UNICEF has reported the completion of a corridor for testing drones, the first of its kind in both the country, region and in the continent of Africa as a whole.
The corridor was built in the Kasungu district of Malawi, in the Kasungu Aerodrome, and according to UNICEF officials, the drones piloted in and out are planned to be used to further humanitarian causes and programs.
In a press release, UNICEF said that the drones would focus on aerial imaging, Wi-Fi and cell phone signals and transportation of goods, food and medical supplies — much like the drones that were built and piloted in the 2016 testing of the program. The early machines were put through various trials such as transporting dried blood samples from infants for HIV testing in remote clinics.
Malawi’s Minister of Transport and Public Works Jappie Mhango said that the Malawi government was already looking into using the drones to respond to natural disasters like floods and fires.
Food Security
With food sustainability, numbers have improved dramatically from September and October’s low statistics. In late 2016 and early 2017, the majority of Malawian households reported a minimal to crisis level of food security, meaning that families didn’t know where their next meal was coming from, or if it was even coming at all. Malawian crops in recent years have been affected by both an unstable economy and a surge of armyworm infestations, as well as a long-lasting and regional-spanning drought.
Humanitarian Aid to Malawi
According to the USAID-funded Famine Early Warning Systems Network, humanitarian aid to Malawi has caused an 87 percent decrease in low food security for households in the Malawi districts of Balaka and Machinga.
Project Concern International (PCI), Feed the Future and Concern Worldwide distributed more than 22,800 crop storage bags, trained 225 households across 45 communities on the use of the bags and collectively raised over $500,000 to improve food security and agricultural sustainability in Malawi in 2017.
In addition, USAID/OFDA provided a total of more than $3.5 million in 2017 to partner organizations to aid in the recovery of water sanitation and hygiene interventions.
Heading into 2018, Malawi’s food sustainability and security is on the rise, the country has embraced new technological solutions to humanitarian crises and the future looks brighter than it has in years past.
– Arianna Smith
Photo: Flickr
Growing Up in Exile: Who Is Monique Macías?
Born in Equatorial Guinea in 1970, only two years after the country gained independence from Spain, her father, Francisco Macías Nguema, was the small country’s first elected president. As a new president, Macías sought to form relationships with leaders of other countries such as North Korean President Kim Il-sung.
Monique Macías stated that her father and Kim Il-sung became fast friends because they had “a lot in common”, pointing out that “both fought against colonial powers and both built their support base through nationalism.”
Regardless, Francisco Macías had a short term due to a series of illegal acts he implemented through the Equatorial Guinean government. In the late 1970s. Francisco Macías was overthrown as president of Equatorial Guinea and tried for numerous crimes including genocide, embezzlement and treason. Francisco Macías was executed by firing squad in the late 1970s.
Foreseeing his exile and later execution, Franciso Macías sent his three children to North Korea to live and receive an education. Monique Macías, along with her sister and brother, attended Mangyongdae Revolutionary School in Pyongyang, North Korea, where they learned to shoot Kalashnikov rifles and participated in daily physical drills that involved running and climbing.
Formerly an all-boys school, the Mangyongdae Revolutionary School made a new class for Macías and her sister as an exception. The special treatment often led other students to ask: who is Monique Macías and why do she and her siblings deserve preferential treatment? Macías was not too young to recognize the special treatment that she and her siblings received in Pyongyang:
“[We] were the only Korean-speaking long-term foreign residents during that period. We lived a privileged lifestyle compared to other foreign students and the majority of North Korean people. Throughout those years Kim Il-sung stayed in regular contact with us…”
Macias lived in exile in Pyongyang for 15 years before relocating in 1994.
So, who is Monique Macías outside of exile? Still affected by the conditions in which she spent her formative years, Macías continues to author memoirs and articles about her incredibly unconventional childhood and discusses how living in Equatorial Guinea, North Korea, Spain and the United States informed her opinions of the North Korean regime.
“There are people in North Korea who know that this is not the right way to live,” she said in an interview with Reuters. “I don’t think it’s going to collapse easily.”
However, Monique Macías does not shy away from defending the country that took her in upon her father’s death and formed her childhood:
“I have found that Western media normally just focuses on nuclear issues, politics or human rights. Together, all this makes people think that North Korea is an evil country and that its people are simply robots….But having lived there, I am proof that all of these things are not always true.”
In the 2000s, Monique Macías published her memoir “I’m Monique, From Pyongyang” in Korean.
Photo: Flickr
Credit Access in Nigeria Growing as Obstacles Are Addressed
Although these numbers look promising, few businesses are successful in obtaining loans from financial institutions. According to The Credit Crunch, a joint report by the Central Bank of Nigeria (CBN) and the International Finance Corporation (IFC), of the 840 MSMEs surveyed in Nigeria, only 31 percent successfully obtained a loan from a bank or microfinance institution. MSMEs are often burdened by a myriad of challenges like multiple taxation systems and high costs. The risks associated with credit access in Nigeria stem from many causes.
Lack of Collateral
To secure a loan from financial institutions, collateral is one of the prerequisites. This protects the lending bank in case the borrower defaults on the loan. For MSMEs looking for small business loans, inadequate collateral is a major reason for not receiving loans.
Secure land is the most common collateral for banks in Nigeria, but only 5 percent of the land is formally titled, mostly consisting of urban land or commercial farms. Low-income households own a large portion of rural land, which does not have validated titles.
This acts as a major obstacle for microenterprise owners and low-income households that are keen to obtain affordable credit from formal financial institutions. Many analysts argue that the provisions and implementations of the Land Use Act of 1978 are largely responsible for limiting the authenticated titling of rural land. Since banks ask for land or buildings as collateral in 98 percent of loan applications, low-income loan seekers remain unable to secure loans.
But efforts are being made to allow greater use of moveable and reputational collateral in bank loans. The CBN recently established the National Collateral Registry to improve credit access in Nigeria. Additionally, it is supporting the development of a modern credit reporting system in Nigeria with backing from the World Bank.
No Awareness of Credit Reporting System
Many borrowers are unaware of their credit history, and despite having a good credit record, they are reluctant to apply for loans simply because they do not meet the collateral requirements.
This becomes a concern for borrowers, particularly rural dwellers looking for microloans for their small businesses. They have been reluctant to approach banks for loans, which in turn has slowed down the entrepreneurial growth of small businesses that may have had a promising growth but could rarely take off due to a lack of financing.
The country remains a part of a large-scale campaign, the Credit Reporting and National Collateral Registry Education and Awareness Campaign. The campaign’s goal is to create awareness of credit tools through the collateral registry and the credit reporting system and is a collaborative initiative of the CBN and IFC. Such efforts promise to promote responsible lending and borrowing among those borrowers.
CBN has also teamed up with other stakeholders to promote the Credit Awareness campaign. The campaign promises to educate consumers on rural financial services and shares information on issues that will improve and allow greater appreciation of the rights and responsibilities of microfinance institutions and other financial institutions, along with their clients and stakeholders. Subsequently, Credit Awareness Nigeria plans on launching another public campaign on credit awareness and financial literacy to bring together microfinance practitioner institutions, development partners, stakeholders and clients of microfinance institutions.
No Interaction with Financial Institutions
Of those surveyed, less than a third of MSMEs successfully acquired loans for their businesses. A reason for this is that rural borrowers do not have an established relationship with banks. Due to their lack of interaction with financial institutions, rural borrowers fail to understand the conditions of getting a loan or the required loan application procedures. This also causes problems for rural dwellers who do not have a credit history, resulting in borrowers resorting to informal savings and reinvested profits.
Nigerian Businesses Remain Hopeful
While there remain considerable concerns about inadequate credit access in Nigeria, not all hope is lost. MSMEs overall have confidence in Nigeria’s economy and feel that economic growth will improve in the next five years as financial lenders become more willing to lend to smaller-scale businesses.
Nigeria is one of the 25 priority countries to become a part of the World Bank Group’s Universal Financial Access 2020 initiatives. The World Bank project aims to extend access to financial services to all adults by 2020. Moreover, many projects are joining hands to ensure that the rural dwellers get credit access, with programs being introduced to overhaul the obsolete land registration system and paving way for more credit options for rural farmers.
– Deena Zaidi
Photo: Flickr