Informality and the Prospects of Microcredit and Social Protection as Drivers of Poverty Alleviation from Below: Lessons for Nigeria

This study looks at how microcredit works, identifies its limitations and possible factors that can make it fail. It hypothesizes that credit alone is not enough to bail the poor out of poverty. The microcredit approach needs state intervention in terms of broader social protection interventions to succeed. The study analyzes preconditions like committed government and elite, sustained availability of funds and effective delivery mechanisms. It offers lessons and insights from different countries that have adopted social protection interventions, and presents a case study of Nigeria. The paper states that while countries showcased do not constitute best practices, their effectiveness at arresting the situation of the poor can be useful for future interventions. It offers the following recommendations:

• Poverty alleviation efforts must be led by the state;
• Social protection and social spending of the state should be encouraged;
• Social interventions can start with targeting the very poor and vulnerable, and progressively become universal;
• Promoting entrepreneurial initiative by increasing access to credit will work, but needs an enabling environment and provision of complementary services.