Assessment of Rural Sustainable Development by Microfinance Banks in Nigeria

This paper assesses the provision of microfinance systems in Nigeria, with a view to determine if they have positive effects on the socioeconomic well-being in rural areas.

In many developing countries, the rural poor are denied access to financial support because of inadequate infrastructure and pro-urban banking systems. This problem can be addressed by setting up microfinance systems. However, there are questions raised on whether MFIs or microfinance banks can really transform the economic conditions of the rural poor.

The paper analyzes the pattern and value of loans, advances, and credit disbursed to people in different segments of the rural economy over a 15-year period. Findings reveal that:

• Core sectors of the economy, particularly agriculture, have been neglected;
• Microfinance banks have not really improved or developed the economy of the rural people;
• Value of credits to rural people saw a major downward trend in comparison to deposits mobilized from them;
• Rural poor saw a net outflow of finance, jeopardizing sustainable development of the rural areas.