Devonomics

Devonomics

It is difficult to answer questions about how Nigeria can and should achieve sustainable economic, social and political growth. This column takes a look at well known development economic theories and applies them to the unique Nigerian context.

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Microfinance as a Catalyst for Development

Martha Sambe

Martha Sambe

Martha is a graduate of Development Economics and International Cooperation from the University of Rome, Tor Vergata. She enjoys writing and researching topics in development, sociology, and religion.

When people mention microfinance, they are often referring to microcredit, a small loan provided to generate a steady stream of income for the poor. So what then is microfinance? Microfinance is a broader term that covers a range of financial services including loans, savings, investments, insurance, etc., all of which are targeted at the poor. In short, microcredit is merely a component of the broader concept of microfinance. 

 

Every Kobo Counts

During a discussion on microfinance, one of my graduate professors said, "The provision of financial services is not a magic bullet against poverty," and indeed, it is not. However, over time, financial inclusion has been an unerringly effective way of pulling households out of poverty. It turns out that access to credit, opportunities to save and build capitaland the availability of insurance products are all hugely beneficial! There are also benefits to be gained at the macroeconomic level, including higher productivity and expanded growth.

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