Microcredit as a strategy for poverty reduction in Nigeria: a systematic review of literature

Abstract

Microfinance was introduced in Nigeria in 2005 to give microcredit to the poor, especially the petty traders. This was to allow them to expand their businesses, increase sales and earn income. This study systematically assessed the impact of the microcredit in poverty reduction. A systematic search for quasi-experimental, observation and comparative studies published between 2008 and 2018 was conducted in five literature databases, lists of relevant studies and websites. Both qualitative and quantitative studies were included in the review and their quality assessed. Inclusion criteria were met by twenty studies. These studies showed how microcredit influence poverty reduction among petty traders who are beneficiaries of microcredit. Among these studies, fourteen focused on microfinance and poverty reduction and seven dealt with microcredit and poverty alleviation. Most studies were quantitative, eight had mixed methods and one had a qualitative analysis. Among the included studies, nineteen supported the hypothesis that microcredit contributes to poverty reduction and only one study objected to this hypothesis. While the findings of this review have revealed that microcredit is a strategy for poverty reduction, there are some challenges that hinder the accessibility to microcredit. This calls for government actions to review its microcredit policy.

Micro-loans and financial performance: a case of a Chinese commercial bank

“…Micro-loans or more commonly known as “micro-credit” have been well studied in a variety of contexts and countries (Adeniran and Ogwumike, 2016; Afriyie et al , 2020; Hussain et al , 2019; Tayebi and Onel, 2016). Not only does this have an impact on reducing poverty (Awojobi, 2019; Rahman, 2016) but also empowering individuals (Zaei et al , 2018; Rahman et al , 2017). As mentioned by Barboza and Trejos (2009), these types of programs generally have a positive impact on poverty and loan recuperation.…”

Do Cooperative credit unions reduce or increase poverty in Cameroon?

“…MFIs have recently demonstrated their national potential for poverty reduction. Muhammad Yunus was awarded the Nobel Peace Prize in 2006 for being a pioneering microfinance promoter who enabled the poor to be eligible for loans to improve their living standards (Donou-Adonsou and Sylwester 2016; Awojobi 2019;Sugiyanto et al 2020). Ghauri and Wang (2017) indicated that poverty alleviation depends on mutual cooperation between financial institutions and human capital development, which encourages sustainable development and national organizations' capabilities in a society.…”

“…MFIs have recently demonstrated their national potential for poverty reduction. Muhammad Yunus was awarded the Nobel Peace Prize in 2006 for being a pioneering microfinance promoter who enabled the poor to be eligible for loans to improve their living standards (Donou‐Adonsou and Sylwester 2016; Awojobi 2019; Sugiyanto et al. 2020).…”

The Effect of Microfinance Banks on Poverty Reduction in Nigeria

“…In Nigeria, like other developing countries, microfinance institutions avail the major source of funds for microenterprises that are usually owned by low-income earners (or the economically active poor). Consequently, the underlying idea behind the rising of microfinance banks is the fact that low-income/poor people are financially empowered to undertake economically productive ventures that could generate income and push them above the poverty line (Awojobi, 2019;Mecha, 2017). At this point, a natural question that arises is; what is poverty and how do microfinance banks aid poverty reduction?…”