Problem and Prospect of Microfinance Banks in Ilorin Metropolis, Kwara State, Nigeria

Abstract

In 2005, the Nigerian government launched the Microfinance Banking Scheme to offer funding to economically active impoverished people who cannot obtain loans from traditional banks, create jobs, promote rural development, and alleviate poverty. This study looks at the theoretical issues these institutions have had to deal with since their creation. It also examines the business climate to analyze the potential of microfinance institutions in the Ilorin metropolis, Kwara State. According to the research, microfinance banking in the Ilorin metropolis faces enormous challenges due to inadequacies in infrastructure, social misconceptions, a poor legal and regulatory framework, unbridled competition from other financial institutions, abandonment of core microfinance functions, and a scarcity of qualified workforce. The research highlighted areas where these institutions might capitalize despite the numerous hurdles. Some of these potential include expanding entrepreneurial awareness, increased government involvement, significant unbanked rural areas, and a high number of disadvantaged individuals. According to the study, with correct regulatory interventions and the dedication of other stakeholders to the primary objective of microfinance banking, its issues may be solved, and its prospects may be improved. As a result, this study suggests that the future of microfinance banking in the Ilorin metropolis, Kwara State, and Nigeria is promising.