Micro Finance Banks in theoritical aspects are special banks set aside to help small business find their feets in the populated world of business. But coming to the practical aspect especially here in Nigeria, it is like a trap waiting to catch a prey.
Lately, I have studied the trend in our Local market, by market here I mean commodity markets. It has come as a shock to most people that not all shops or stalls which are full to the brim are from the capital of the owner, most traders trade on debt which is fund by money borrow from Micro Finance like LAPO and the rest.
You will see many of our pepper sellers, food vendors and the likes running to these banks. You might be wondering why do they run to these banks? Well, these Micro Finance banks are easy to access unlike the normal banks where you need a collateral security, all a Micro Finance bank needs is a Gaurrantor or Surety they can hold incase the borrowers makes away the loan.
But beneath it being easy to collect, is the difficulty in payment due to the high interest you have to pay either every 7days, 5days etc.
Apart from this, refusal to pay is like shooting ones foot, Micro Finance Banks do not toy with their money. They go as far arresting defaulters and most trader are given restless and sleepless night.
Above all these, Micro Finance Banks have been doing a nice job, it could be that our traders do not understand you don’t take a loan to fund a celebration but for the main business.
A suggestion to Micro Finance banks is to create a monitoring team to ensure traders given loan use it for what they should as this will both help the banks and customers.
How many of this banks do you know, relate your experience.