Mr Abdulateef Husseni, the acting Managing Director, Egwafin Microfinance Bank, says microfinance banks (MFBs) were the major driving force for financial investments in Nigeria in 2022.
Husseni said this in an interview with the News Agency of Nigeria (NAN) on Monday in Abuja. This he said, was based on the data from the National Bureau of Statistics (NBS) which recognised the banks as the driving force for businesses, especially Small Scales and Medium Enterprises.
“Available information has shown that local industries depend on these financial institutions to the tune of about 60 percent of financial investments which now ensure the economic development of the country.
“Microfinance banks in Nigeria recorded an 82 percent boost in lending rising from N300.2 billion in 2019 to N546.6 billion in 2020. This is according to the latest data from the NBS.
“Also, an interesting observation to be made is the impact total lending to the private sector alone as it increased by 18.5 percent (N5.58 trillion) year-on-year to N35.73 trillion in December 2021, up from N30.15 trillion in 2020,” he said.
Husseni said that microfinance institutions were the fuel that helped to drive other sectors to success in 2022.
He said that the increase in private sector lending was supported by the growth of business activities of FinTech and technology-based companies.
“And this aforementioned is why microfinance bank should have not given credit for the economic development as a whole in Nigeria,” he said.
Husseni said that economic development depended solely on the activities of financial institutions based on the capital accumulation being financed mainly by the activities and tools of financial institutions and its intermediation mechanism.
He said that the financial institutions were an integral part of the nation’s financial intermediation mechanism through which the saving of households’ firms, public corporations and even oversea residents were made available to borrows at home.
He said that such driving force needed to be empowered and strengthen in order to sustain the growth of other sectors reliant on it and to sustain the nation’s economy.
Husseni said that when a financial system was well developed, it would enhance investment by identifying and funding good business opportunities, mobilizing savings, enabling trading, hedging and diversification of risk and facilitating the exchange of goods and services.
He called for a more well-developed financial system in the country to foster an open and vibrant economic system that would build sustained economic growth.
“It is a well-established fact that financial institutions played a vital role in the development of any economy and serve as lubricant for the survival of an economy.
“Countries with well-developed financial institutions tend to grow faster; especially the size of the banking system and the liquidity of the stock markets, tend to have a strong positive impact on economic growth.
“In spite absence of all of this, it is imperative to know that the industry in Nigeria is still a strong growth industry, yet the banking sector alone contributes up to N168.4trillion to the country’s gross domestic product between 2017 and 2020.
“This is indicating an incredible resilience and growth despite two difficult recessions in the country,” he said.
