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ABSTRACT
In Nigeria, microfinance institutions (MFIs) have gained acceptance not only as important financial institutions but they are also being recognized for their economic and social contributions in the country. However, as financial institutions, MFIs are not invulnerable to problems. Like the other organizations, MFIs confront difficulties that affect their operations as well as performance. The literature reveals that there is not only limited research but also little information on the problems encountered by MFIs. This study attempts to investigate the problems faced by MFIs in Nigeria. By using questionnaire, the data was collected from 121 MFIs. Based on the analysis of the data gathered from the MFIs, the study detected a number of significant problems faced by these institutions.
Keywords: Problems, Microfinance, Nigeria
INTRODUCTION
The lack of development in developing countries is often linked to inadequate sources of financing and poverty. Given this, more and more developing countries are depending on financial institutions such as microfinance institutions (MFIs) to narrow the financial gap as well as eradicate poverty by providing financial products and services to help the poor people in their countries.
Since the MFIs were introduced in the 1980's, their numbers have continued to increase in developing countries across the globe. However, the growth, performance and sustainability of the MFIs depend very much on their ability to manage their institutions effectively as well as efficiently. In terms of their performance, some MFIs have been outstanding successes while others have been dismal failures. In the case of successful MFIs, they are able to perform well because of their effective management and lending practices. On the contrary, the less successful MFIs do not perform due to misdirection, ineffective management as well as poor lending practices (Dunford, 2000; Ehigiamusoe, 2008; Lawson, 2008; Olanike & Adebola, 2014; Wheelen & Hunger, 2013; Yunus, 1998).
The MFIs in Nigeria have been recognized and emphasized as an essential part of the financial system in the country. Nevertheless, as an important field of study, MFIs have not been able to attract much research attention. The limited research in this field of study has resulted not only in little knowledge about MFIs but also the lack of information concerning their true nature, particularly in terms of their strengths and weaknesses as...