Review of Micro-Credit and Business Development Programmes in the Niger Delta Region of Nigeria

Abstract

This study is a review of Micro-Credit and Business Development Programmes in the Niger Delta Area of Nigeria as well as that of SPDC’s Micro-Credit and Business Development programme.

The Nigerian economy is one of the three largest in Africa and though rich in oil, it is one of the poorest in the world. The government economic programme for the years 1999-2003 was designed to reduce poverty, achieve faster and sustainable growth and raise living standards. And, the strategy focuses on the encouragement of the private sector to lead the process. The main macro-economic objectives are to achieve real GDP growth of 10 percent, and to contain inflation rate to single digits.

Thus, the macro-economic environment for growth of Micro and Small Enterprises (MSEs) can be regarded as increasingly becoming favourable. However, the unemployment rate in Nigeria and in the Niger Delta is disturbing. It is estimated to be about 50 percent and over 60 percent for school leavers and, poverty has deepened with 70 percent of Nigerians below the poverty line.

Since late in 1986, some 12 initiatives have been taken by the Federal Government to address the unemployment problem. Of particular relevance for this review, the measures were also meant to support Micro/small/medium Enterprise Development. (MSMED)

The National Directorate of Employment (NDE) programmes alone benefited only 1324975 persons over a period of 10 years or at a rate of 132498. For the Niger Delta (9 states), the total number of beneficiaries is estimated at 20223 in 1997 and 30852 in 2000. Compared with 4 million of unemployed persons in the Niger Delta alone, it can be concluded that these programmes have had little impact. Indeed, the unemployment and poverty situations seem to be worsening.

The size of Micro/small Enterprises sector in the Niger Delta in Nigeria as a whole is not known. Estimates by this review indicate that there could be a minimum of about 3750000 MSEs in the Niger Delta. This was based on the number of cooperatives in the Niger Delta. Some local practitioners believe the size could be above 5000000. This estimate is obviously on the low side, considering that hundreds of thousands more MSEs are not members of co-operatives societies.


The promotion of Micro/small Enterprise Development has become an industry and proof of the positive role of MSE’ in employment creation and growth of the economy need not be presented here. The constraints on growth and Development of the sector are instead identified and possible strategies for remedies proposed in this review. The main constraints discussed are financial, infrastructural and inadequate Business Development services.

Generally, Business Development is the process of promoting and assisting a Micro/small income generating Enterprise to grow and develop into a sustainable entity. The main instruments or services in support of Micro/small Enterprise Development are: training in Business and technical skills, technology Development and diffusion, Business incubators and marketing support.

An review of training activities by some Business Development service providers is carried out. These providing Technical and Business skills only were found to be very few. Most provide both financial services and Business Development services. However, partnering among Business Development service providers was prevalent. Of interest is the fact that commercial banks are also partnering in this area of Business Development.

It is noted that in Business Development, training and capacity building should be given to both clients and Micro finance institutions themselves. Again, best practices would dictate that competent Business Development service providers, some of who could be Micro finance institution, carry out training of small Enterprises. Training services should be paid for at commercial rates. However, training of the rural poorest of the poor could be provided at subsidise rates. It was observed that training in Niger Delta is a free commodity. Reason: trainees are project-related groups and not independent individual Businesspersons.

The review found that there are moves by Government and International labour Organisation (ILO) to introduce a new Business Development product – Know About Business (KAB)-in schools curriculum. Training of potential entrepreneurs should start at school age. At adult age, training in entreprenourship will not be effective due to bad practices already acquired. The idea is to institutionalise Enterprise Development programmes.

Micro-Credit Activities of various players in the Niger Delta are reviewed, first by examining the role of traditional Micro-Credit institutions and practices and then that of formal institutions.

It is observed that the foremost Micro-Credit lenders to all occupational groups are the Esusu groups followed by the family, friends and banks (formal institutions). Moneylenders come last.

Formal Micro-Credit initiatives in the Niger Delta are reviewed. Some are donor funded projects/programmes. Others are state, private banks and Non Governmental Organisations (NGOs). The NGOs provide both Credit and Business Development services.


There are two new schemes that are being introduced in the Micro-Credit field. One scheme is introducing value cards or cash cards to be used by groups in Credit schemes. The other is where traditional Esusu collections find their way into a bank, thus creating a link between informal and formal financial services. These two schemes are being recommended for adoption by Micro-Credit providers.


The general conclusion for Micro-Credit (MC) in Niger Delta is that the demand for Micro-Credit by MSEs is not being satisfied. A large gap still exists.

Challenges for Business Development and Micro-Credit in the Niger Delta are identified and possible measures to mitigate the problems suggested

Unemployment

It is proposed that the existing training and skills Development initiatives be reviewed thoroughly and strengthened, if possible.

Reaching the Poorest of the Poor

An appropriate methodology that seeks to identify the real poor is required to better ensure service to low income women and men.

Lending at Market Interest Rate and Promoting best Practices.

In a poor region like the Niger Delta, a gradual approach to self-help Development programme is required. A systematic savings and Credit methodology that will lead to achieving a market rate of interest should be developed. Community members should be enlightened on the need to be self-reliant and profitable, both of which can be achieved largely by charging market rate of interest on loans.

Change in Mind-set

There is need to train beneficiaries and NGOs to understand why loans must be serviced at market rates. Also, trainees need to understand that training should be paid for. In order to set minds correctly early enough, ILO is initiating a programme that would introduce entrepreneurship Development in the Nigeria schools curriculum.

High Cost of Monitoring Projects in rural areas

It is recommended that persons whose homes are in a community be recruited and trained to monitor projects in that community.

Inadequate Economic Infrastructure

Considering the importance of economic infrastructure, what is needed here is a massive investment in feeder roads, bridges, canalisation, and appropriate transportation by both government and the private sector, particularly oil companies.

Limited Economic Activities

The priority number one here is investment in economic infrastructure discussed above. This alone should open up new economic activities. For example, can the riverine be turned into a tourist area, given adequate infrastructure?

Greater Need for Co-operation and Co-ordination

To address the challenge of inadequate co-ordination of Micro-Credit and Business Development service providers, it would be of great help to facilitate the evolvement of a formal forum for NGOs/MFIs in the Niger Delta, for the purpose of experience and information sharing.