Recovering of micro credit in Nigeria Implications for enterprise development and poverty alleviation

Purpose - This paper aims to examine the factors that are responsible for the poor credit recovery among micro-finance institutions (MFIs) that disbursed a United Nations Development Programme's micro credit in Anambra State, Nigeria. Design/methodology/approach - A total of 97 MFIs were surveyed out of a total of 129 MFIs in Anambra State in 2007. A ten-item researcher developed questionnaire on a four-point Likert scale was used to measure MFIs' staff assessment of factors that were responsible for poor credit recovery. Descriptive statistics were used to analyse the data, and conclusions and implications of the findings are presented. Findings - From the findings of this study, it is evident that multidimensional factors contribute to low credit recovering by the MFIs. These factors can be summarised under borrowers' wrong attitude to credit repayment, MFIs' staff weak skill and corrupt tendency, and poor infrastructural provision by the government. Arguably, these factors have direct effect in encumbering genuine effort at alleviating poverty in Nigeria through the instrumentality of micro credit. This calls for a change in strategy especially on the part of the MFIs in reducing the incidence of low credit recovery. Research limitations/implications - The paper offers fresh insight that would offer better understanding of the informal sector of the financial system in Nigeria that has hitherto received limited research attention. Practical implications - This paper is informative in terms of the imperativeness for public policy adjustment and firm-level competencies required for better operation of the MFIs in Nigeria. This would translate into creating viable micro-credit sector to support current plans to eradicate poverty and foster the development of the "bottom-of-the-pyramid". Originality/value - Addresses issues related to micro credit in a highly challenged and isolated context.