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Rural
Finance Institution-Building Programme
This programme, approved by the September 2006 IFAD Executive Board meeting, is designed to strengthen microfinance institutions and establish linkages between these institutions and formal financial institutions in 12 Nigerian states. It lays the foundation for the long-term development of a sustainable rural financial system that will eventually operate throughout the country. By reaching out to poor rural people, the programme ensures that they gain access to financial services and can thereby invest in and improve productivity in agriculture and small businesses. Marginalized groups, such as women, young people and those with physical disabilities, are particularly targeted by the programme. Microfinance has been shown to be an effective tool for improving women’s status and overall household welfare.
Effective poverty reduction requires strong linkages between technical and financial services. For this reason, the programme supports the development of target-group organizations into rural finance institutions that improve poor rural people’s access to low-cost credit. As such, it provides an important basis for ongoing and future agricultural and rural development programmes and projects implemented by IFAD and other organizations in Nigeria . It assists microfinance institutions, including the Nigerian Agricultural Cooperative and Rural Development Bank (NACRB), the National Poverty Alleviation Programme, and microfinance banks and NGO-microfinance institutions operating in rural areas, to strengthen their rural outreach and improve their services to the most vulnerable groups, particularly households headed by women. In the past, poor rural people have been unable to benefit from credit financing because they lack tangible assets to use as collateral for loans. The programme develops new alternative financial products, which facilitate cash-flow and character lending to overcome these obstacles to borrowing. It also promotes an improved legal, policy and regulatory framework, and establishes linkages between the financial system and the rural production system to improve operational efficiency, raise productivity and minimize technical and credit risks. Source: IFAD |
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