Microcredit as a strategy for poverty reduction in Nigeria: a systematic review of literature

Abstract

Microfinance was introduced in Nigeria in 2005 to give microcredit to the poor, especially the petty traders. This was to allow them to expand their businesses, increase sales and earn income. This study systematically assessed the impact of the microcredit in poverty reduction. A systematic search for quasi-experimental, observation and comparative studies published between 2008 and 2018 was conducted in five literature databases, lists of relevant studies and websites. Both qualitative and quantitative studies were included in the review and their quality assessed. Inclusion criteria were met by twenty studies. These studies showed how microcredit influence poverty reduction among petty traders who are beneficiaries of microcredit. Among these studies, fourteen focused on microfinance and poverty reduction and seven dealt with microcredit and poverty alleviation. Most studies were quantitative, eight had mixed methods and one had a qualitative analysis. Among the included studies, nineteen supported the hypothesis that microcredit contributes to poverty reduction and only one study objected to this hypothesis. While the findings of this review have revealed that microcredit is a strategy for poverty reduction, there are some challenges that hinder the accessibility to microcredit. This calls for government actions to review its microcredit policy. Keywords: Microcredit, Microfinance, Nigeria, Poverty reduction