In the wake of recent developments, Nigeria’s microfinance landscape finds itself in a state of flux, with implications for the vast number of micro-businesses that depend on it.

The revocation of licenses from some microfinance institutions has left approximately 700 microfinance banks to service the country’s extensive network of micro-businesses, estimated to be around 36.9 million strong.

This translates to an average of 53,000 businesses vying for funding from each available micro-lender.

However, the challenges surrounding access to funding for micro-businesses run deeper than this seemingly straightforward arithmetic.

The unemployment situation in Nigeria serves as a stark backdrop to the importance of a thriving micro-business environment. According to widely accepted labor force data from the fourth quarter of 2020, the country’s unemployment rate stood at a staggering 33.3 percent, with over 23 million Nigerians unable to secure gainful employment.

A study conducted by the SME Finance Forum, affiliated with the International Finance Corporation (IFC) and Global Partnership for Financial Inclusion, reveals that Nigeria is home to an estimated 36.9 million micro-businesses.

While the exact figure may be subject to debate, it closely aligns with the findings of a 2021 survey by the Small and Medium Enterprise Development Agency (SMEDAN), which suggests the existence of 39 million micro, small, and medium-scale enterprises (MSMEs) in the country.

If we consider both sets of data to be reasonably accurate, it becomes evident that policies aimed at enhancing access to funding for these micro-businesses, enabling them to scale up and hire additional employees, could potentially eradicate unemployment and usher in a tighter labor market.

While this notion may appear simplistic and theoretical, it underscores the significant potential within the micro-business sector to generate employment opportunities.

Chairman of the Presidential Committee on Tax Policy and Fiscal Reforms, Taiwo Oyedele, previously affiliated with PwC, emphasized this prospect during an event hosted by the Chartered Institute of Bankers of Nigeria (CIBN).

He advocated for fiscal incentives to support MSMEs, with a focus on job creation, primarily through improved access to funding.

In many business schools, debates often center around the idea

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