Microfinance institutions under fire: Seyi Asagun calls for overhaul

Michael Olumide

Seasoned finance expert with over 20 years of experience, Seyi Asagun, has criticise Nigeria’s microfinance institutions for neglecting the country’s informal businesses, which are the largest contributors to the economy.

According to Asagun, these institutions have failed to provide adequate financial support to micro, small, and medium-sized enterprises (MSMEs), hindering their growth and development.

Speaking during a recent policy-centered broadcast, Asagun noted that the ongoing cost-of-living crisis, worsened by inflation and global commodity shocks, has made affordable credit nearly inaccessible for most small entrepreneurs.

“We’re facing a silent credit collapse,” he said. “And MFIs, as they are structured today, are not the solution.”

He argued that most MFIs are replicating commercial banking behaviors—excluding the very people they were built to serve.

“You walk into some MFIs and hear them ask for CAC documents and audited statements from pepper sellers. That’s ineffective,” he quipped.

Asagun proposed a radical shift toward trust-based lending, emphasizing peer guarantees, local vouching systems, and a strong physical presence in marketplaces.

“MFIs need to be embedded in the communities they serve—not just operate through apps and dashboards from VI or Lekki,” he said.

He also tied the credit gap directly to rising food prices. “When a banana seller pays 20% monthly interest, you can’t expect plantain to stay at ₦800,” Asagun observed.

With prices of basic food items spiraling, he argued that strengthening informal credit systems is key to stabilizing inflation.

His message was unequivocal: “Stop treating informal traders like corporations. Their business model is trust—not balance sheets.”