Linkage Banking Programme in Nigeria - Concept, Relevance and Implementation (A Case Study of Self-Help Groups)

As part of its development promotion roles, and as the managing agent of the Agricultural Credit Guarantee Scheme Fund (ACGSF), the Central Bank of Nigeria (CBN), sought to evolve a viable and sustainable credit strategy with a built-in growth factor that would improve the level lending under the scheme. This led to the introduction of the concept of “Self-Help Groups Linkage Programme” by the Central Bank of Nigeria in 1991. Under the programme, group members are expected to save on a regular basis an agreed sum of money with a partner bank of their choice over a reasonable period of time. The partner bank on its parts, lends on a timely manner to the group members in multiples of their savings. The group members are equally expected to continue with their regular savings simultaneously with loan repayment so that they would be qualified for higher loans from the bank. The advantage is that borrowers are able to overcome their collateral problem, catalyze savings mobilization and promote group synergy