How Nigerians make money investing in Micro Finance banks

Posted by Felix Okoli on Saturday January 17, 2015 at 13:34:5:

Micro Finance banks tend to offer a higher interest rate on funds investment in them than the traditional banks in Nigeria.

Last time I checked, the highest interest rate offered by Nigerian banks was about 10% and this was for mostly Fixed deposit accounts. With Micro Finance banks however, you can earn up to a 20% interest rate on your investment.

Not sure how it works? Well, let me give you a scenario.

Let's assume that you have N5,000,000 or N5m to invest and the Micro Finance bank was offering a 20% rate on it per annum, then it means that your invested capital will be earning about N1,000,000. Did I hear you say whaow? Well, that's how some Nigerians with capital make easy money without doing extra work.

Traditional big Banks in Nigeria don't offer as much returns on one's investment like smaller microfinance banks but some people still prefer the former because of long term security.

I have to say that microfinance banks are not as fully insured or risk free as the big banks but they do offer a higher than usual rate of returns on one's investment.

To invest in a microfinance bank, you just need to find one close to you, inquire about their investment rates and require capital before signing a contract that will be bringing you returns on your investment. They would receive funds from your bank and then start working with your money so that they would be able to pay you back the capitla by the time it matures.

Before seeking to invest in a microfinance bank, you need to decide how long you want to invest in them whether it's for 30, 60, 80 or 365 days. The longer you invest, the more interest you can earn but it also exposes you to more risks.

It's highly risky and also highly rewarding to invest in Miro Finance banks and so you should only do it if you are confident enough.

Only invest in microfinance banks that are registered by the CBN and you can check them out here

Tips:
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- Invest in the microfinance banks that hav a good history and that you trust
- Don't pay cash for anything. Use a bank cheque, ATM or bank transfer for making payments
- Stay tuned to financial news and move away your funds if you suspect uncertainty.