Social Theory and Poverty Reduction with Special Attention to Nigeria: Social-Institutional Explanation of Small-Scale Financial Institutions

<p>Do institutions and social capital provide a viable means for advancing the goals of poverty reduction programs in low capacity states? This question has particular importance for Nigeria and Africa as a whole because of the poor performance of poverty reduction programs despite domestic and global efforts to reduce poverty in the continent. In this paper, I assess the usefulness of the informational aspects of the new institutional economics and the social network method of social capital paradigm in reducing access, information and monitoring costs faced by the poor and service providers of micro-credit institutions in Nigeria. The general proposition of this paper is that poverty reduction can be promoted on the one hand, by designing programs to reflect some regularities (formal and informal rules and regulations) which best enhance benefits and mitigate costs faced by the poor for obtaining services, and on the other hand a mobilization of cohesive social relationships based on existing networks of semiautonomous units, that substitute for weak enforcement of contracts to reduce the service delivery costs to the poor.</p>