THE IMPACT OF MICRO-FINANCE BANKS ON THE ECONOMIC GROWTH OF NIGERIA


THE IMPACT OF MICRO-FINANCE BANKS ON THE ECONOMIC GROWTH OF NIGERIA

ABSTRACT

The role of microfinance banks in economic growth and development is quite clear and distinct as the agricultural and entrepreneurial sector of the Nigerian economy has been improved through numerous Micro Finance banks. The contribution of the microfinance bank in economic development is situated within the framework of entrepreneurial development since the major reason for the establishment of the microfinance bank is to ensure economic growth through the enforcement of the business entrepreneurs.

Data for the study was gotten from both primary and secondary sources. questionnaires issued out from the primary source of data for the study, while the internet, newspapers, and textbooks were the secondary source of data for the study. Findings from the study revealed that Micro-Finance banks are strongly co-related with the development of the economy of Nigeria. The hypothesis tested with Chi-Square at a significant level of 0.05 proved this assertion.

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

It would be observed that, despite the presumed developments in the Nigerian economy, the country is still largely being regarded as a developing country (Onyema, 2006). More so, its industrial growth is not quite impressive. 

Before the emergence of formal microfinance institutions, informal microfinance activities flourished all over the country. Traditionally, microfinance in Nigeria entails traditional informal practices such as local money lending, rotating credit and savings practices, credit from friends and relatives, government owned institutional arrangements, poverty reduction programmes etc (Lemo, 2006). The Central Bank of Nigeria Survey in 2001 indicated that the operations of former microfinance institutions in Nigeria are relatively new, as most of them never registered after 1981.

Before now, commercial banks traditionally lend to medium and large enterprises which are judged to be credit-worthy. They avoided doing business with the poor and their micro enterprises because the associated cost and risks are considered to be relatively high (Anyanwu, 2004).

The Federal and State governments have recognized that for sustainable growth and development, the financial empowerment of the rural areas is vital, being the repository of the predominantly poor in society and in particular the SMEs. If this growth strategy is adopted and the latent entrepreneurial capabilities of this large segment of the people is sufficiently stimulated and sustained, then positive multipliers will be felt throughout theeconomy. To give effect to these aspirations various policies have been instituted over time by the Federal Government to improve rural enterprise production capabilities. (Olaitan 2006)

In view of this, the impact of micro finance bank in economic growth and development of Nigeria started showcasing itself. With the initiative of microfinance, rural areas are opportune to grow and develop as loan and fund are easily given to rural farmers and entrepreneur. Jobs opportunities were created since there is avenue for lending and investing.

1.2 AIMS AND OBJECTIVES

The mains objectives of this research work are to investigate the impact of micro finance bank in economic growth and development of Nigeria.

Other objectives are as fellows

i. it will explicate in detail ways in which micro finance banks can contribute in developing rural areas and improving the life of the poor people.

ii. It will investigate the ways microfinance bank can contribute in building entrepreneurship within the country.

1.3 STATEMENT OF RESEARCH PROBLEMS:

There are so many problems and challenges that hinders the functionality of the microfinance bank in carrying out their major role of improving economic growth ad development in Nigeria. 

These problems include

poor attitude of Nigerians towards MFBs

insufficient support from the regulators and government

There are communication gaps and inadequate awareness among the masses.

Undue competition rather than cooperation from the mega banks, and undue malpractice/Sharp practices by microfinance bank operation.

The researcher will in the research find possible ways of solving or making better the conditions for the operation of MFBs.

1.4 SIGNIFICANCE OF THE STUDY

This study is essentially significant in that it is directed towards evaluating the impact and role that micro finance banks have on the economic growth and development of Nigeria, especially the rural areas which is a criteria aimed at measuring economic standard.

Owing to the fact that researcher has aimed at pinpointing the ways in which micro finance bank can help in the revamping of the nation’s economy, the findings of this research work will be of great help to most developing countries who may wish to toe the part of Nigeria in MFB development.

It will also serve as a reference point for future researchers who in one way or the other will try to unveil the role and impact of micro finance bank to economic development.

1.5 SCOPE OF THE STUDY

The scope of the study is subjected around the frame work of microfinance bank in Nigeria vis-à-vis its contribution to the economic growth anad development.

For accuracy and coherency, the research work will take as a case study the Community bank Enugu to enable precision and distinctiveness.

1.6 LIMITATION OF THE STUDY

 During the course of this research, a lot of obstacles were encountered.

Thus, the uncooperation of most people working in the library and other offices where the researcher needed to get materials posed great problem to the researcher. Some of the staffs do not feel safe letting us have access to some materials while others will charge me more than double cost of Photostat before I can get what I wanted.

Financial constraint is another limitation to this work which is as a result of high cost of transportation fare to the areas of study to gather data, combined with the cost of materials to carry this work to conclusive end.

It also took great strength to convince the respondents that their responses to the questions in the questionnaire will be treated with great confidentiality and are purely academic.

1.7 STATEMENT OF RESEARCH HYPOTHESIS

It is quite evidential that the major ways in which microfinance bank can help in economic development is through the encouragement of entrepreneurial development.

The essence of microfinance bank is to enable the  poor individual to be able to obtain loan and be able to manage their enterprise.

To this effect, the following hypothesis will be tested, thus.

Hypothesis I

H0: Micro finance bank is irrelevant to the economic development and growth of Nigeria since the number of entrepreneurs that uses their services is low

Hi: Micro finance bank is relevant to the economic development and growth of Nigeria since the number of entrepreneurs that uses their services is low

Hypothesis II

H0: Microfinance institution do not contribute to entrepreneurial productivity

H1: Micro finance institutions do contribute to entrepreneurial productivity.

1.8 DEFINITION OF TERMS

IMPACT:

According to the advanced oxford learner’s dictionary, impact is the

powerful effect that something has one somebody or something

MICROFINANCE BANK

According to the Nigerian Banking Act, 1969 (as amended Bank amendment act 1979), Microfinance banks are institutions constructed as a company licensed to carry on the business of providing microfinance services such as collection of savings, loans provision, insurance money transfer services and other non financial services that are needed by the poor.

The clients of microfinance banks are typically self employed low income entrepreneurs in both urban and rural areas, they include traders, subsistence farmers, street vendors, motorcycle riders and blacksmith etc.

ECONOMIC GROWTH AND DEVELOPMENT:

This term has generated a lot of controversies over the years. Some economics see it as political and structural change while others are of the opinion that it relates the progress in the basic human needs over time. Another school of thought defines it as growth accomplished by changes i.e. change in structure of the economic in the country’s social structure and its political structure.

Others have tended to make basic human needs approach, an approach which defined economic development in terms of progress toward reducing the incidence of poverty, unemployment and income inequalities and for those whose living standards have not been rising. This approach also seeks ways and means of improving their conditions,

NIGERIA:

A nation in the African continent and located in the western part of Africa. it was colonized by the British and got its independent in 1960.

REFERENCE

Lemo, T (2006) Transforming the Nigerian economy through microfinance initiative “national workshop on empowerment through microfinance, p.1, Calabar Nigeria.

Onyema M. E (2006), Transformation of the Nigeria economy through the microfinance initiatives operators and entrepreneurs perspectives pp. 1-5 Abuja Nigeria

Anyanwu C. M, 2004, Microfinance institution in Nigeria, policy practice and potentials paper presented at the G24 workshop on constraint in growth in sub Sharan African, November, 2004, p-4, Pretoria south Africa.

Olaitian M. A (2006) Finance for small and medium scale enterprises in Nigeria Journal of international farm management Vol. 3 No 2 January

.


TYPE IN YOUR TOPIC AND CLICK SEARCH.






RESEARCHWAP.COM

Researchwap.com is an online repository for free project topics and research materials, articles and custom writing of research works. We’re an online resource centre that provides a vast database for students to access numerous research project topics and materials. Researchwap.com guides and assist Postgraduate, Undergraduate and Final Year Students with well researched and quality project topics, topic ideas, research guides and project materials. We’re reliable and trustworthy, and we really understand what is called “time factor”, that is why we’ve simplified the process so that students can get their research projects ready on time. Our platform provides more educational services, such as hiring a writer, research analysis, and software for computer science research and we also seriously adhere to a timely delivery.

TESTIMONIES FROM OUR CLIENTS


Please feel free to carefully review some written and captured responses from our satisfied clients.

  • "Exceptionally outstanding. Highly recommend for all who wish to have effective and excellent project defence. Easily Accessable, Affordable, Effective and effective."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I saw this website on facebook page and I did not even bother since I was in a hurry to complete my project. But I am totally amazed that when I visited the website and saw the topic I was looking for and I decided to give a try and now I have received it within an hour after ordering the material. Am grateful guys!"

    Hilary Yusuf, United States International University Africa, Nairobi, Kenya.
  • "Researchwap.com is a website I recommend to all student and researchers within and outside the country. The web owners are doing great job and I appreciate them for that. Once again, thank you very much "researchwap.com" and God bless you and your business! ."

    Debby Henry George, Massachusetts Institute of Technology (MIT), Cambridge, USA.
  • "I love what you guys are doing, your material guided me well through my research. Thank you for helping me achieve academic success."

    Sampson, University of Nigeria, Nsukka.
  • "researchwap.com is God-sent! I got good grades in my seminar and project with the help of your service, thank you soooooo much."

    Cynthia, Akwa Ibom State University .
  • "Great User Experience, Nice flows and Superb functionalities.The app is indeed a great tech innovation for greasing the wheels of final year, research and other pedagogical related project works. A trial would definitely convince you."

    Lamilare Valentine, Kwame Nkrumah University, Kumasi, Ghana.
  • "Sorry, it was in my spam folder all along, I should have looked it up properly first. Please keep up the good work, your team is quite commited. Am grateful...I will certainly refer my friends too."

    Elizabeth, Obafemi Awolowo University
  • "Am happy the defense went well, thanks to your articles. I may not be able to express how grateful I am for all your assistance, but on my honour, I owe you guys a good number of referrals. Thank you once again."

    Ali Olanrewaju, Lagos State University.
  • "My Dear Researchwap, initially I never believed one can actually do honest business transactions with Nigerians online until i stumbled into your website. You have broken a new legacy of record as far as am concerned. Keep up the good work!"

    Willie Ekereobong, University of Port Harcourt.
  • "WOW, SO IT'S TRUE??!! I can't believe I got this quality work for just 3k...I thought it was scam ooo. I wouldn't mind if it goes for over 5k, its worth it. Thank you!"

    Theressa, Igbinedion University.
  • "I did not see my project topic on your website so I decided to call your customer care number, the attention I got was epic! I got help from the beginning to the end of my project in just 3 days, they even taught me how to defend my project and I got a 'B' at the end. Thank you so much researchwap.com, infact, I owe my graduating well today to you guys...."

    Joseph, Abia state Polytechnic.
  • "My friend told me about ResearchWap website, I doubted her until I saw her receive her full project in less than 15 miniutes, I tried mine too and got it same, right now, am telling everyone in my school about researchwap.com, no one has to suffer any more writing their project. Thank you for making life easy for me and my fellow students... Keep up the good work"

    Christiana, Landmark University .
  • "I wish I knew you guys when I wrote my first degree project, it took so much time and effort then. Now, with just a click of a button, I got my complete project in less than 15 minutes. You guys are too amazing!."

    Musa, Federal University of Technology Minna
  • "I was scared at first when I saw your website but I decided to risk my last 3k and surprisingly I got my complete project in my email box instantly. This is so nice!!!."

    Ali Obafemi, Ibrahim Badamasi Babangida University, Niger State.
  • To contribute to our success story, send us a feedback or please kindly call 2348037664978.
    Then your comment and contact will be published here also with your consent.

    Thank you for choosing researchwap.com.