An Appraisal of Operational Problems Facing Micro Finance Bank
OBJECTIVES OF THE STUDY
The main objective of the study is to appraise the operational problems of Micro Finance Banks in Delta Sate, Nigeria. Specific objectives of the study are:
- To examine operational structures of Micro Finance banks in Delta state.
- To appraise operational problems of Micro Finance banks in Delta state.
- To examine the effects of these operational problems on the performance of Micro finance banks in Delta state.
- To determine if operational problems of Micro finance banks in Delta state affect micro finance access to Small and Medium Scale Enterprises in Delta state.
Our focus in this chapter is to critically examine relevant literatures that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.
Precisely, the chapter will be consider all the Conceptual Frameworks relevant to this study.
Micro Finance: Concept and Needs
Micro finance was defined by micro credit summit (2-4 of February, 2007) people for self employment projects that generate income; allowing them to care for themselves and their families (Awa, 2008). Micro finance refers to the provision of financial services to poor or low income clients including consumers and the self employed. The term also refers to the practice of sustainably delivering those service, more broadly it refers to a movement that envisions a world in which as many poor and near poor households as possible have permanent at access to an appropriate range of high quality financial services including not just credit but also savings, insurance and fund transfer (Wikipedia, 2008).
Micro finance was defined by Ana (2008) quoting Gert Van Manner, a micro finance expert as banking the unbankable, bringing credit, savings and other essential financial services within the reach of hundreds or millions of people who are too poor to be served by regular banks in most cases because they are unable to offer sufficient collateral. A micro finance bank can therefore be defined as the bank for the poor. It means investing in the income generating activities of the poor. Micro finance is meant for those who cannot be efficiently served by regular commercial, universal or merchant banks because their activities and volumes are too low to warrant the high cost of services by big institutions.
It is thus meant to lift the poor from their current level of poverty to a level of productivity and self sufficiency. Therefore, it must be used for the income generating and economic activities of a person not for paying school fees, hospital bills, burial or marriage ceremonies. Banking originated purely from deposit taking and later metamorphosed into lending or what is called credit. However, an individual or a group of corporate bodies that has not been licensed as a bank by the Central Bank of Nigeria cannot be called bank no matter to what level such as person or institution carries on banking functions of financial intermediation or disintermediation consequently only microfinance institutions that have obtained the CBN license may use the word Micro-Finance Bank as part of their names. Those institutions known as micro finance institutions but do not have the CBN license are not banks even though they carry on micro credit activities. These include Non Governmental Organizations (NGO) finance houses, cooperatives etc.
Area of Study
Delta State (recognized on August 27, 1991) is an oil and agricultural producing state in Nigeria. The capital city is Asaba, located at the northern end of the state, with an estimated area of 762 square kilometres (294 sq mi), while Warri is the economic nerve center of the state and also the most populated (Wikipidia). Thus it is the area of the study.
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the descriptive survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled.
Population of the study
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This research was carried out on the appraisal of operational problems facing micro finance bank using selected Micro Finance Banks in Warri, Delta State Nigeria as case study. The researched selected three (3) Micro Finance Bank in Delta state in this study. The selected banks include;
Accion Microfinance Bank, Lapo Microfinace Bank and Coastline Microfinance Bank. Therefore all the staffs of the selected micro finance bank form the population of the study.
DATA PRESENTATION AND ANALYSIS
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. Out of the sum of Sixty Five (60) questionnaires administered to respondents, only 50 copies were returned and validated. The analysis of this study is based on the number returned and validated.
Table 4.1: Demographic data of respondents
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS:
This chapter summarizes the findings into the appraisal of operational problems facing micro finance bank using selected Micro Finance Banks in Delta State as case study. The chapter consists of summary of the study, conclusions, and recommendations.
Summary of the Study
In this study, our focus was to appraise the operational problems of Micro Finance Banks in Delta Sate, Nigeria. The study specifically was aimed at examining the operational structures of Micro Finance banks in Delta state. To appraise operational problems of Micro Finance banks in Delta state; To examine the effects of these operational problems on the performance of Micro finance banks in Delta state and To determine if operational problems of Micro finance banks in Delta state affect micro finance access to Small and Medium Scale Enterprises in Delta state.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are active staffs of selected Micro Finance Banks in Delta State.
Based on the finding of this study, the following conclusions were made:
- The operational problems experienced by micro finance banks in Delta State Nigeria include the following; Poor Communication; Poor Customer Service; Lack of Innovation; Inadequate Teamwork and prioritizing personal Interest than collective goal.
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