The Impact of Microfinance Bank on Economic Growth of Nigeria
OBJECTIVE OF THE STUDY
The objectives of the study are;
- To ascertain the impact of micro finance bank in economic growth and development of Nigeria.
- To ascertain the ways in which micro finance banks can contribute in developing rural areas and improving the life of the poor people.
- To investigate the ways microfinance bank can contribute in building entrepreneurship within the country.
REVIEW OF RELATED LITERATURE
Microenterprises in Nigeria have not made the desired impact on the economy (Nwachukwu, 2012). This may not be unconnected to the numerous challenges facing the enterprises, among which is finance. Olorunshola (2001) rightly observed that the major gap in Nigeria’s industrial development process is lack of long and in some cases short term finance for Microenterprises. Microenterprises usually raise their finance through informal sources. The sources comprise owners’ savings/retained earnings, contributions/borrowing from friends, relations etc (Ango, 2011). In most cases finance generated from informal sources fall short of the required capital for Microenterprises (Okungwu and Saleh, 2004). To raise the balance of the required finance, entrepreneurs look up to the formal sources, which comprise banks, other financial institutions, cooperative societies and government loans agencies (Ango, 2011). There are a lot of challenges for Microenterprises in raising finance through the formal sources, especially as it affects banks and other financial institutions (Lawal, 2010). Dauda (2007) evaluates the performance of Nigeria’s community banking scheme and observes that deposits generated significantly grew over the period of evaluation (1992 – 2004). The study attributes the deposit growth to improved grass root banking habit. Although their aggregate loan portfolio to agriculture and rural based real sector activities increased nominally over the period, the credit exposures are relatively much lower than their exposure to general commerce, (19.2% against 47.6%). The study remarks that this trend is counter-productive to policy efforts at boosting real sector growth and sustainable economic development in Nigeria. Oluyombo (2011) attempt to investigate the contributions of microfinance banks to Nigeria’s economic growth and employs credits disbursed by the microfinance institutions as a proxy for their operational activities. The study employs the Ordinary Least Squares (OLS) regression technique and finds a weak, though positive relationship between Nigeria’s microfinance banking operations and the nation’s economic growth. Consequently, it recommends that microfinance institutions should channel very high proportion of their credits to the productive and real sectors of the economy for valuable impact of their operations on Nigeria’s economic growth. Babajide (2012) studied the effects of micro financing on micro and small enterprises (SMEs) in South West Nigeria using Diagnostic Test Kaplan-Meier Estimate, Hazard Model and Multiple Regression Analysis. The study indicates that microfinance enhances survival of small business in South West Nigeria; that microfinance does not enhance growth and expansion capacity of MSEs in Nigeria; that microfinance impacts significantly on the level of productivity of MSEs operators in South West Nigeria and that the provision of non-financial service by microfinance institutions enhances the performance of micro and small enterprises (MSEs) in South West Nigeria. Okpara (2010) examines the critical factors that induce poverty among the enterprising poor in Nigeria and the extent to which micro credits have assisted in alleviating poverty. The study’s selected causative factors for poverty include low profit, high cost of start-up or expansion funds for business and low rate of business growth. Employing two-stage regression technique within a quadratic equation framework, the study finds that in the first or take-off stage of microfinance banking, poverty was observed to have increased, though at a declining rate with increase in micro credits. In the second stage of the study which started from the year 2001, persistent increases in disbursed micro credit facilities are observed to have significantly lowered the poverty index in Nigeria. Consequently, the study calls for policy measures to establish microfinance institutions in every community in Nigeria.
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to the impact of microfinance bank on economic growth of Nigeria
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
The data collected from the respondents were analyzed in tabular form with simple percentage for easy understanding.
A total of 133(one hundred and thirty three) questionnaires were distributed and 133 questionnaires were returned.
Gender distribution of the respondents.
SUMMARY, CONCLUSION AND RECOMMENDATION
It is important to ascertain that the objective of this study was to ascertain the impact of microfinance bank on economic growth of Nigeria
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of the impact of microfinance bank on economic growth of Nigeria
This study was on the impact of microfinance bank on economic growth of Nigeria. Three objectives were raised which included: To ascertain the impact of micro finance bank in economic growth and development of Nigeria, to ascertain the ways in which micro finance banks can contribute in developing rural areas and improving the life of the poor people, to investigate the ways microfinance bank can contribute in building entrepreneurship within the country. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of community bank, Enugu state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study.
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