2.6 Theoretical framework
2.7 Empirical Results
2.8 Variance in literature
3.2 The description of study
3.3 Sampling Technique and sample
3.4 Description of data collection
3.5 Validity and reliability of the
3.6 Data Analysis method
Data Presentation, Analysis and Interpretation
4.2 Data Presentation
4.3 Presentation and interpretation
Summary, Conclusions and Recommendations
5.1 Summary or the Findings
1.1 BACKGROUND OF THE STUDY
The recent economic situations in the country have proven to the government
beyond doubt, that the large scale enterprises cannot perform the major roles
of economic development. This is true for Nigeria being a developing country.
Hence, priority has been placed on the small scale Businesses in Nigeria.
Government steps in achieving this include ban on importation of goods and
commodities, encouragement of local industries, establishment of the small and
medium enterprise Equity Investment Scheme (SMEEIS). In 1989, the World Bank
projected an increasing size of small and indigenous sector in Sub-Saharan
Africa. The small scale Businesses in Nigeria have a reputation as the 'Seed
bed' for economic development.
The impact of Micro Finance Banks on small scale business cannot be over
emphasized. The world today is inhabited by an estimated 6.6 billion people,
2.5 billion of which are believed to be living on less than US $ 2 (N300) a day. This group constitutes much .of
World's unbanked population. They have no access to financial services with
which to create wealth. This is because they lack necessary collateral often
requested by conventional banking institutions for credit facilities. This goes
further to impoverish and worsen national and even global poverty levels.
(Anyanwu C. M. (2004).
In confronting this challenge, the federal government through Central Bank
of Nigeria (CBN) had carried out different reforms in the banking industries.
The reforms culminate in the adoption of Micro Financing. This combat the
negligence of the small scale enterprises, by the conventional banking
institutions. Micro Finance as oppose to conventional banking is defined as
"the provision of credit and lower income group". It usually involves
very small of less than US $200 (N30,000), without any form of 'formal'
collateral as defined by the Nigeria Micro Finance Newsletter, volume 5, July-
December 2007. Central Bank of Nigeria (CBN) defines Micro Finance as providing
financial services to the poor who are traditionally not served by the
conventional financial institutions. According to CBN three things distinguish
micro Finance from other financial products: These are:
Small loans advanced and or saving
The absence of asset- based-
Simplicity of operations.
The conventional financial system provides services to only 35% of the economically active population in Nigeria,
while the remaining 650/0 are excluded.
The Micro Finance Banks were brought under the supervision of the CBN. A micro
Finance Policy was put in place to recognize, enhance and their existence
formalized. This secures their monetary stability, expand their financial infrastructure
and development. This policy injects vibrancy, stimuli for
growth, harmonized operating standards and provides platform for economic
revolution through the Small Scale Enterprises (SMEs), low investment in the
small scale enterprises in the past led to low entrepreneurial drive spirit
among citizens. It silences business acumen, business ideas development among
youths and encourages redundancy. The resultant factors of these are
unemployment, poverty, social vices like robbery, forgery etc. all these led to
low productivity and economic backwardness.
These backdrops justify the introduction of Micro Finance Policy. This
helps to develop a long term, sustainable Micro Finance sub-sector that will
enhance the Small Scale Enterprises (SMEs) towards economic growth and
Micro Finance plays an important role in the fight against poverty, by
providing sustainable access to financial services. For instance, Micro
Fi4nance helps the poor to increase their income, build viable business and in
essence help in reducing their vulnerability .to external shocks (social and
economic). It can also serve as a powerful instrument for self -employment to
women (CBN 2005).
Nigeria, being a developing country is faced with financial problem low for
small scale enterprises (SMEs). This result in low par capital income, poor
standard of living, abject poverty, malnutrition, poor
health status and a host of poverty related problems.
Micro Finance is about provision of financial services to the economically
active poor who are traditionally not served by the conventional financial
institutions. Micro Finance focuses its spot light on the Small Scale
Enterprises (SMEs). Micro Finance appreciates small business initiatives and
ideals. It supports and raises necessary non-collateral based credit facility.
1.2 STATEMENT OF THE PROBLEM
Over the years, there has been noticeable laxities in the government effort
through the CBN in financing small scale business In Nigeria. This makes it
difficult for small scale business to thrive. The government however later
initiated credit programmes, sectorial Credit Allocation, Concessionary
Interest Rate and Agricultural credit Guarantee Scheme (ACGS).
In addition to these were the establishment of Nigerian Agriculture and
Cooperative Bank (NACB), the National Agricultural Insurance Corporation (NAJC)
, others are the People's Bank of Nigeria (PBN), the community Banks (CBs) and
the Family Economic Advancement Programme (FEAP). In year 2000, government
merged the NACB with the PBN and FEAP to form The Nigerian Agricultural
Cooperative and Rural development Bank Limited (NACRDB) to enhance the
provision of finance to the Agricultural sector. The National
Poverty Alleviation Programme (NAPEP), was also created and was given a mandate
to provide financial service to alleviate poverty.
All these reforms in the banking sector is to redirect focus on the small
scale businesses. This however are confronted with several setbacks. They were
with little or no. success. The programmes or initiatives are Micro finance
service majorly sponsored by the government. Something significant about the
programmes is that they are focused mainly on agricultural and other activities
such as tailoring, hairdressing, trading, weaving, agro-processing, black smiting,
barbing, transportation e.t.c. These programmes were equipped with huge funds
but the effects were not visible and were short- lived where visible. The
initiatives were not sustained due to mis-management, fraud and change in
It was thus imperative for the government organizations and donor agencies
to recognize the need for the establishment of Micro Finance Bank. It provide
funds for the small scale industries towards economic growth and development.
1.3 OBJECTIVES OF THE STUDY
The set objectives of the study is to ascertain a quantitative and qualitative
analyses of the impact of the Micro Finance Banks on small scale Businesses in Nigeria. The specific set of objectives of
these study are:
v To examine the capacity of the small scale businesses in Nigeria.
v To ascertain the impact of the small scale businesses in Nigeria.
v To determine the impact of the Micro Finance Banks (MFBs) on the small
scale businesses in Nigeria.
v To ascertain the level of job/ employment
provision In Nigeria.
v To ascertain the level of wealth creation through the credit facilities
provided by the Micro Finance Banks (MFBs) to small scale businesses in
Nigeria, and also see if the credit facilities are enough.
Through the Micro Finance Bank, low income earners will have access to
small loans which are non -collateral based to finance their businesses.
1.4 RESEARCH QUESTIONS
The research hypothesis will be deduced from some of the following research
questions. These will serve as a guide to this present line of reasoning.
v What is the capacity of the small businesses in Nigeria?
v What is the impact of the small scale businesses in Nigeria?
v What has being the impact of the Micro Finance Banks (MFBs) on the small
scale businesses in Nigeria?
v Has there been any noticeable Increase in job/ employment provision in
v Has the Micro Finance Banks (MFBs) provided enough credit facilities for
small scale businesses in Nigeria?
v Has there been commensurate creation of wealth through credit facilities
provided to small scale businesses in Nigeria?
v Has the Micro Finance Banks have any influence on social services in
In order to find solution to the research problem identified and to achieve
the goal of this research work, the following hypothesis shall be tested with
the use of statistical tools.
Ho: Null Hypothesis
H1: Alternative Hypothesis
Finance Banks have impact on small scale businesses in Nigeria.
Finance Bank do not have impact on small scale businesses in Nigeria.
Finance Banks create positive effect on small scale businesses in Nigeria.
Finance Bank create negative effect on small scale businesses in Nigeria.
The research hypothesis is done with the view of examining the impact of
Micro Finance Banks on small scale businesses in Nigeria, the effect could be
positive as in the case of null Hypothesis (Ho) or negative as in the case of
alternative hypothesis (HI).
1.6 SIGNIFICANCE OF THE STUDY
The fact that this study sheds light on the significance and relevance of
Micro Finance Banks in Nigeria, as it relates to the small scale businesses
gives credence to the justification of this study. It draws attention to the
problems and solutions of the small scale businesses finance. This with its
consequential results of unemployment, poverty, economic decadence e.t.c.
This study is necessary as it gives an avenue of understanding and
appreciating the roles played by Micro Finance Banks so far in strengthening
the Nigeria's economy, by empowering small scale businesses.
The importance of Micro Finance Banks cannot be over emphasized in any
economy. Micro Finance Banks channel their funds to the
economically active poor. This group would have been left economically idle as
they were not served by the 'formal financial institutions'. The economically
active poor would not have played a role in Nigeria's economic growth and
development, if not for the Micro Finance Banks (MFBs).
1.7 SCOPE AND LIMITATION OF THE STUDY
The period under review will cover significant episodes of Micro Finance
Banks transformation in Nigeria. This study will exploit relevant information
and resource materials on the impact of Micro Finance Banks (MFBs) on small
scale Businesses in Nigeria, focusing on olive microfinance bank, Ikeja Lagos.
Consequently, the study focuses attention on small scale businesses in
Nigeria and the degree to which Micro Finance Banks (MFBs) have fared in
enhancing its performance. It will shed light on the prospect of the Micro
Finance Banks (MFBs) in the future.
During the field survey, most of the respondents were reluctant to answer
the researchers questions when they later agree to answer it takes a while to
retrieve the questionnaires.
Also, delay in data collection constitutes a major limitation to this
research work as most of the questionnaire are delayed but all at the end
retrieved, fully answered.
1.8 ORGANISATION OF THE STUDY
This study comprises five chapter. Chapter one introduces the background to
the study, statement of research problem, research questions, research
objectives, justification of the study, statement of the hypothesis and
organization of the study.
The second chapter concentrates on the 'review of relevant literature' on
the impact of Micro Finance Banks on small scale Businesses in Nigeria.
The third chapter' provides the methodology for the research work. It
discusses the subject of the research work, sample size, sampling procedure and
instrument for data collection and the method of data analysis.
Chapter four shows the presentation and analysis of data while chapter five
provides a summary and conclusion to the project work, and makes recommendation
for further research work.
1.9 OPERATIONAL DEFINITION OF TERMS.
SME'S- Small and Medium scale Enterprises is a type of business which requires
small capital for its operations.
MICRO FINANCE- Is a finance structure which deals with financing of business on a small
and medium level.