ABSTRACT
This study examined the effect of micro finance as an effective tool for poverty alleviation
in Nigeria. There has been an intensified and concerted effort by the
government to eradicate poverty in the nation and international level because
of the poor standard of living in the country. It is a very big problem in the
society that needs to be addressed by the government. This work is aimed to
know the reasons while the governments have not able to eradicate poverty in
the society.
The study was conducted in integrated
micro finance bank (IMFB) with 200 respondents. Data were collected from the
respondents by the use of questionnaire method. These respondents were chosen
by simple random method which comprises of both male and female youths, the
data collected were analyzed using percentage while chi-square technique was
used to test hypothesis.
The findings of this study reveal
that the micro finance institutions change interest rate as high as up to 100%
of lending and pay as low as 5% of savings. This aggregate the existing
inequality in the distribution of wealth and income in Nigeria.
In conclusion; micro finance as an
effective tool for poverty alleviation has gone a long way to help eradicate
poverty in Nigeria. The study therefore recommends that both individual and
government should employ qualities and skilled staff so as to enhance the
achievement of both organizational and economic goals.
TABLE OF
CONTENTS
CHAPTER ONE
1.1 INTRODUCTION
1.2 STATEMENT OF
RESEARCH PROBLEMS
1.3 THE AIM AND
OBJECTIVES OF THE STUDY
1.4 RESEARCH
QUESTIONS
1.5 RESEARCH
HYPOTHESES
1.6 RESEARCH
METHODOLOGY
1.7 THE IMPORTANT OF THE STUDY
1.8 THE SCOPE
AND LIMITATION OF THE STUDY
1.9 THE
DEFINITION OF BASIC TERMS/CONCEPT
1.10 ORGANIZATION
OF THE STUDY
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
2.2 DEFINITION CONCEPT OF
MICROFINANCE
2.3 DEFINITION AND CONCEPT OF
POVERTY
2.4 EFFECT OF MICROFINANCE ON
POVERTY ALLEVIATION
CHAPTER THREE
THE STRUCTURAL COMPOSITION OF THE STUDY
3.1 INTRODUCTION
3.2 HISTORY OF MICROFINANCE
3.3 THE MICROFINANCE POLICY
REGULATORY AND SUPERVISORY FRAMEWORK IN NIGERIA.
3.4 HIGHLIGHTS
OF POLICY FRAMEWORK FOR l\UCROFINANCE (MFB'S) ACCORDING TO THE (CENTRAL BANK OF
NIGERIA (CBN)
CATEGORIES AND LICENSING OF MFB'S:
3.5 ROLES OF MICRO
FINANCE BANK IN THE ECONOMIC GROWTH AND DEVELOPMENT OF NIGERIA.
3.6 INSTITUTIONAL CONSTRAINTS TO EFFECTIVE SERVICE DELIVERY
OF MICROFINANCE BANK IN NIGERIA:
3.7 THE
EXPERIENCE OF THE CENTRAL BANK OF NIGERIA IN ENHANCING ECONOMIC DEVELOPMENT
3.8 ROLES AND RESPONSIBILITIES OF GOVERNMENT ANI) CENTRAL
BANK OF NIGERIA (CBN) IN ENCOURAGING EFFECTIVENESS AND EFFICIENCY OF OPERATlONS
OF MICRO FINANCIAL BANKS.
3.9 POVERTY
3.10 ACUTE CAUSES
OF POVERTY
CHAPTER FOUR
RESEARCH METHODOLOGY; DATA ANALYSIS AND INTERPRETATION OF RESULTS
4.1 INTRODUCTION
4.2 RESEARCH
DESIGN
4.3 SOURCES
OF DATA
4.4 RESEARCH
INSTRUMENT SPECIFICATION
4.5 SAMPLING PROCEDURE AND SAMPLE DESIGN POPULATION
4.6 PROBLEM
ENCOUNTERED
4.7 DATA
PRESENTATION
4.8 DATA
ANALYSIS
4.9 HYPOTHESIS
TEST AND INTERPRETATION
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
5.1 SUMMARY OF
FINDINGS
BIBLIOGRAPHY
CHAPTER ONE
1.1 INTRODUCTION
Today widespread poverty is one of
the major problems of mankind and its alleviation one of her major agendas. In
recent years micro finance has emerged as an important instrument to relieve
poverty in the developing countries.
Today there are more than 700 micro
lending institution providing loans to more than 25 million poor individuals
across the world, their vast majority being the women. However, these
institutions face some serious challenges, especially in less developed
countries where the proportion of people in poverty is high. The existing
microfinance in Nigeria serves less than 1 million people out of 40 million
being the potential number that need the service. Also, the aggregate micro
credit facilities in Nigeria account for about 0.2 percent of the GDP and is
less than one percent of total credit in the economy. Addressing this situation
inadequately would further accentuate the problem and slow down growth and
development of the country.
We find that the microfinance
institutions charge interest rate as high as up to 100% for lending and pay as
low as 5% of savings. This aggravates the existing inequalities in the
distribution of wealth and income in Nigeria.
Finally, Nigeria being a country
thirty for rapid development and economic growth encourages the creation and
availability of micro finance institutions so as to encourage these (people
masses) considered unbanked by the commercial banks to participate in the
economic activities. Thus, encouraging economic growth and development.
1.2 STATEMENT OF
RESEARCH PROBLEMS
Poverty is a serious menace, which
most developing or underdeveloped Nations/economy tend to tackle. The
imperative of a concreted and coordinated effort in dealing with the problem
cannot be overemphasized.
Remarkable multilateral effort had
been taken against high poverty level in Nigeria, where the proportion of
impoverished people is reportedly high.
Due to this high rate of poverty in
the economy, our youths engage in criminal activities such as robbery,
smuggling, etc to meet their daily necessities/needs.
Moreso, the inability of ladies of meet their
necessities i.e., adequate health care, material and
financial needs led them to institutions, (Aristo) so as not to be
distinguished or segregated by inferiority complex to mingle with the friends
or fellow students.
Hence, the inability of parents to
meet children needs, enforces them to give their child(ren) out for maids and
the inability to meet or pay hospital bill makes them to go for self
medications which at times is dangerous to health and causes death.
It is against all these scourge, that
the need for Micro finance arouse (MOHAMMED YUNUS) so as to enable those who
were previously considered unbearable by commercial bank participate actively
in the economic activities. Mohammed Aliyu Dahiro and Hasa, Zubair (2008) the
existing microfinance in Nigeria serves less than 1 million people out of 40
million being the potential number that need the service.
According to Nout Wellinki (2008) the
term micro finance is generally used for the provision of financial services,
in most cases micro-loans, to the poor and many people have been to realize its
opportunities. Indeed, the concept of Microfinance has been accepted as an
effective means to reach out for the poor.
Conclusively, it is against these
scourge (high poverty level in Nigeria), that Microfinance banks was
established, and the aim of this project is to test how effectively, the
establishment of Microfinance banks can help in the alleviation of poverty in
Nigeria.
1.3 THE AIM AND
OBJECTIVES OF THE STUDY
The aim of this research work is to:
i.
To examine the impact of microfinance bank on poverty alleviation.
ii.
To identify the availability of credit facility on poverty alleviation on
small scale enterprises (SME's)
iii.
To evaluate the effect of small-scale enterprises on poverty alleviation.
1.4 RESEARCH
QUESTIONS
With the analysis of Microfinance
Bank as an effective tool for poverty eradication in Nigeria, the question that
came for proper consideration and dependable solution are as followed listed
below:
i.
Does the institutional constraint to effective microfinance services
delivery in Nigeria also affect the Integrated Microfinance Bank (IMFB)?
ii.
Is there any positive impact made by the Integrated Microfinance bank
(IMFB) in the eradication of poverty in Nigeria?
iii.
Are there any possible recommendations in solving or tackling the
institutional constraints to effective microfinance services delivery in
Nigeria?
iv.
Does Microfinance bank undermine domestic capital formation of Nigeria?
v.
Does the Roles and Responsibilities of stakeholders e.g. government, Central
Bank of Nigeria (CBN) contributes to encourage effective participation of
Microfinance institutions to enhancing economic growth and development?
1.5 RESEARCH
HYPOTHESES
This research work aimed at testing
the following hypotheses.
1. Ho: That there is no strong relationship
between Microfinance bank and poverty alleviation.
H1: That there is strong
relationship between poverty alleviation and Microfinance bank.
2. Ho: That there is no strong relationship between credit
facility and poverty alleviation (SMEs).
H1: That there is strong
relationship between credit facility and poverty alleviation (SMEs).
3. Ho: That there is no positive effect of SMEs in the
alleviation of poverty in Nigeria.
H1: That there is positive
effect of SMEs In the alleviation of poverty in Nigeria.
1.6 RESEARCH
METHODOLOGY
Primary method of study: This study will use questionnaire in
other to test for the relationship between Microfinance bank and poverty
alleviation programmes in Nigeria. The source of data will be through primary
source of data generation mainly through observation, survey, questionnaires
e.t.c.
Sources of Data: Chi-square statistics will be used to analyse the
information source through questionnaire.
1.7 THE IMPORTANT OF THE STUDY
The importance of the study on
individuals, firms and governments are:
i.
The research work is carried out to put a clear picture to Microfinance
bank as an effective tool for poverty eradication in Nigeria. Using (IMFB)as
the case study.
ii.
It will also show the institutional constraints to effective microfinance
services delivery in Nigeria.
iii.
This research study will also show the roles and responsibilities of
stakeholders e.g. government, central bank of Nigeria (CBN) in Microfinance
institutions.
iv.
This study is also aimed at indicating the goals of the Microfinance banks
in eradicating poverty in Nigeria.
v.
It is also aimed of showing the policy strategies of microfinance
institutions in Nigeria and the policy targets.
1.8 THE SCOPE
AND LIMITATION OF THE STUDY
In carrying out this research work,
information will be obtained from the case study; Integrated Microfinance Bank
(IMFB) on Microfinance bank as an effective tool for poverty eradication in
Nigeria.
Secondly, the questionnaire method of
data collection will be use in the acquisition of information from the case
study. Thirdly, the chi-square method of data
analysis will be used to analyse the questionnaire acquired so as to provide
adequate interpretation to the research work.
Finally, possible recommendations
will be given or enhanced to tackling or combating the constraints or problems
faced by the Microfinance institutions to effective microfinance services
delivery in Nigeria.
Moreso, limitations also have its own
impact on this project. The limitations are listed below:
1.
Time constraints
2.
Inadequate financial resources
3.
Inadequate manpower resources
4.
Inadequate data
1.9 THE
DEFINITION OF BASIC TERMS/CONCEPT
Micro finance: Integrated Micro finance Bank (IMFB)
P1c was incorporated as a wholly indigenous microfinance bank following the
grant of an approval-in-principle by the Central Bank of Nigeria (CBN) on
issuing of operating license as the first micro finance bank in Nigeria on
September 2, 2005 and possessing dividend of 250 million ordinary shares of N1.00 each. The authorized share capital
of N26 billion to accommodate the teeming high net worth of individuals
yearning was acquired.
Integrated Micro finance Bank (IMFB)
was promoted by a group of investors who saw the gap in the Microfinance
institutions in Nigeria. The official launching of Integrated Microfinance Bank
was enhanced by the then President and commander-in-chief of the Federal
Republic of Nigeria Olusegun Obasanjo.
Promoters of the bank comprised
seasoned and tested Nigerians of integrity and their primary goal is to bank
the unbanked, less-banked (Micro customers) and to take customers to their
businesses through the provision of efficient financial services integrating
the informal sector into the mainstream financial system.
Monetary policy: G.K. Shaw (Jhingan, M.L. 2004) defines it as any conscious action
undertaken by the monetary authority (Central bank of Nigeria) to change the
quantity availability or cost of money i.e. interest rate.
CBN: This
means the Central Bank of Nigeria. It is the highest monetary authority in
Nigeria.
Finance: Finance is the livelihood of any enterprise. It is a key factor of
production; with finance; an enterprise can acquire other factors of production
such as labour, machinery/technology and management as well as raw materials
and embark on any business activity.
GDP: Gross
Domestic Product: It can be defined as the total monetary value of all goods
and services produced within an economy during a given period of times usually one year.
1.0 ORGANIZATION
OF THE STUDY
Chapter one is the introductory
parts. Chapter two will be the literature review. Chapter three is theoretical
framework. Chapter four is research methodology, data analysis and interpretation of results. While chapter
five shall contain the summary, conclusion and recommendation.
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