THE IMPACT OF MICRO FINANCE BANK IN ERADICATING POVERTY IN RURAL AREA (A CASE STUDY OF GAA AKANBI MICRO FINANCE BANK)

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND INFORMATION ABOUT THE STUDY

According to Banda M. (2002) Micro Finance is about Providing Financial Services to the poor who are traditionally not served by the conventional financial institution. In Nigeria. The formal financial system provides services about 35% of economically active population while the remaining 65% are executed from the access to financial services. The small and medium scale enterprises falls among the 65% who are not catered for finally. The finance need of most of these small and medium scale enterprises are catered for the informal financial sector via non – governmental organization (N.G.O) friend money, other relatives as well as credit union.

In order to enhance financial flow to the poor Nigerians who want to start – up a small and medium scale business, the government has in the past initiative a series of public finance micro – credit programme and policies targeted at the poor. Some of such programme well Agricultural Credit Guarantee Scheme (ACGS). People Bank of Nigeria (PBN), Community Bank (CB), Non – Micro finance bank etc. All these are aimed at empowering Nigeria and local productions.

Micro finance is the main source of funding micro enterprises in Nigeria, Africa and even in other developing regions. The study is aimed at undertaking a primary surveying of micro finance institution in Nigeria, it will also examine the frame work of micro finance institution and also observed how the operation of micro finance are carried – out.

Institution have helped in conditioning poverty in rural area with regard to this research work. It will work make a critical education of micro finance institution and wind examination of rural area (concentration on level at poverty) and how the operation of the institution have helped in finding poverty.

1.2   STATEMEN OF THE PROBELM

The following are the problems that necessitated my choice of this topic.       

-       Conceptual framework of micro – finance and micro finance institute in Nigeria.

-       Reason for the establishment of Micro Finance Bank

-       Regulation bodies and regulatory guideline that guide the operation of Micro Finance Institution in Nigeria.

-       Meaning and features of a rural area setting

-       Rate of poverty in the rural area

-       Reason for increasing rate of poverty in rural area

-       Impact of Micro Finance Banks in eradication of poverty in the rural area.

-       Different and draw back encounted by microfinance banks while performing their function of poverty eradication.

-       Solution to the problems of Micro – Finance Institution.

1.3   OBJECTIVE OF THE STUDY

        The purpose of this research work is to examine the impact of Micro Finance Bank in eradicating poverty in the rural area. On other hand, the aims and objectives of the study are as follow.

-       Examine the conceptual framework of micro finance institution in Nigeria.

-       Enumerate the feature and the meaning of rural setting

-       Discussing the rate of poverty in rural area

-       Highlighting the reason for the increasing rate of poverty in the rural area.

-       Expantiating the roles impact of Micro Finance Bank in eradicating poverty in rural area.

-       Examining the problems encountered by Micro Finance Institution and the likely solution.

1.4   SIGNIFICANCE OF THE STUDY

The research work is descriptive in nature and to describes the impact in law of Micro Finance Bank in eradicating. Poverty in rural area. The research work is also beneficial to the micro finance bank because it will examine the reasons of Micro Finance Banks critically and prefer solution the problems.

Thus, this research block will therefore help in the overall economic development, it will also encourage rural dwellers on the effective utilization of the Micro Finance Banks nearer to them. Because this project will educate the general public on the use of Micro Finance efficiently and effectively.

Finally at the completion of this work, the following group will benefit one way as listed below.

Micro Finance Institution

1.     This research work will increase their scope of service and profitability.         

2.     The research will also assist the Micro Finance Banks in identifying their problems and profer likely dwellers; rural dweller.

-       This research work will educate the rural dweller on the impact of their finance

-       The project will also assist and educate the rural dweller on how to increase their saving and productivity.

-       This research work will also eradicate poverty in rural area by educating the dweller in the effective use of banks. Traditional authority will as well benefit from this project because it will increase their internal revenue generation as a result of increase in their level of productivity.

Finally, Local and State Government will benefit from this research work through the overall increase in standard of living in the rural area and state at large.

1.5   SCOPE AND LIMITATION OF THE STUDY

        This research work focus on impact of Micro Finance Bank in eradicating poverty in rural area. But because of the existence of some limiting factors the research work delimitate the study with special emphasis on Gaa – Akani Micro Finance Bank as the case study and the examination of Gaa – Akanbi community as the rural area under study as my sample population.

        A result of this research work is an historical case study and investigate based research.

        Furthermore, in carrying out the research work, some of the limitation of the problems encountered were.

·        Financial constraints, because the research work is personally financed by the researcher.

·        Inadequate material to guide in carrying out the research work.

·        Unenthusiastic attitude of some of the respondent in divulging useful information about the research topic.

·        Serious rubbing of minds and brainstorming by the researcher before unanimously putting down points on the research.

·        Problems of generalization of the final finding of the research to all rural areas in Nigeria.

However, despite all the limitation encountered during the research, effort where made to ensure that the limitations did not serve as an obstacle or hindrance toward the successful completion of this research work.

1.6   RESEARCH METHODOLOGY

The research methodology on the topic intend to use both secondary and primary sources of gathering information, the primary source include the materials from internet, material from related past project and research works and also academic textbooks.       

        The method of analyzing, interpreting and presenting the information covered and descriptive and also internal statistical analysis.

1.7   DEFINITION OF TERMS

        The major terms used in this research are define below

·        Micro – Finance they provide financial services to the poor who are traditionally not serve by conventional banks.

·        Micro – credit – The firm of soft loan provision by micro – finance bank.

·        Micro – credit plus – An additional services rendered by more finance bank together with provision of micro credit, which include skill acquisition programme, business advice, etc.

·        Community bank – These are unit banks owned and manage by the owner communities they were establish to cater for the rural dweller who do not have access to conventional banks.

·        Small and Medium scale Enterprises (SME) an enterprises with a minimum asset base of N200 millions excluding land and working capital and have the minimum number of staff not than 10 and more than 300 persons.

·        Collateral – A Asset collected by Bank as security

Chapter four is provide information on brief introduction of the study chapter, interpretation and analysis of data, presentation of data result according to research question, presentation of result according so research hypothesis, generalization and the procedure for processing collection data.

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