ABSTRACT
This study
was designed to explore the significant impact of microfinance on petty
traders in Agege local Government. The sample for the study comprised of 86
individual who were petty traders in Agege Local Government. The main tool used
for the study was a questionnaire designed to collect relevant data about the
subject matter. The data collected were subjected to frequency distribution,
percentages, mean and Non-parametric chi-square test with the aid of
Statistical Package for Social Science (SPSS).
After
testing the various hypotheses, it was established that there is a correlation
between micro finance scheme and petty trading in Lagos State most especially
in Agege Local Government. It is recommended that the activities of micro
finance bank should increase from just giving loans but carry out research on
how to improve petty trading in Agege Local Government.
TABLE OF CONTENTS
CHAPTER ONE: GENERAL
INTRODUCTION
1.1
Background of the Study
1.2
Statement of the Study
1.3
Aim and Objective of the study
1.4
Statement of Research Question
1.5
Statement of Research Hypotheses
1.6
Significance of the Study
1.7
Scope of the Study
1.8
Limitations of the Study
CHAPTER TWO: LITERATURE REVIEW
2.1 Conceptual Clarification
2.2 Key Principles of Micro Finance
2.3 Micro Finance Banks Policy and Small and
Medium Enterprises in Nigeria
2.4 Challenges of Micro Finance Banks in
Nigeria
2.5 Opportunities
2.6 Poverty in Nigeria
2.7 Impact of Micro Finance on Poverty
Alleviation in Nigeria
2.8 Theoretical Framework
CHAPTER THREE: RESEARCH METHOD
3.0 Introduction
3.1 Restatement of Research Question
3.2 Restatement of Research Hypotheses
3.3 Research Design
3.4 Source of Data
3.5 Population of the Study
3.6 Sample and Sampling Techniques
3.7 Data Collection Instrument
3.8 Administration of Data Collection
Instrument
3.9 Method of Data Analysis
3.10 Limitations of the Study
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Introduction
4.2 Summary of Data Collection
4.3 Presentation and Analysis of Data
According to Research
Questions
4.4 Testing of Hypotheses
4.5 Discussion of Findings
CHAPTER FIVE: SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.0 Introduction
5.1 Summary of Findings
5.2 Conclusion
5.3 Recommendations
5.4 Suggestions for Further
REFERENCES
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Commercial banks in most developing
countries exclude the poor and hardcore poor by imposing strict rules and
regulations on loan applications. The demand for the products and services
offered by commercial banks are low among the poor, not because of "poor do not need financial services", but the product and service
are not designed to meet their requirements. Micro-credit was originally
established to bridge the capital gap apparently unfilled by the rural
cooperatives and commercial banks. It is a collection of banking practices
built to provide small loans and accept small saving deposits. According to
Otero (1999), micro-credit provides access to capital, which enables the poor
self-employed to create productive capital, to protect the capital they have,
to deal with risk and to .avoid the loss of capital. It attempts to build
assets and create wealth among poor and hardcore poor people.
Microfinance is a phenomenon
that reflects the provision of both credit and savings services to low income
people. This provision of funds in form of credit and micro-loans empowers the
poor to engage in productive economic activities which can help boost their
income level and thus alleviate poverty in the economy.
In recent times, the growing
awareness of the potentials of microfinance in poverty reduction, economic
growth and development, coupled with the increasing number of microfinance
institutions has effectively put the issue of microfinance a top agenda in most
developing countries. The monetary
authority (CBN) is spearheading this campaign
in Nigeria and they act as the supervisory and regulatory body for this
sub-sector. The financing of the industrialization process which is one of the
major goal of Nigeria policy makers, cannot be overemphasized. For any program
on poverty alleviation to be successful, the economy needs a viable industrial
sector that can cushion
the economic and production process in the country. In most developing
countries of Asia, Africa, South America and the rest, poverty reduction is
anchored on the development of small and medium scale enterprises.
This is due to the low
technological capacity of these nations; majority of people in these nations
engage in low productive activity. As a result, economic development in these·
regions to a large extent depends on how well the small and medium enterprises
flourish. The inaccessibility of the poor to financing options has hindered the
progress and survival of most of these enterprises thereby worsening the
poverty incidence in these economies. Enhancement of small-scale production
plays important role in development process of a developing economy. Apart from
increasing the per capita output and expenditure, it enhances regional economic
balances through industrial dispersal and promotes effective allocation of resources.
Robust economic growth can be
achieved by putting in place well focus countries poverty. These programmes empower the people by
increasing their access to factor of production especially capital. The latent
capacity of the poor for entrepreneurship is significantly enhanced through the
provision of microfinance services. The financial services enable the poor to
engage in economic activities that make them' self-reliant, it enhances their
household income and helps them create wealth. Thus, the potential of
microfinance far exceeds the micro level, scaling up to address macro problems
associated with poverty reduction.
,
It has been acknowledged that
microfinance captures elements of widespread perception, broadening, deepening
and speeding up the interconnection to poverty reduction and economic
development. Schreiner and Colombet (2001, p.339) clearly describe microfinance
as "the attempt to improve access to small deposits and small loans for
poor households neglected by banks."
According to Olaitan (2001) and
Akanji (2001), the tools of microfinance include increased provision of credit,
increased provision of savings, repositories and other financial services to
low income earners or poor households. Thus simply defined, microfinance is a
development process through the provision of micro-credit and savings service
to small-scale entrepreneur. The Olaitan and Akanji perspective on microfinance
go in line with Schreiner's description of the concept. Schreiner (2001) also
proposed a definition of microfinance as "uncollateralized loans to the
poor and small-scale entrepreneurs". This implies that microfinance
provides financial strength to the low income earners so as to enable them carry
'on- economic activities that can earn them, improved living standard.
UNDP (2001) identified
microfinance as a major tool effective in alleviating poverty. It empowers the
financially disadvantaged ones. According to Morduch et al (2003) and Alegiemo and Attah (2005), microfinance is
the financial empowerment of economically active poor through the provision of
micro-credit as well as other productive assets; it enhances the latent
capacity of the poor for entrepreneurship, enabling them engage in economic
activities, be self-reliant and also enhancing the household income as well as
creating wealth.
1.2 STATEMENT OF PROBLEM
The object behind the concept
of microfinance is to generate financial service for those people which are
away from financial services and to help poor people to pull out from the vicious
circle of poverty. The idea behind the microfinance is very naive to generate
appropriate change in financial systems all over the world. As the traditional
financial system provided benefits and safety to the rich seqment of the
society, the main object of microfinance is to lift the poor segment of the
society from the circle of poverty and able them to contribute and participates
in the economic activities and development.
The microfinance campaign
started: when Professor Muhammad Yonus (Bangladeshi economist) first time
granted a few dollars to an impecunious (basket maker) in the year of 1974.
These little loans granting campaign to the poor persons enable them to run
their small businesses that would have helped them to come out from the poverty
circle. The Grammen Bank is one of the successful example which provides loans
for the poor to, uplift from the poverty. In this reorganization Professor
Muhammad Yonus was awarded the noble prize in the year of 2007.
It is well documented that
microfinance is the most appropriate and better corridor to empower the poor
people and rise their income generating ability (Pakistan institute of poverty
reduction program 2001). The significance of microfinance is increasing with
the passage of time not only in Pakistan but across the boarder as an
instrument to eliminate poverty. This sector faces many problems and challenges
in Pakistan as well as other underdeveloped countries because of additional
scope of this sector.
The thought behind the
microfinance services is to provide financial help to the poor persons and
people at their doorstep at very easy terms and conditions (Wahid Ur Rehman
2007). At this juncture microfinance has drawn special attention not only at
the academic level but also in the area of policy designing (Smailbone and Wyer
2000).
A review of microfinance
literatures has shown disparity in perception by scholars on this subject.
While some relay microfinance as an instrument that empowers the poor, others
negate this opinion; conceptualizing microfinance has a social liability. The conservatives view microfinance as social
liability, consuming scarce resources, without significantly effecting
long-term outcomes. Critics argue that the small enterprises supported by
micro-credit program have limited potential to grow and so have no sustained
impact on the poor. They contend that these "microfinance programs rather
make the poor economically dependent on the program itself (Bouman and Hospes,
1994).
Hence, even if the programs are
able to reach the poor, they may not be cost-effective and hence worth
supporting as a resource transfer mechanism. According to Zeller and Meyer
(2002), the excitement about the use of microfinance to empower the low income
people is not backed up with sound facts. Most microfinance providers are
unwilling to evaluate the appropriateness and effectiveness of such scheme
because they are perceived to be rigorous and expensive. These are part of the
issues that this study will try to address.
1.3 AIM AND OBJECTIVES OF THE
STUDY
The main aim of this study
include finding out whether there is; any
relationship between micro-finance schemes and petty trading. Other specific
objectives include:
i. To underpin the various
challenges militating against the performance of micro finance schemes in
Nigeria.
ii. To examine the impact of
micro finance scheme in the lives of petty traders in Agege Local Government.
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