This project work examines the bank institution to rural economic in
Etsako West Local Government in Edo State. Microfinance bank has long been
recognized to play an important role in the economic development of rural area
in Etsako West Local Government. The aim of mobilization and allocation of
savings for productive, provision of structure for monetary management and
serve as the basic for managing liquidity. The descriptive research method was
used for this study. Data was collected making use of a structured
questionnaire. The findings revealed that there is also absence of security
needs to protect the bank properties. Based on the findings, the study
recommends that the bank should train manpower and the government should
provide infrastructural facilities. This project work concludes that economic
policy is important in the rural area in recovery and transition into a
of Contents vii
Chapter One: Introduction
to the Study 1
of Problem 3
of the Study 4
of Hypotheses 4
of the Study 5
of the Study 6
of the Study
of Terms 7
Chapter Two: Review of Related Literature
Development of Microfinance Bank in Nigeria 13
for Microfinance Banking 16
Role of Microfinance Banking 17
of Community Infrastructure 21
Life or Rural Banking Areas 28
of Microfinance Bank 29
Issues in Agriculture Rural Development and
Microfinance (MF) 37
for Development Strategies 40
Concept of Microfinance 44
Products and Services for SMEs
of Sustainable Microfinance 53
Microfinance to Rural Entrepreneur 53
Rural Entrepreneurs and their Demand for
Entrepreneurs in Commodity Production and
Chapter Three: Research Method and Design
of Population of the Study 62
of Data Collection 63
of Data Presentation 64
of Data Analysis 64
Presentation, Analysis and Interpretation
of Data 65
of Hypothesis 85
Chapter Five: Summary of Findings, Conclusion
of Findings 89
1.1 Background to the Study
The ideal of micro-finance banking become necessary due to the inability
of the conventional banking schemes to mobilize the dormant funds in rural area
and channel them into needy factor. Besides, small business and the rural
farmers needed to inculcate banking culture. Their idle funds needed to be
mobilized for onward lending to the productive sector hence the need for micro
– finance banks arose.
Much effort have been made in the past by successive government to
involve rural dwellers in Nigeria in modern banking practice the extend credit
to them in terms that are easily attainable earlier on, in obedience to the
Central Bank directive the commercial banks opened braches in many communities.
In spite of opening of such branches, it was not possible to make
banking attractive to Rural dwellers. This was because banking operations even
in the rural braches have continued to be complex, cumbersome and too
complicated for the level of education and enlightenment at the rural people
participation therefore, was not just possible.
according to Ezike (1981) the main objective of rural banking is to effectively
mobilize saving in the rural area and bring credit close and within the reach
of the long-credit starved farmer.
However, like the previous schemes, aimed at small business in the rural
and small business in the rural/urban areas and farmers to mention but a few.
The rural banking scheme has failed to accomplish its set objectives of
providing for the rural people in particular. Against the background, this
study is designed to X-ray the role of micro finance banking in the
socio-economic development of Nigeria
(Arural) with a focus on Rural micro finance bank Arural Edo State.
The banking industry is quite a risky business and a lot of fears is
being exercised in establishing bank branches in rural areas because of
inadequate security and fear incurring losses in the course of their
There is a problem associated with the non-provision of loans to rural
farmers. The problem of rural-urban drift lack of employment opportunities,
inaccessibility of infrastructure, road, electricity, potable water, telephone
services, among other which for a long time have been denied the rural
microfinance bank reduce poverty in the community?
What is the
function of microfinance bank toward women and other disadvantaged population
microfinance bank does towards the activities of business in the community?
finance bank a base for the development of the rural infrastructure?
of the Study
how microfinance banks help to reduce poverty in the community.
To find out
the function of microfinance bank towards women and other disadvantaged
To find out
what microfinance bank does towards the activities of business in the
To find out if
microfinance bank serves as a base for the development of the rural
In doing this study, the researcher has adopted the following hypothesis
designed to accomplish the objective of the study.
HI: Micro finance bank does not provide for the needs of
Ho: Micro finance banks provides for the needs of the
Ho: Microfinance bank does not assist in the employment of
bank assists in the employment of the people.
Ho: Microfinance banks are not a base for development of
the rural infrastructure.
HI: Microfinance bank is a base for the development of the
Ho: Microfinance bank does not help in the provision of
soft loan to assist the rural dwellers.
Hi: Microfinance banks help in the provision of soft loan
to assist the rural dwellers.
of the Study
Microfinance banking service has become relevant instruments for the
socio-economic development of our rural areas. Rural Micro-finance banks occupy
a pride of place like the economic activities of the rural people.
Significantly, this study will contribute to the existing literature for
information and reference.
Also, it will enable management of banks know the problems of rural
banking and hence be able to take effective decision about them.
The study will also serve as a source of information for those who will
embark on a similar research.
This study is limited to the services of the micro finance bank in Nigeria with a
focus on Rural Micro finance bank, Arural Etsako West Local Government Area of
of the Study
The framework os this study is limited due to
time constraints and the financial involvement in carrying out a detailed and
thorough extensive work on the impact of microfinance banking in rural
Perhaps, the greatest limitation of this work
stemmed from the limited available secondary data at the researcher’s disposal.
Ignorance and low literacy level among the
Nigerian public, as well as suspicious among them greatly limited my data
gathering especially during random sample interview carried out. This low
awareness and lack of orientation limited this study.
Also, was the dearth of data in this field, as
the library could not supply all data needed, and even most of the books
catalogued were not in the shelf, and even if found there irrelevant and
pertinent pages have been torn out, and of course most of the books were
In this research, the researcher made use of some technical but related
terms for case of understanding and application the following functional definition
have been giving.
Finance Bank: Bank is seen
as self sustaining finance institution, owned and managed by a community for
the purpose providing credit banking and other financial services to its member
largely on they basis self recognition and credit works.
Deposit: Money kept in a bank not to be withdrawn without
notices on which interest is payable.
Credit: A payment made to somebody on trust on the ground that such money will
be repaid as at when due.
DFRRI: The Directorate of Food, Road and Rural Infrastructure.
Rate: This can be defined as the rate at which the commercial banks lend money
to the public.
Savings: An amount or a sum of money deposited in the bank on which interest is
payable which also can be written by depositor at will.
CBN: Central banks of Nigerian.
Risk: The risk borne by a lender
that interest rate an economy will raise causing a fall in capital value of the
Statement: It is
financial information which shows the cash inflow and out of an enterprise in a
give accounting year or a reporting period but include inflow rising for change
in cash as a result of the purchasing and liquidation of cash equivalent.
Cash Flow Techniques: This is use to ensure comparability of cash flow
accruing at different times.
Bank: That part of organization risk that arise from using
capital, partly finance by capital financial risk together with business risk
made up total risk.
Risk: This is the rate of
interest pardon the nominal value of retained securities, unless the securities
have a market value capital to their nominal value the actual yield will not
equal to coupon rate.
Doubtful Debt: Portion of loan and advance granted by banks
that are considered uncollected because they are not operating to schedule.
Management: The whole system of credit control, which aims at
ensuring good quality loan asset for bank at all times.
Balance: This is the customer is total habit less value of any
security held which recoverable and the accumulated interest charges from the
time the account was classified or in bad debt category.
Risk: That part of business
organization risk which arises from it commercial activities business risk
together with financial risk makes up total risk.
The extent to which variation in the value of one
variable are associated with variation in that of another variable. For example
it is generally true that the return from any particular asset are corrected
with return from the generally.
Annuity: A series of constant cash flows receivable for a specified
number of years.
Rate of Return: The net accounting profit from a particular project
expressed as percentage of the book value of the asset invested in the project.
Equity: The risk
bearing portion of the long-term capital of a business organization for a
company it is the share capital and reserve.