ABSTRACT
The objective of this research work
is to analyze the impact of microfinance bank in revamping and enhancing the
economic growth and development of Nigeria. It the bid to arrive at
the objectives of this research work, the work will be sub-divided into five
chapter, the first chapter by way of introduction will captured the concept of
microfinance bank stating the hypothesis and defining the terms and key
concepts used in this research work. The second chapter will conceptualize the
concept of microfinance bank, stating the importance of microfinance in
contributing to entrepreneurship development in Nigeria. It also stated the
challenges facing microfinance back in Nigeria. The third chapter was the
methodology in which the statistical tools used in the analysis of data was
stated. The presentation and analysis of the primary data was carried out in
the fourth chapter while the fifth chapter draws the findings of the research
work, the summary, conclusion and recommendation of the research work
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
It would be observed that, despite
the presumed developments in the Nigerian economy, the country is still largely
being regarded as a developing country (Onyema, 2006). More so, its industrial
growth is not quite impressive.
Before the emergence of formal
microfinance institutions, informal microfinance activities flourished all over
the country. Traditionally, microfinance in Nigeria entails traditional
informal practices such as local money lending, rotating credit and savings
practices, credit from friends and relatives, government owned institutional
arrangements, poverty reduction programmes etc (Lemo, 2006). The Central Bank
of Nigeria Survey in 2001 indicated that the operations of former microfinance
institutions in Nigeria are relatively new, as most of them never registered
after 1981.
Before now, commercial banks
traditionally lend to medium and large enterprises which are judged to be
credit-worthy. They avoided doing business with the poor and their micro
enterprises because the associated cost and risks are considered to be
relatively high (Anyanwu, 2004).
The Federal and State governments
have recognized that for sustainable growth and development, the financial
empowerment of the rural areas is vital, being the repository of the
predominantly poor in society and in particular the SMEs. If this growth
strategy is adopted and the latent entrepreneurial capabilities of this large
segment of the people is sufficiently stimulated and sustained, then positive
multipliers will be felt throughout the economy. To give effect to these
aspirations various policies have been instituted over time by the Federal
Government to improve rural enterprise production capabilities. (Olaitan 2006)
In view of this, the impact of micro
finance bank in economic growth and development of Nigeria started showcasing
itself. With the initiative of microfinance, rural areas are opportune to grow
and develop as loan and fund are easily given to rural farmers and entrepreneur.
Jobs opportunities were created since there is avenue for lending and
investing.
1.2 STATEMENT OF RESEARCH
PROBLEMS
There are so many problems and
challenges that hinders the functionality of the microfinance bank in carrying
out their major role of improving economic growth and development in Nigeria.
These problems include
-
poor
attitude of Nigerians towards MFBs
-
insufficient
support from the regulators and government
-
There
are communication gaps and inadequate awareness among the masses.
-
Undue
competition rather than cooperation from the mega banks, and undue
malpractice/Sharp practices by microfinance bank operation.
The researcher will in the research
find possible ways of solving or making better the conditions for the operation
of MFBs.
1.3 OBJECTIVES OF THE STUDY
The mains objectives of this research
work are to investigate the impact of micro finance bank in economic growth and
development of Nigeria.
Other objectives are as fellows
i. it will explicate in detail ways
in which micro finance banks can contribute in developing rural areas and
improving the life of the poor people.
ii. It will investigate the ways
microfinance bank can contribute in building entrepreneurship within the
country.
1.4
RESEARCH QUESTIONS
1. Does microfinance bank help in the development
of rural areas and improve the live of the poor people?
2. To what extent has microfinance bank
assist in the eradication of poverty in the country?
3. Do microfinance bank contribute to
entrepreneurial development?
4. Has microfinance bank reduce the rate
of unemployment in the country?
5. Has microfinance bank made
significant contribution to the development of Nigerian economy?
1.5
SIGNIFICANCE OF THE STUDY
This study is essentially significant
in that it is directed towards evaluating the impact and role that micro
finance banks have on the economic growth and development of Nigeria,
especially the rural areas which is a criteria aimed at measuring economic
standard.
Owing to the fact that researcher has
aimed at pinpointing the ways in which micro finance bank can help in the
revamping of the nation’s economy, the findings of this research work will be
of great help to most developing countries who may wish to toe the part of
Nigeria in MFB development.
It will also serve as a reference
point for future researchers who in one way or the other will try to unveil the
role and impact of micro finance bank to economic development.
1.6
SCOPE OF THE STUDY
The scope of the study is subjected
around the frame work of microfinance bank in Nigeria vis-à-vis its contribution
to the economic growth and development.
For accuracy and coherency, the
research work will take as a case study of the Lapo Micro Finance Bank, Benin
City to enable precision and distinctiveness.
1.7
LIMITATION OF THE STUDY
During the course of this research, a lot of
obstacles were encountered.
Thus, the uncoperation of most people
working in the library and other offices where the researcher needed to get
materials posed great problem to the researcher. Some of the staffs do not feel
safe letting us have access to some materials while others will charge me more
than double cost of Photostat before I can get what I wanted.
Financial constraint is another
limitation to this work which is as a result of high cost of transportation
fare to the areas of study to gather data, combined with the cost of materials
to carry this work to conclusive end.
It also took great strength to
convince the respondents that their responses to the questions in the
questionnaire will be treated with great confidentiality and are purely
academic.
1.8 DEFINITION OF TERMS
MICROFINANCE BANK
According to the Nigerian Banking
Act, 1969 (as amended Bank amendment act 1979), Microfinance banks are
institutions constructed as a company licensed to carry on the business of
providing microfinance services such as collection of savings, loans provision,
insurance money transfer services and other non financial services that are
needed by the poor.
BANK
A bank is a financial
intermediary that accepts deposits and channels those deposits into lending
activities, either directly by loaning or indirectly through capital markets.
ECONOMIC GROWTH
Economic growth is the increase in
the market value of the goods and services produced by an economy over time.
ECONOMIC DEVELOPMENT
Economic development is
the sustained, concerted actions of policy makers and communities that promote
the standard of living and economic health of a specific area. Economic
development can also be referred to as the quantitative and qualitative changes
in the economy.
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