Assessment Of The Impacts Of Micro-Finance Industry On The Development Of The Rural Area In Nigeria (A Case Study Of Gaa-Akanbi Micro Finance Bank Ilorin)

Assessment Of The Impacts Of Micro-Finance Industry On The Development Of The Rural Area In Nigeria (A Case Study Of Gaa-Akanbi Micro Finance Bank Ilorin)
Abstract
This study researches into the Assessment of the Impacts of Microfinance Industry on the Development of the Rural Area in Nigeria, A Case Study of Gaa-Akanbi Micro Finance bank Ilorin. It examines the significant of micro finance bank in Nigeria. It was concluded that knowing the population of rural area is very low, with special reference to Gaa-Akanbi Micro Finance Bank.
Table of Content
- Title page
- Certification
- Dedication
- Acknowledgement
- Table of content
- Abstract
Chapter One
Introduction
- 1.1 Background to the study
- 1.2 Statement of the problem
- 1.3 Aims and objectives of the study
- 1.4 Scope of the study
- 1.5 Limitation and constraints to the study
Chapter Two
Literature Review
- 2.1 Conceptual issue in micro finance industry
- 2.2 Rational for the establishment of microfinance
- 2.3 Features of micro finance industry in Nigeria
- 2.4 Regulatory authority and audlines.
- 2.5 Meaning and feature of rural area
- 2.6 Rate of poverty in rural area
- 2.7 Reason for increasing rate of poverty in rural area
- 2.8 Impacts of micro finance bank towards eradicating poverty in rural area.
- 2.9 Problems of union banks in eradicating poverty.
Chapter Three
Research Methodology
- 3.1 Data collection method/techniques
- 3.2 Data presentation and analysis method
- 3.3 Definition of population
- 3.4 Sample size and distribution
- 3.5 Sample selection
Chapter Four
Data Presentation and Analysis, Summary Conclusion and Recommendation,
- 4.1 Brief history of case study
- 4.2 Data presentation and analysis
- 4.3 Summary of findings
- 4.4 Conclusion
- 4.5 Recommendations
- References
- Appendix
Chapter One
Introduction
1.1 Background to the Study
According to Banda M. (2002), micro finance industry is about providing finance service to the poor who are traditionally not serve by the conventional financial institution in Nigeria the formal financial system provides services to about 35% of economically active population which the remaining 65% are excluded from the access to financial services. The small and medium scale enterprises falls among the 6% who are not catered for financially. The financial need of most of these small and medium scale enterprises are catered for by the informal financial sector via non-government organization (NGO’s), friends, money under relatives as well as credit unions.
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 initiated a series of publicly financed micro-credit programe and policies targeted at the poor. Some of such programe were agricultural credit guarantee scheme (ACGS), people bank of Nigerians community banks (CB), now micro finance bank etc. all these are aimed at empowering Nigerians and local productions.
Microfinance industry the main source of funding micro enterprises in Nigerian Africa and even other developing regions.
This study is aimed at undertaking a primary survey of micro finance institution or industry has helped inconditioning poverty in the rural area. It will also examine the framework of microfinance institution and also observed how the operation of micro-finance. To this research work will make a critical education of micro finance institution and wide examination of rural area (concentration on the level of poverty) and how the operations of the institution have helped in reading poverty.
1.2 The Following are the Problems that Necessitated our Choice of the Topic:
- Conceptual framework of microfinance and microfinance industry in Nigeria.
- Reason for the establishment of microfinance banks
- Regulation bodies and regulatory guidelines the operation of micro-finance industry in Nigeria.
- Rate of poverty in the rural area.
- Reason for the increasing rate of poverty in rural area.
- Impact of microfinance banks in eradication poverty in the rural area
- Different and drawbacks encountered by microfinance banks while performing their function of poverty eradication.
- Solution to the problem of microfinance industry.
1.3 Aims and Objectives of the Study
The main purpose of this research work is to examine the assessment of the impacts of micro finance banks in eradicating poverty in the rural area.
The aims and objective of the study are as follows:
- Examine the conceptual framework of microfinance industry in Nigeria
- Enumerate the feature and the meaning of a rural setting
- Discuss the rate of poverty in rural area
- Highlight the reason for the increasing rate of poverty in rural area.
- Expatiate the role and impact of micro-finance banks in eradicating poverty in rural area
- Examine the problems encountered by microfinance industry and the likely solution.
1.4 Significance of the Study
This research work is descriptive in nature and to describe the impact or roles of microfinance bank/industry in eradicating poverty in rural area. This research work is also beneficial to the micro finance banks because it will examine the problems of micro finance banks critically and potters a solution to the problems.
Thus, this research will therefore, help in the overall economic development as it will encourage rural dwellers on the effective utilization of the microfinance banks never to them because this research work is describe and 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 institutions:
- This research work will increase their scope of service and profitability
- The research work will also assist the micro finance banks in identifying their problems and proper likely dwellers.
- Rural-dwellers
- This research work will educate the rural dweller on the impact of micro finance.
- The project will also 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 on the effective use of the bank.
Traditional authorities will as well benefit from this project because it will increase their internal revenue generated as a result on 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 the state at large.
1.5 Scope of the Study
This research work focus on assessment of the impact of microfinance banks in eradicating poverty in the rural area but because of the existence of some limiting factors the research work delaminate the study with special emphasis on Gaa-Akanbi community as the rural area under study as our sample population.
As a result of this, the research work is an historical case study and investigative based research. It emphasis on Gaa-Akanbi micro finance banks as a case study of the project.
1.6 Limitations and Constraints to the Study
In carrying out this research work, some of the limitation or problems encountered are:
- Financial constraints, because the research work is personally financed by the researcher.
- Inadequate materials to guide in carrying out the research work.
- Unenthusiastic attitude of some the respondent in divulging useful information about the research topic
- Serious rubbing of minds and brainstorming by the researcher, before unanimously putting down point on the research topic.
- 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 were made to ensure that the limitation did not serve as an obstacle or hindrance toward the successful competition of this research.
Chapter Four
Data Presentation and Analysis, Summary Conclusion and Recommendation
- 4.1 Brief history of case study (Available in the complete material)
- 4.2 Data presentation and analysis (Available in the complete material)
4.3 Summary of the Study
In this research work, we have examine the topic on assessment of the impact of micro finance bank toward the eradication of poverty in the rural area, taken a case study of Gaa Akanbi micro finance bank.
The first chapter of this research deal with the introduction of the research work, it also encompasses the general background information, objective of the study, statement of problems and hypothesis. This chapter also includes the limitation of the study as well as definition of some terms as analysis of the data collected.
Chapter four on the other hand deals with the hypothesis were tested using chi-square and at the tail of chapter four discussion and conclusion were made respectively and appropriatively.
The last chapter five is the conducting part of the whole research work. It comprise of the summary, conclusion as well as recommendations, the summary work, while in the course of the research work.
The recommendation in chapter five, service as the researcher contribution to the subject of the study which is “the microfinance bank a tools to eradicating poverty in rural area.
4.4 Conclusion
In conclusion, this research work we which to stress that the establishment of micro finance bank in Nigeria has really created a positive impact in the eradicating of poverty in the rural area, it has also (in addition to eradicating poverty) made finance service accessible to the poor in rural area.
Additionally, since the micro finance bank have been re-capitalized to the tune of N20milion and N1million for community micro finance and the state micro finance bank respectively.
This will go in the long way to cater for the medium scale enterprises and the other poor individuals in the rural region.
In view of the assessment of the impact of micro finance in the eradication of poverty in the rural area we therefore implore the micro finance bank to build up their capacities so as to meet up with the challenges ahead. We also improve the wealthy private individuals to set up micro finance banks so that the micro finance bank can be widely spread and to enhance more financial service delivery to the small and medium scale entrepreneurs together with the poor.
4.5 Recommendations
The following recommendations will assist the microfinance banks to further reduce the level of poverty in rural area, coupled with the present development
- We recommend that regulatory agencies like central bank of Nigeria (CBN), the Nigeria Deposit insurance corporation (NDIC) security and exchange commission (SEC) to build or increase the capacity to cope with the challenge ahead.
- The government should also assist the micro finance banks and other commercial banks by establishing a well funding national credit guarantee found that will act as buffer for credit facilities from bank and other financial institution.
- The micro finance bank should often send their manager to seminars and workshops so as to broaden their horizons in the area of credit finance toward poverty eradication and also to meet any subsequently challenges that can arise during the process of eradicating poverty in rural area.
- The government should implore a medium of encouragement banking habits among rural dwellers, in order to increase the rate of participant in the micro finance credit provided by micro finance banks which will at the long-run increase finance standard of rural dweller and reduce the level of poverty amidst them.
- The micro finance bank should strictly adhere to the guidance set for their operation. This will guide them to apply appropriate interpretation in the process of implementation.
- Finally, in order to ensure that micro finance banks have an effective impact on poverty eradication in rural area the following policy intervention by the government will be suggested.
Suggested Policy Intervention
- The micro finance provided should have a proper assessment of type and scope of ventures for their beneficiaries to ensure that there is no over-competition that drive down prices and profit thereby jeopardizing the ability to repay credit. Though competition is a genius economic practice, micro finance provider and administrator should encourage devastating of venture for their client (micro-enterprises) to make them more viable and sustainable.
- The group or corporate model should be encouraged in micro lending. The group methods encourage collective responsibility for repayment of loans thereby reducing tendency for default.
- The regulation of micro finance industry should be sure that world allow niche playing state could be give the scope to legislate or guide the establishment and operation of micro finance industry. That is the federal government of CBN regulation should not be such that could be stifle the emergence of niche player in the system, or instance, the re engineering and regulation of community banks by the CBN should be done in such a way as not to exclude the poor from accessing funds from the community banks.
- Government intervention is critical to the growth of micro-enterprises especially in removing bottleneck that discourage investment in micro-credit financing.
- Commercial finance industry are not wiling to lend to the poor because of the high cost of administering the trying loans to the class of borrower scattered in mainly the rural communities. However, there should be deployment of technology in such away that it could reduce the cost of management credit other micro finance services to the poor.
- There recommendation threshold be made available to the policy maker in government industry development and dinner community for inclusion in their policy menu and programming for the finance sector in Nigeria.
However, the views expressed in this research work are merely our contribution and it is to stimulate other research toward explosive in rural area through micro finance in Nigeria.


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