The Impact Of Micro Finance Bank In Eradicating Poverty In Rural Area (A Case Study Of Gaa Akanbi Micro Finance Bank)
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 Problem
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
- This research work will increase their scope of service and profitability.
- 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.
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.
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.
Summary, Conclusion and Recommendation
5.1 Finding Based on Data Analysis
The finding in the research work can be reduced from the conclusion rained at the end of chapter four of this research, which station that at the end of end of chapter four of this research, which station that the micro finance banks in Nigeria will bring about a positive import in eradicating poverty in the rural areas based on the data discovered that the primitive motive of any micro finance bank in Nigeria is to eradicate poverty (making use of he principle of generalization in research).
5.2 Summary of the Study
In this research work, we have food to examine the impact of micro finance banks towards the eradication of poverty in the rural area taking a case study of Gaa’ akanbi micro finance.
The first chapter of the research deal with the introduction of the research work, it also encompass the general background information, objective of the study, statement of problems and hypothesis. This chapter also include the limitation of the study as well a definition of some terms as analysis of the data collected.
Chapter four on the other hand deals with the presentation of data on table, re-statement of hypothesis, while the hypothesis were tested using chi-square and the tail of chapter four discussion and conclusion were made respectively and appropriately.
The last chapter five is the concluding part of the whole research work. It comprises of the summary however, shows at a glance the content of the research work, while in the cause of the research work.
The recommendation is chapter five service is a researcher contribution to the subject of the study, which is the micro finance as tools to eradicate poverty in rural area,
In conclusion this research work we wish to treas 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 eradicate poverty) made finance service accessible to the poor in rural area. Additionally, since the micro finance banks have been re-centralized to the tune of N20 million and N1 billion for community micro finance and the state micro finance bank respectively. They will go in the long way to carter for the medium scale enterprise and the other poor individuals in the rural region.
In view of the impact of micro finance in the eradicating of poverty in the rural area, we therefore implore the micro finance banks to build up their capability so as to set up with he challenge ahead. We also implore the wealthy private individual to set up micro finance banks so that the finance bank can be widely spread. And to enhance more financial services delivery to the small and medium scale entrepreneurs together with the poor.
The following recommendation will assist the micro finance banks to further reduce the level of poverty on rural area, coupled with the present development.
- I recommended that the regulatory agents like central bank of Nigeria (CBN), the Nigeria depact insurance corporation (NDIC) security and exchange commission (SEC) to build or increase the capacity of cope with the challenges ahead.
- The government should also assist the micro finance banks and other commercial banks by establishing a well finding national credit guarantee fund that will act a buffer for credit facilities from bank and other financial institution.
- The micro finance bank should often send their manager in the area credit finance towards poverty education and also to meet my subsequent challenges that can arise during the process of eradicating poverty in rural area.
- The micro finance bank should strictly adhere the guidance set for the operation. This will guide them to appropriate interpretation in the process of implantation.
- Finally, in order to ensure that micro finance banks have en effectively impact on poverty eradication in the rural area the following policy intervention by the government will be suggested.
5.5 Suggested Poly Intervention
- The more finance provide should have a proper assessment of type and scope of ventures for their beneficent 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 practices micro finance provides and administrative should encourage divaricating of ventures for their client (micro enterprises) to make them more viable and sustainable.
- The group or co-operate model should be encourage in micro lending the group method encourage collective responsibility for repayment of loans there by reducing tendency for default.
- The regulation of MFI should be such that niche paying state could be given the scope to legislate guide the establishment and operation of MFIS that is, the federal government or CBN regulation should not be such that be shift emergency of nichie players in the system for 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 assessing funds from the community books.
- Government intervention is critical to the growth of micro finance enterprises especially in removing bottleneck that discourage investment in micro credit financing.
- Commercial finance institution are not willing to tend to the poor because of the high cost of administration loans to this class and borrower scattered in mainly the rural communities. However, there should be development of technology in such a way that it could reduce the cost of management credit other microfinance service to the poor.
There recommendation should be make available to the policy maker in government industry, development and commentary for inclusion in their policy menu and programming for the finance sector in Nigeria.
However, the view expressed on the research work are merly our contribution and it is to stimulate research towards explosive in rural area through more finance in Nigeria.
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