Role Of Micro Finance Banks In The Economy Development Of Nigeria

Project and Seminar Topics with material for Banking and Finance

Role Of Micro Finance Banks In The Economy Development Of Nigeria

Chapter One

1.0 Introduction of the Study

1.1 Background

Micro finance Bank (describe here as small scale financial services to claim that they are economically active various urban and rural areas) has been proven to be effective in fighting poverty by providing entrepreneurs with the necessary capital to start and expand their entrepreneurial activities.

Last year, successive government has put in place various policies in order to make things easier for the ordinary man on the street. Unfortunately, the struggle for survival has became more difficult and excruciating for the toiling masses. Indeed, the government’s concern for the intolerable poverty level, which is more than 54 percent – over 70 million out of 140 million Nigerian population, is encapsulated also in the recent statement by Prof. Chukwuma Soludo, while lamenting that the poverty level in Nigeria is not only getting to a crisis point but also becoming dynastic.

1.2 Statement of the Problem

The research is means to widen the researcher knowledge about the topic in question and to serve a benefit to the people who wish to know about Micro finance bank in Nigeria. And also to serve as a basic of knowledge to other students who wish to carryout research on the same topic.

In Nigeria Micro finance Bank instructively, the researchers by statistics, (from the National Bureau of Statistics (NBS) in 2004) say that the 65 percent of Nigerians are served by the informal financial sector made by money leaders, friends, relatives and credit unions. There seriousness of the state government to the cause of poor in their meds would be gauged by their willingness to remit one percent of their annual budget to the micro – credit development fund, which return, qualities then to withdraw from the pool to empower their people. It is importance here to look at those factors responsible for the higher poverty incidence in the country, especially in northern Nigeria that in 2004 single member household had 12.6 percent poverty incidence, 2 – 4 members household 39.9 percent poverty incidence, 5 – 9 household 57.9 percent, 10 – 20 member households 73 percent and above 20 member household often have 90.7 percent poverty incidence.

In the areas of education, the NBS disclosed that households headed by those without education, agriculture and forestry had 67 percent poverty incidence while those who live in rural areas contributed 65 percent to poverty in 2004.

1.3 The Objective of the Study

The aims and objectives of the study is to investigate into the roles played by Micro finance banks, which actually can not be overemphasized in the development of Nigerian economy especially in the areas of poverty alleviation, which is an identified of moving our economy forward.

Micro finance bank carries out various functions, one, that is granting or provide financial services such as credit, savings, micro insurance, micro leasing and the basic aims of study are to examine the experience of payment services to the poor and low income clients. Economic activities in which the poor and low income clients engage in include farming micro and small enterprise where goods are produced, catering, trading, commerce and housing improvement services.

1.4 Significance of the Study

The study is based on identifying, analyzing and reporting advises to Micro finance bank on how to apply their economic plant in terms of agriculture development and mobilization of savings at the local level has been an importance element for the community development around the world for a longtime. This depends on the role of the Micro finance bank which helps to exploit natural resources and poverty alleviation quantities, qualities of capital. It is a well known fact that the basic function of Micro finance bank is to eradicate poverty among the poor it also benefits on food security and child rent’s education. This research work is to intensively look in to the role of Micro finance bank developing the economy, or not? If they do, do they plan their role in developing the economy? While it is a known fact that no researches work that is exhaustive, it is hoped that at the end of this work, it would be proved that Micro finance bank plays a vital role in the development of our economy (Nigeria).

1.5 Scope and Limitation of the Study

Due to this topic, our area of concentration will be mainly based on the role of Micro finance bank in the development of Nigeria economy.

In a research work of this nature, there are bond to be factors that act on the contrary. There militating against one’s effort.

Time, which no matter how abundant it is limited, this is one of the factors. The time allowed for research work of this nature is quite short, even though it gives room for supervisor’s day to day consultation.

However, the research work was carried out within Kaduna and some part of Nigeria; therefore, it was administered to a sample of population. This study should be interpreted with caution in the light of fact that a sample can hardly be same as population. The hesitant nature was also a limiting factors in carrying out this research work. The conclusion therefore are based on the readily information provided, but the limitation however does not render research work useless but allows it to used as a basis for decision making and as a basis for further research work.

1.6. Definition of Terms

Interest Rate:

This is a percentage that expresses the relations between the interest for a particular period and the principal of a given loan.

Beneficiary:

The last in the series of individual or group who gain from a particular activities.

Disbursement:

This is the act of giving or paying out of funds.

Poverty:

This is a situation or experience of being poor.

Loan:

Leveling a sum of money by a lender to a borrower to be repaid with certain amount of interest.

Scheme:

To device a plan specifically having certain motives in mind.

Security:

This is what is put down as a guarantee by a borrower for the payment of loan.

Tax Clearance:

This is a written testimony of having paid a compulsory contribution levied on persons, individual, and business Inland Revenue Development

Chapter Three

Summary, Conclusion and Recommendations

3.0 Summary

This study has talked a role of Micro finance Bank in Nigeria economics where they Central Bank of Nigeria (CNB) as has taken the initiative through the N50 billion (fifty billion Naira) micro credit scheme, which is expected to grow to more than N10 billion ( ten billion Naira) per annum in a few years time. Fortunately, the CBN is not just busy lamenting, it has taken initiative to put in place a new micro finance policy to enhance the provision of diversified micro finance services on a long term, sustainable basis. For the poor and low income groups, which are common place in Nigeria. Micro finance sub sectorias critical to achieving the millennium development goals. The successful implementation of the national economic empowerment and development strategy ( NEEDS)

3.1 Conclusion

Base on my finding, I conclude that, it is important to stress that Muhammed Yunus, the Bangladeshi economist cum social entrepreneur, and his Gramean Bank have proved that micro finance is the solution to poverty in con temporary society. In recognition of this, in 2006 they share the noble peace prize for a micro lending revolution that has helped millions to earn their own way out of poverty. That is not to say that micro finance has no down side. Essentially because of the complex nature of human and many promoters who think that making great profit is the driving force.

No single intervention can defeat poverty-poor people need employment, schooling, and health care. Some of the poorest require immediate income transfer or relief to survive. And the beauty of micro finance is that, as programmes approach financial sustainability, they can reach far beyond the limits of scare donor resources.

3.2 Recommendations

The seriousness of the state government to the cause of the poor in their minds will be gauged by willingness to remit one percent of their annual budget to the micro credit development fund.

Micro finance project to give a revolving loan targeted at mass empowerment and self-employment for the unemployed in the state micro finance project would help to tackle the high bate of poverty.

Micro finance institutions should continuous enlightenment campaigns on the micro policy to raise awareness and educated promoters and clients on these provisions and encourage their participation in the interest of the sectors.

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