CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Microfinance is the provision of small loans (microloans), small savings deposits (micro-savings), micro-insurance, and the enhancement of simple payments services required by micro-entrepreneurs and economically active poor people who cannot access financial services provided by the formal banking sector (USAID, 2000). The loans are minimal in size and are intended for start-up businesses. The loans are collateral-free, grouped-based, and largely directed to women entrepreneurs, with little or no interest rates and a concentration on women and low-income clientele. The attention is being switched to women because of their capacity to profitably manage little amounts of money (UNITUS, 2000).

STATEMENT OF PROBLEM

Microfinance is the provision of small loans (microloans), small savings deposits (micro-savings), micro-insurance, and the enhancement of simple payments services required by micro-entrepreneurs and economically active poor people who cannot access financial services provided by the formal banking sector (USAID, 2000). The inability of the poor and small business owners to get traditional banking services prompted the development of a microfinance program to meet the financial needs of this impoverished and vulnerable group of people, notably women. The loans are minimal in size and are intended for start-up businesses. It is important to emphasize that, while microfinance banks are prepared to lend to this category, they are constrained in their financial resources to satisfy the large number of clients seeking microcredit. Because of the nature of the segment’s activity, savings deposits are low. As a result, it is necessary to re-evaluate the impact of microfinance on the performance of women entrepreneurs in order to identify the challenges that microfinance banks face in fulfilling their constitutional mandate of providing financial services to the economically active but poor segment of society, particularly women. As a result, the study problem is to determine the effects of microfinance on the economy.

OBJECTIVES OF THE STUDY

The purpose of this study is to see how microfinance affects the performance of women entrepreneurs in Kaduna state.

RESEARCH QUESTIONS

What effect does microfinance have on the performance of women entrepreneurs in Kaduna state?

SIGNIFICANCE OF THE STUDY

The purpose of this study is to determine the function and influence of microfinancing on the performance of women entrepreneurs in the state of Kaduna.

RESEARCH HYPOTHESIS

Ho The influence of microfinance on women’s performance in Kaduna state is minimal.

Hi Microfinance has a significant impact on women’s performance in Kaduna state.

SCOPE OF THE STUDY

The purpose of this research is to assess the influence of microfinance on the performance of women entrepreneurs in Kaduna state.

LIMITATION OF THE STUDY

The study had to deal with various limitations, such as logistics and geography.

DEFINITION OF TERMS

DEFINITION OF A MICRO-FINANCE BANK

Microfinance is the provision of small loans (microloans), small savings deposits (micro-savings), micro-insurance, and the enhancement of simple payments services required by micro-entrepreneurs and economically active poor people who cannot access financial services provided by the formal banking sector (USAID, 2000). The loans are minimal in size and are intended for start-up businesses. The loans are non-collateralized, grouped-based, and largely directed to women entrepreneurs, with low or no interest costs.

DEFINITION OF ENTREPRENEURSHIP

Entrepreneurship is defined as the capacity to recognize and pursue new business possibilities with the goal of founding, owning, and operating a company.

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