The Role of Micro-finance Banks in the Development of Rural Areas

The Role Of Micro-finance Banks In The Development Of Rural Areas

Abstract

The part ofmicro-finance banks in the development of pastoral areas

This study end at describing the part ofmicro-finance banks in the development of pastoral areas. To this effect, a case study was used which is OkoMicro-Finance Bank 2004- 2014. This study end at exhuming the important strategy for easing poverty in general and pastoral poverty in developing country, to dissect the strengths, weakness, openings and pitfalls ofmicro-finance institutions in the named region, to pierce the problems encountered bymicro-finance service consumers in the pastoral areas. To achieve this purpose, 4( four) exploration questions were raised Vis how doesmicro-finance institution operate in named pastoral settling in the country? What are the problems encountered bymicro-finance service consumers in the pastoral areas? What are strengths, sins, openings and pitfalls ofmicro-finance institutions in the named region? In addition, suppositions were formulated to guide the study videlicetMicro-Finance Banks helps in the development of pastoral areas. OkoMicro-Finance Bank is aimed at adding the position of per- capital income of Oko- community in Anambra State. The experimenter uses probabilities repliers ’ opinion. The experimenter also made some Recommendations among which wereMicro-Finance Banks should involve themselves in the catchments areas. Because is the last stopgap of pastoral residers.

Chapter One

Preface

Background to the Study

A major development issue facing numerous developing countries has been the need to reduce the scale and depth of poverty among the growing population. Chandy and Gerts( 2011) estimate that there were about878.2 million people living below the poverty line in the time 2010. Of this number over 700 million live in pastoral areas. African has369.9 million population or proportion of poor people the elimination and reduction of poverty is a crucial concern of development thinkers and guru( Coyle, 2007; Ifrpi, 2008).

The morning of the 1970’s saw attention general towards perfecting the good of the pastoral poor who formed the maturity of the population in developing countries, numerous governments and transnational and original agencies shifted their attention and conducted their coffers towards development of pastoral area. This idea was motivated by the intention of reducing the situations of severance, adding access to public goods and services by the development of pastoral population and further particularly, lowering poverty and prostrating income inequalities in utmost developing and least- developed countries according to brad show( 2006), the explanation of poverty may be structural, particular, social or profitable according to( Burgess & Pande, 2002). In the fight against poverty it’s believed that the preface of banks in pastoral areas enhance the livelihood of the pastoral residers. It’s assumed that intervention will change mortal actions and practices in a way that will lead to the achievement of asked outgrowth.

According to( Van Santen, 2010) said that fiscal services for the poor have also been proven to be a important instrument for reducing poverty, enabling poor people to make means and increase inflows, and reducing vulnerability to profitable stress and shocks the idea of establishingmicro-finance banks in Nigeria was initiated under the former head of state general Ibrahim Babagida in 1990 the idea was to rally finances and acclimatize people on the need for development particularly those in the pastoral areas. Themicro-finance becomes effective on the 16th day of July 1991 with the induction of the National Board forMicro-Finance Bank perpetration commission and posterior opening of the first Micro- Finance Bank in the country at Althen which was located in Kaduna state. Since also there had been major sweats at perfecting the understanding of Nigeria about the objects and modalities of establishingmicro-finance bank.

numerous communities have established their ownMicro-Finance Bank, formerly the country is having about 1,450Micro-Finance banks as at the end of December 1999. Stood atN200m substantially is presently form of cash bank, balance loane.t.c of the One Hundred and Five Bank Licensed before February 2004 about 52 fifty two have share capital of between N 500,000 and N1million. Twenty seven banks, between N1billion andN3billion loan and advance range from 500,000 to5.8 million in zone. Over 20micro-finance banks have asked to be allowed to increase their share capital to N1million while far bones are requesting to raise their share capital to N5million banks like IbetoMicro-Finance Bank, OganiruMicro-Finance Bank and so on have formerly assests worth over N10million each. As a mark of growth, so numerousmicro-finance banks had qualified for a board matching loan prepayment over a period of five times. The loan is being given to those banks that have met the condition of submitting the return for the first three months, board resolution requesting the loan and an understanding by the board of directors to guarantee the loan.

In 1993 precisely, there was a smash on establishing ofMicro-Finance Banks, which also was regarded as the last stopgap of the pastoral residers, this encouraged guests to deposit and granting loan to pastoral residers thereby developing pastoral areas through investment by the pastoral people, it was within this period that OkoMicro-Finance Bank was registered with the National Board ofMicro-Finance Banks. OkoMicro-Finance Bank has a staff strength of between 15- 20 a share current capital of about N 700,000 to N1million and multitudinous guests which are substantially scholars of the Federal Polytechnic Oko. Their function includes to advance loans to their guests, to help in import backing.

Statement of the Problem

Micro-Finance Bank could be important strategy or instrument among several others, for easing poverty in general and pastoral poverty in particular in developing countries. Although numerous developing countries, similar as African have scored relative successes in usingmicro-finance bank as an instrument for easing poverty in general, and pastoral poverty in particular, it has not been so for numerous other developing countries.

utmost of themicro-finance programs operated in these countries have left the so- called heirs in debts. In a analogous tone, utmost association involved in furnishingmicro-finance service, including government institution,co-operatives and Non Governmental Organizations( NGOs) have in utmost cases performed veritably inadequately. High rates ofnon-repayment of loans by guests have on several occasions led to the collapse ofmicro-finance institutions. Notwithstanding this,micro-finance has continued to gain fashionability among pastoral inventors as a visible tool for perfecting pastoral agrarian practice and the diversification of profitable conditioning of small- holder husbandry householders.

Lack of acceptable loan finances, shy institutional capacities, poor collaboration, little or no participation of the heirs in the planning ofmicro-finances programs, lack of effective training programs for the both heirs and drivers of the programs are some of the reasons behind the ineffectiveness ofmicro-finance as a strategy for easing pastoral poverty in developing countries.

Purpose of the Study

The main ideal of this study is to critically examine howmicro-finance can be used as an effective instrument or strategy to reduce the high position of poverty in the pastoral areas of separate developing counties especially in Africa. The experimenter have to look at the Nigeria situation.

1. To examine howmicro-finance institutions operate in named pastoral settings in the country.

2. To dissect the strengths, sins, openings, and pitfalls ofmicro-finance institutions in the named region.

3. To pierce the problems encountered bymicro-finance service consumers, in the pastoral areas.

4. To probe and dissect the types and nature ofmicro-finance service handed in named pastoral agreements in the country.