The Role Of Microfinance Bank In The Alleviation Of Poverty In Nigeria

The Role Of Microfinance Bank In The Alleviation Of Poverty In Nigeria

Abstract

This study is an attempt to explore the immense part of the Microfinance banks in the relief of poverty in Nigeria. The exploration revealed that the rate at which pastoral residers deposit their plutocrat in their pillows rather than in microfinance banks is high. Data were collected through primary and secondary sources. As respects to data collection, primary sources, questionnaires, and interviews were use. The ki- forecourt( x2) system was used for the analysis of data. Responses to the questionnaires were analysed using chance system of analysis. Grounded on the findings of this study, an attempt to explain the part ofmicro-financing as encouragement to poverty relief in Nigeria may warrant acceptable knowledge of colorful fiscal deals available and how the pastoral residers can pierce them. In conclusion, it hoped that the recommendation will help the microfinance banks to strengthen its weakness for better and effective services in order to achieve its set pretensions and socio- profitable advancement for the relief of poverty in Nigeria.

Chapter One

Preface

Background Of The Study

A robust profitable growth can not be achieved without putting in place well focused programme to reduce poverty through empowering the people by adding their access to factors of product.

The idle capacity of the poor for entrepreneurship would be significantly enhanced through the provision of microfinance services to enable them engage in profitable conditioning and be more tone reliant, increase employment openings, enhance ménage income and produce wealth. Micro-financing has was for times before the preface of conventional banking in Nigeria and the laterpart of nineteenth century.( Ekot, 2008)

The traditional Nigerian society has a system of group savings and backing to one another. The practice was that a group of people who had requirements for some form of capitalor lump sum to execute a particular design which they couldn’t raise acceptable savings on their own, generally come together to form a savings group. The group may be named after the leader who’s generally the generator of the adventure. The traditional microfinance institutions give access to credit for the pastoral and civic low- income earners. These are substantially the informal tone- help groups similar as Isusuwomen association like one obtainableduring popular August meetings, Umu- adaprogressive women association. Other providers of microfinance services include savings collectors and co-operatives.( CBN, 2005)

The reluctance and incapability of the formal fiscal institutions is to give fiscal services to the civic and pastoral poor, coupled with unsustainability of government patronized development fiscal schemes, contributed to the increase in number of private sector led micro finance in Nigeria. therefore, before the emergence of microfinance institutions, informal microfinance conditioning flourished each over the country. The Central Bank of Nigeria( CBN) as at end of December 2009 gave an blessing to 840 microfinance banks to begin operation in the country.( CBN missions, 2008- 2009)

Microfinance banking is about furnishing fiscal services to the economically active poor and low income ménage, who are traditionally not served by the conventional fiscal institutions. These services include credit savings, micro-leasing, micro-finance and payment transfers to enable them engage in income generating conditioning.( Asemota, 2002)

still, the microfinance policy launched on 15th December 2005 defined the frame for the delivery of these fiscal services on a sustainable base to the micro, small and medium enterprises( MSMES) through intimately possessed microfinance banks. TheNon-governmental Associations or Microfinance institutions( NGO- MFIS) are also anticipated to transfigure to microfinance banks.( Dinye, 2006)

Being Community banks and NGO- MFIS that want to convert and transfigure independently to amicrofinance banks but don’t have the needed minimum capital base can increase the share capital by capital injection, junction and accession. These would not only enhance financial stability but also expand the financialinfrastructural development of the country to meet the nationalfinancial system and give encouragement for growth and development( Benson 1985). It would also harmonize operating norms and give a strategic platform for the elaboration of microfinance institution, promote applicable regulation, supervision and relinquishment of stylish practices. The establishment of microfinance banks has come imperative to serve the following purposes Ameliorate, diversified and produce a reliable fiscal service to the active poor, low- income earners in a timely and competitive manner that would enable them to take over and develop long- term, sustainable entrepreneurial conditioning, rally savings for intermediation, produce employment openings and increase the productivity of active poor and income earners in the country. therefore adding their individual ménage income and capacity standard of living, enhance systematized and methodical but focused participation of the poor in the social- profitable development and resource allocation process. It’ll also give veritable avenues for the administration of the micro credit programme of government and high net worth individual onnon-resource base. This policy ensures that state government shall delegate an quantum of not lower than 10 of their periodic budgets for on- lending conditioning of microfinance banks in favour of their residers and render payment services similar as hires, pension for colorful categories of government.( Luck,O.R.( 2011)

Statement Of Problem

Nigeria consist of different classes of individualities, who are either enterprising or artificial low class that regard for over half of the population who don’t have access to formal banking services. Savings have continued to grow at a veritably low rate particularly in the pastoral areas of Nigeria. One of the problems brought to bear is the incapability of pastoral residers to channel their savings into banks. utmost pastoral people keeps their coffers under their pillows. This system of keeping savings is parlous because it might be stolen, lost or wasted in extravagant spending. also, returns which would have accrued to the depositors in form of interest are robbed.

The donation of government to palliate poverty through the establishment of microfinance banks appears a little progress. This is in malignancy of the establishment of microfinance banks, it was observed that utmost people aren’t suitable to gain loan. This is attributed to a number of challenges similar as the high position of interest rate, lack of collaterals needed by the marketable banks before loans can be granted which needed the establishment of Microfinance to address these profitableimbalances.However, this shows that there’s a gap which need to be filled and this can be done through the donation of government by establishing further microfinance banks in Nigeria to help in relief of poverty, If the banking assiduity continue to meet the demands of Nigerians especially the pastoral poor.

Another problem observed is the inabilityof prospective borrowers of utmost Microfinance banks to repay their loans as at when due. This may be attributed to high rate of poverty in the country. The high rate of poverty is conspicuous insuch area similar as severance, high rate of affectation, remitment of hires, mismanagement of loan granted to pastoral residers, infrastructural scarcities, similar as power, road network, etc and all kinds of political, profitable and regulatory backups. Also Nigerian frugality correspond of existent who feeds from hand to mouth. The loans when granted are conducted to other areas similar as feeding, payment of bills, academy freights, sanitarium bills and others rather of using it for the intended business purpose.

Objects Of The Study

The broad ideal of this study is to find out the part of microfinance banks as a palliative in the relief of poverty in Nigeria. They’re as follows

1. To find out the rate at which pastoral residers deposit their plutocrat in microfinance banks rather than putting it under pillows.

2. To find the donation of government in relief of poverty throughthe establishment of microfinance banks.

3. To find out the rate at which pastoral residers are suitable to repay their loans.