Micro finance bank and economic growth in nigeria

Project Abstract

Microfinance banks play a crucial role in fostering economic growth in developing countries like Nigeria. This study aims to investigate the relationship between microfinance banks and economic growth in Nigeria. The research will employ a mixed-methods approach to gather both quantitative and qualitative data. The quantitative data will be collected through financial reports and economic indicators, while qualitative data will be obtained through interviews and surveys with stakeholders in the microfinance sector. The study will analyze the impact of microfinance banks on various economic indicators such as GDP growth, poverty reduction, employment generation, and financial inclusion. By examining the performance of microfinance banks in Nigeria and their contribution to economic growth, this research seeks to provide valuable insights for policymakers, financial institutions, and other stakeholders. The findings of this study are expected to contribute to the existing body of knowledge on the role of microfinance banks in economic development. The research will also provide practical recommendations for enhancing the effectiveness of microfinance banks in promoting economic growth in Nigeria. Ultimately, the study aims to support the sustainable development of the Nigerian economy by leveraging the potential of microfinance institutions.

Project Overview

<p> </p><p><strong>&nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; &nbsp; INTRODUCTION</strong><br><strong>1.1 &nbsp; &nbsp; OVERVIEW OF THE STUDY</strong><br>It would be observed that, despite the presumed developments in the Nigerian economy, the country is still largely being regarded as a developing country (Onyema, 2006). More so, its industrial growth is not quite impressive.<br>Before the emergence of formal microfinance institutions, informal microfinance activities flourished all over the country. Traditionally, microfinance in Nigeria entails traditional informal practices such as local money lending, rotating credit and savings practices, credit from friends and relatives, government owned institutional arrangements, poverty reduction programmes etc (Lemo, 2006). The Central Bank of Nigeria Survey in 2001 indicated that the operations of former microfinance institutions in Nigeria are relatively new, as most of them never registered after 1981.<br>Before now, commercial banks traditionally lend to medium and large enterprises which are judged to be credit-worthy. They avoided doing business with the poor and their micro enterprises because the associated cost and risks are considered to be relatively high (Anyanwu, 2004).<br>The Federal and State governments have recognized that for sustainable growth and development, the financial empowerment of the rural areas is vital, being the repository of the predominantly poor in society and in particular the SMEs. If this growth strategy is adopted and the latent entrepreneurial capabilities of this large segment of the people is sufficiently stimulated and sustained, then positive multipliers will be felt throughout the economy. To give effect to these aspirations various policies have been instituted over time by the Federal Government to improve rural enterprise production capabilities. (Olaitan 2006)</p><p>In view of this, the impact of micro finance bank in economic growth and development of Nigeria started showcasing itself. With the initiative of microfinance, rural areas are opportune to grow and develop as loan and fund are easily given to rural farmers and entrepreneur. Jobs opportunities were created since there is avenue for lending and investing.<br><strong>1.2 &nbsp; &nbsp; STATEMENT OF PROBLEM</strong><br>There are so many problems and challenges that hinder the functionality of the microfinance bank in carrying out their major role of improving economic growth in Nigeria.<br>These problems include</p><div><ul><li>poor attitude of Nigerians towards MFBs</li><li>insufficient support from the regulators and government</li><li>There are communication gaps and inadequate awareness among the masses.</li><li>Undue competition rather than cooperation from the mega banks, and undue malpractice/Sharp practices by microfinance bank operation.</li></ul></div><p>The researcher will in the research find possible ways of solving or making better the conditions for the operation of MFBs.<br><strong>1.3 &nbsp; &nbsp; OBJECIVE OF THE STUDY</strong><br>The set objective of this research work are to:</p><div><ul><li>Investigate the impact of micro finance bank and economic growth in Nigeria.</li><li>It will explicate in detail ways in which micro finance banks can contribute in developing rural areas and improving the life of the poor people.</li><li>It will investigate the ways microfinance bank can contribute in building entrepreneurship within the country.</li></ul></div><p><strong>1.4 &nbsp; RESEARCH QUESTIONS</strong></p><div><ul><li>To what extent will the poor attitude of Nigerians towards Micro finance banks affects the economic growth in Nigeria</li><li>To what level will insufficient support from the regulators and government affects the smooth operations of Micro finance banks</li></ul></div><p><strong>1.5 &nbsp; TEST OF HYPOTHESIS</strong><br>It is quite evidential that the major ways in which microfinance bank can help in economic development is through the encouragement of entrepreneurial development.<br>The essence of microfinance bank is to enable the poor individual to be able to obtain loan and be able to manage their enterprise.<br>To this effect, the following hypothesis will be tested, thus.<br><strong>Hypothesis I</strong><br>H0: &nbsp; &nbsp; Micro finance bank is irrelevant to the economic growth and development in Nigeria since the number of entrepreneurs that uses their services is low<br>Hi: &nbsp; &nbsp; Micro finance bank is relevant to the economic growth and development in Nigeria since the number of entrepreneurs that uses their services is low<br><strong>Hypothesis II</strong><br>H0: &nbsp; &nbsp; Microfinance institution do not contribute to entrepreneurial productivity<br>H1: &nbsp; &nbsp; Micro finance institutions do contribute to entrepreneurial productivity.</p><p><strong>1.6 &nbsp; &nbsp; SCOPE OF THE STUDY</strong><br>The scope of the study is subjected around the frame work of microfinance bank in Nigeria vis-à-vis its contribution to the economic growth and development.</p><p><strong>1.7 SIGNIFICANCE OF THE STUDY</strong><br>This study is essentially significant in that it is directed towards evaluating the impact and role that micro finance banks have on the economic growth and development in Nigeria, especially the rural areas which is a criteria aimed at measuring economic standard.<br>Owing to the fact that researcher has aimed at pinpointing the ways in which micro finance bank can help in the revamping of the nation’s economy, the findings of this research work will be of great help to most developing countries who may wish to toe the part of Nigeria in MFB development.</p><p>It will also serve as a reference point for future researchers who in one way or the other will try to unveil the role and impact of micro finance bank to economic growth and development.</p> <br><p></p>