Impact of Microfinance Banks Activities on Poverty Alleviation in Nigeria : Current School News

Impact of Microfinance Banks Activities on Poverty Alleviation in Nigeria: 1993 – 2012

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Impact of Microfinance Banks Activities on Poverty Alleviation in Nigeria: 1993 – 2012.

Abstract

The fight against extreme poverty has been at the front burner of global discourse for a very long time. Poverty is deemed as a state of deprivation but more specifically, where an  individual or group has insufficient income for securing basic goods and  services.
Microfinance has been globally acknowledged as a vehicle that drives the  poor  out  of  extreme poverty zone. This study set out to examine the impact  of  microfinance  banks activities on poverty alleviation in Nigeria.
Annualized time series  data  for  20  years,  covering the period 1993-2012, were collated from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) and National Population Commission (NPC).
Five hypotheses were tested with multiple linear regression technique. Poverty Index (PI), Employment Ratio (ER), and Standard of Living (RGDP-TP) were the dependent variables while microfinance banks’ activities and investments were adopted as the independent variables.
Also, liquid liability (M2), interest rate and Federal  Government  capital  expenditure were the controlled variables. The result was a mixed grill.
For hypothesis one, microfinance banks’ activities do not have a significant positive impact on poverty alleviation  in Nigeria, in hypothesis two, microfinance banks’ activities have  a  significant  positive  impact on employment generation in Nigeria and for hypothesis three, microfinance banks’ activities do not have a significant positive impact on standard of living in Nigeria.

Table Of Contents

Title                                            i

Approval                                        ii

Declaration                                iii

Dedication                                     iv

Acknowledgements                   v

Abstract                                 vi

Table of Contents                      vii

List of Tables                    xi

List of Figures                     xii

CHAPTER ONE:     INTRODUCTION

  • Background to the Study 1
  • Statement of the Problem 5
  • Objectives of the Study 8
  • Research Questions 8
  • Research Hypotheses 8
  • Scope of the Study 9
  • Significance of the Study 9
  • Operational Definition of Terms 10

References                13

CHAPTER TWO:    REVIEW OF RELATED LITERATURE

  • Introduction – Conceptional Framework 18
  • Theoretical Review 18
    • Origin of Microcredit and Microfinance 18
    • Definitions of Microcredit and Microfinance 23
      • Microcredit 23
      • Microfinance 25
    • Functional and Conceptional Differences Between 28

Microcredit and Microfinance

  • Does Microfinance Really Alleviate Poverty? 34
  • Special Features of Microfinance 38
  • Characteristics of Microfinance 42
  • Principles of Microfinance 46
  • The Concept and Definitions of Poverty 48
  • Women Poverty and Microfinance 53
  • Reasons for Women Disproportionate Representation in 56

Microfinance Clientele

  • Microfinance and Women Empowerment 56
  • Does Microfinance Actually Empower Women? 59
  • Muhammad Yunus and Grameen Bank 62
  • Is Grameen Bank Model Replicable? 65
  • Previous Pro-Poor Initiatives In Nigeria 67
  • Empirical Review 70
    • Introduction 70
    • Microfinance in Some Climes 72
      • Bangladesh 72
      • India 75
      • Sierra Leone 77
      • Uganda 79
      • South Africa 82

2.3.3.6 Nigeria                  85

  • Further Empirical Review 89
  • Review Summary 99

References                          103

CHAPTER THREE: RESEARCH METHODOLOGY

  • 121
  • Research 121
  • Nature and sources of 121
  • Specification of 122
    • Hypothesis One Model 122
    • Hypothesis Two 122
    • Hypothesis Three 123
    • Hypothesis Four 123
    • Hypothesis Five 123
  • Models 124
  • Techniques of Data 124
  • Explanation of Research 125
    • Dependent 125
      • Poverty Index (PI). 125
      • Employment Rate (ER). 125
      • Standard of Living (RGDP-TP). 126
      • Gross Domestic Product (GDP). 126
    • Independent 126
      • Microfinance Banks Activities ( RTD-TC) 126
      • Microfinance Banks Investments ( MFBI) 127
    • Controlled 127

3.7.3.1        M2 (RLL-GDP).               127

  • Interest Rate (IR). 127
  • Federal Government Capital Expenditure (RGE-GDP).          128

References              129

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

  • Data Presentation and 130
  • Data 138
    • Descriptive Data 138
  • Test of Research 141
    • Hypothesis 141
    • Hypothesis 143
    • Hypothesis 146
  1. 3.4 Hypothesis Four. 148

4.3.5      Hypothesis Five.               150

  • Implications of 152
  • Implications of other Related 154

CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

  • Summary of Research 156
  • 157
  • Contribution to 159
  • 159
  • Suggestions for further study 161

Bibliography                  162

Introduction

Background of Study

Global poverty has been one of the most burning and unresolved issues in the human history. According to the World Bank Statistics (2005), there is almost 3 billion of  world population living under US$2.5 per day.

Within the group, around 1 billion live under $1 per day. Government and  International Organisations have  been cooperating to fight poverty in different parts of the world. Poverty can be absolute or relative.

Absolute poverty can be reduced but can hardly be eradicated. In recent years, microfinance has been recognized as an effective tool to alleviate poverty (Rubana, 2008; Daley-Harris, 2002; Lalitha, 2008).

Microfinance offers the poor the chance to access financial service such as credit and savings.  Microfinance  programs  in  countries like Bangladesh, Bolivia and Peru have yielded positive  impacts  on  the  poor.

Such programmes have helped the afflicted poor, first, to smoothen their daily expenditure, stabilize their income flows and in the process enhance their overall  welfare (Rubana, 2008; Khander, 2003; Khander & Pitt, 2002; Daley-Harris, 2002;  Hiatt & Woodworth, 2006).

Though, the poor live under very miserable conditions  they  are  generally  economically active. They lack basic necessities of life: food, shelter, education and primary healthcare.

They earn their livelihood by being self-employed as micro- entrepreneurs or by working in  micro-enterprises  (Egwuatu,  2008).  Microfinance  aims to bring financial services to poor people by providing access to small-scaled financial services, primary savings,

Credit and insurance to people involved in small or micro business activities such as farming, fishing, herding or micro-enterprises producing, recycling, repairing or selling goods (Lalitha, 2008).

References

Abiola, Idowu and Salami, A.O. (2011). Impact of microfinance bank and standard of living of hairdresser in Ogbomoso North Local Government Area of Oyo State, Nigeria, International Business Management, Medwell Journals, 27 – 32.
Abu N.M. W. (1994). The Grameen bank and poverty alleviation in Bangladesh: Theory, evidence and limitations. The American Journal of Economics and Sociology, 53, 64- 85.
Abu W. (1999). The Grameen bank and women in Bangladesh: Challenge, 42(5), 94 – 101.
Ackerly, B. (1995). Testing the tools of development: Credit programmes, loan involvement and women empowerment IDS Bulletin,, 26(3), 56–68.
ADB Report (2005). The road map for development of microfinance sector in Pakistan. Agriculture Development Bank,
Aghion, A. & Morduch J. (2002). Microfinance beyond group lending, The Economics of Transition, 8(2), 401-420.

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