An investigation into the role of micro-finance banks in Nigeria towards economic development: a case study of two communities

by

ACKNOWLEDGEMENT

There is an immense role of my supervisor, family and associations for the completion of this research study. I would be gratitude to them for supporting me and assisting me.

DECLARATION

I take oath that the entire dissertation has been completed by me and the entire work has been done by writing and no copy pasting material has been added in this dissertation.

Signed __________________ Date _________________

ABSTRACT

The aims of this research study is to see the impact of micro finance banks on small and medium scale entrepreneur benefit or what can be done from micro scheme towards economic development in Nigeria. This research study examines the micro-finance banks in Nigeria towards economic development of the two selected communities i.e. Okere and Ubiaja. The findings of this research study indicate that there is a significant impact of micro finance banks on small and medium scale entrepreneur. In underdeveloped countries like Nigeria with limited infrastructure, microfinance loans have found their way to the rural and urban poor to start or improve businesses, and sustain families. Where property rights and contract enforcement are lacking, the methods employed by MFIs find ways around this to provide quality financial services to those denied access to the formal financial system. This research study highlights the need for appropriate regulation in financial markets, and in particular to how that regulatory framework can help to improve access to financial services. By paying attention to the policy framework and overall institutional context, this can help to ensure financial access for all and spur entrepreneurship to stimulate the economy from the grassroots level.

TABLE OF CONTENTS

ACKNOWLEDGEMENTii

DECLARATIONiii

ABSTRACTiv

CHAPTER # 1: INTRODUCTION1

Background of the research2

Okere and Ubiaja communities in Nigeria3

Problem Statement4

Research-Aims and Objectives5

Rationale of the Study5

CHAPTER # 2: LITERATURE REVIEW6

Introduction6

Communities in Nigeria7

Theory of Planning and Management8

Social Factors in Nigeria9

Economic-Development Literature: The Institutional Context of Poverty11

State Fragility: An Institutional Construct for Less-Developed Countries13

Concept of Micro Finance16

Challenges in Micro Finance20

Theories of Micro Finance: Benefits20

Summary23

CHAPTER # 3: RESEARCH METHODOLOGY25

Research Design25

CHAPTER # 4: FINDINGS27

Introduction27

Survey Findings27

People in Business27

People not in Business31

Case Analysis34

Professional identity of community development among Okere and Ubiaja35

Organization and Economic Development in Okere and Ubiaja Communities36

Case Studies of Micro Finance in Other Markets37

Application of Micro Finance in Nigeria40

Summary43

CHAPTER # 5: DISCUSSION, CONCLUSION AND RECOMMENDATIONS44

Political Economy: Context and Infrastructure44

The Globalization and Commercialization of Microfinance46

Description of Microfinance48

Fragmentation, Transaction Costs, and Market Failure49

Conclusion51

Recommendation54

Directions for future research55

REFERENCES57

APPENDIX62

CHAPTER # 1: INTRODUCTION

Microfinance can be defined as the provision of loans, savings, money transfer, insurance and other financial services to people excluded from the system traditional financial. In general, microfinance covered all the steps with the goal of expanding access or improving the quality of financial services to which the poorest can employ. Microfinance is important. It is the provision of a number of financial services, such as deposit instruments and credit, to those economic agents without access to traditional banks, when the use of innovative financial technologies makes this access possible. Typically, groups of potential microfinance clients include poor ...