THE RELEVANCE OF MICROFINANCE TOWARDS COOPERATIVE BUSINESS VENTURES
(A CASE STUDY OF IMO STATE COOPERATIVE FINANCE ASSOCIATION LIMITED (ISCFA)
Against the background of severe and high incidence of poverty in Nigeria, the past Nigeria governments have established institutions to ameliorate and alleviate this un-presented poverty in the land. Among the institutions established by the previous administrations are as follows. Operation feed the Nation (OFN) of Gen Obasrijo 1979, Green Revolution of shehu shagari, 1982, structural adjustment programme (SAP) of Dr. Mrs. Mariarm Babangida, Agricultural credit Guarantee scheme fund. Etc, these programmes, were aimed at boosting the agricultural production of the Citizering and raising the standards of living of the people. In spite of all these moves it has been discovered that most small scale enterprises and medium business organizations which cooperative organization belong to, do not have access to adequate financial service. To this end, the CBN on 15th of December 2005, launched a micro- finance policy which is also aimed to enhance and boost economic activities of small business. In this work or study, I shall consider the all importance of microfinance and how to it promotes the activities of cooperative business.
TABLE OF CONTENT
Title page - - - - - - - - i
Certification/ approval - - - - - - ii
Dedication - - - - - - - - iii
Acknowledgement - - - - - - - iv
Abstract - - - - - - - - - vi
Table of contents - - - - - - - vii
1.0 Introduction - - - - - - - 1
1.1 Background of the study - - - - - 1
1.2 Statement of the problem - - - - - 5
1.3 Objective of the problem - - - - - 5
1.4 Statement of hypothesis - - - - - 6
1.5 Significance of the study - - - - - 6
1.6 Scope of the study - - - - - - 7
1.7 Limitation of the study - - - - - 7
1.8 Definition of terms - - - - - - 8
2.0 Review of related literatures - - - 10
2.1 The concept and background of microfinance - 10
2.2 Microfinance defined- - - - - - 12
2.3 Microfinance policy and framework Nigeria’s
perspective - - - - - - - - 15
2.4 Reasons for establishment of microfinance banks 18
2.5 Institutions in microfinance activities - - 20
3.0 Research design and methodology - - - 23
3.1 Introduction - - - - - - - 23
3.2 Research design - - - - - - 23
3.3 Sources/ methods of data collection - - - 23
3.4 Method of data collection - - - - - 24
3.5 Procedures for processing data - - - 25
4.0 Presentation and analysis of data - - - 27
4.1 Introduction - - - - - - - 27
4.2 Presentation of data- - - - - - 27
4.3 Analysis of data- - - - - - - 31
4.4 Test of hypothesis - - - - - - 34
5.0 Summary, Conclusion and Recommendations - 39
5.1 Summary - - - - - - - - 39
5.2 Conclusion - - - - - - - 42
5.3 Recommendation - - - - - - 44
Bibliography - - - - - - - 46
Appendix - - - - - - - - 48
THE RELEVANCE OF MICROFINANCE IN COOPERATIVE BUSINESS VENTURE
Microfinance is a statutory financial institute that is established to give financial services to small and medium scale business outfits, thereby enhancing their productivity and viability.
Since its inception, it has played major roles in boosting the socio economic well being of teaming population that are living in poverty and hunger.
Therefore, this project shall consider in details the all encompassing roles and relevance of microfinance in enhancement and boosting of cooperative business ventures
1.1 BACKGROUND OF THE STUDY
It has been estimated that there are 500 million economically active poor people in the world operating small scale and medium business. Most of them do not have access to adequate financial services.
Microfinance services are financial services that poor people can qualify for. More broadly, it refers to a movement in which as many poor and near poor household as possible have permanent access to.
Theoretically, microfinance encompasses any financial service used by poor people including those they access in the informal economy such as loans from a village money lender. In practice, however, the team is usually only used to refer to institute and enterprises whose goods include both finance and empowerment of the poor.
The concept of the credit union was developed by fried rich W. Raifficion and his supporters. Their altruistic action was motivated by concern to assist the rural population to break out of their dependences on money lenders and to improve their welfare.
Although, much progress has been made the problem has not been solved yet and the overwhelming majority of people who earn less especially in rural areas, they lack access to formal financial leverage.
The concept of modern microfinance was developed in 2004 by consultative group to assist the poor (CGAP) and endorsed by the group of eight leaders at the G8 summit on June 10th 2004.
(Christian, Robert Peck, Jayadeva, Vena and Rosenbery financial institutions with a double bottom line consultative group to assist the poor form encyclopedia Washington 2004).
The practical of microfinance in Nigeria is cultural rooted and dates back to several centuries. They are mainly of the informal self- help group (SHGS) Rotating savings and credit Association (ROSCAS), savings collectors and cooperative thrift savings societies.
These informal financial institutions generally have limited resources to meet up with the demand. Inorder to enhance the flow of financial service to Nigeria rural areas, government has in the past initiated a services of publicly financed micro rural credit programmes and policies targeted at the poor.
Notably among such programmes were the rural banking programme, Agricultural credit guarantee selene fund (AGSF), Nigeria agricultural cooperative and rural development bank (NACROB), Nigeria Directorate of employment (NDE), community banks (CBS) and family economic advancement programme (FEAP)
In 2000, the Federal government merged the NACB, PBN and EFAP to form the Nigeria agricultural cooperative and rural development bank limited (NACRDB) to enhance the provision of finance to the agricultural and cooperative sector- it also created the national poverty Eradication programme (NAPEP) with the mandate to provide material and equipment training.
Though these service have made several impacts in the economy, their activities were short lived due to the unsustainable nature of the programme.
1.2 STATEMENT OF THE PROBLEM
Microfinance has evolved as an economic development approach intended to benefit low income business.
Most small and medium business do not have access to funde, yet microfinance shame is created to meet sustained demand in the management of microfinance and such problems are identified as following:
- Some microfinance institutions target a segment of the population the has no access to business opportunities
- Poor management constract of some microfinance.
1.3 OBJECTIVE OF THE PROBLEM
The core objective behind this study is to access the activities of microfinance institutions in boosting production activities, identify strengths and weakness of microfinance scheme. It also shall consider the impact of microfinance to small furthermore, it will identify some constraint of management of microfinance institutions.
1.4 STATEMENT OF THE HYPOTHESIS
Ho: Microfinance institutions have not contributed to any economic growth.
Ho: Microfinance institutions have contributed to robust economic growth.
Ho: High increase productivity in cooperative business does not have any relationship with microfinance activities
Ho: Microfinance activities enhance cooperative business for increase productivity.
1.5 SIGNIFICANCE OF THE STUDY
This research work is highly significant in many ways. Its significance is to the entire business world because it would expose how microfinance intends to benefit the low income earners and enhance service deliver by microfinance institutions to small and medium enterprise. Also, this study will serve as an eye opener on how microfinance reduces poverty and enhance self employment among the tearing populace or citizenry of Nigeria.
Furthermore, it will show how microfinance mechanism encourages high productivity of both small and medium scale as well as cooperative business.
1.6 SCOPE OF THE STUDY
In the course of this study, the scope of this project writing shall be limited to Imo state cooperative financing association limited at Egbu road.
It is to find how far microfinance has facilitated its business activities.
1.7 LIMITATION OF THE STUDY
In the course of writing this project, I will not fail to unfold certain constraint encountered. Firstly, the subject matter on study does no have much materials because of the newness of the scheme in the national economy, hence the relevant literatures.
Apart from materials, there were financial constraint, another problem was that of time, in most cases lecture periods were used in other to get materials.
1.8 DEFINITIONS OF TERMS
For clarification purposes and clearance of doubt, this project work was done paripause with some definitions of notable key works as follows:
(a) RELEVANCE: According to oxford advanced learners dictionary bathed. The world “relevance” is a noun and it means a closely connected with the subject of your discussion.
(b) MICRO: Means that which is small in size or nature.
(c) FINANCE: Is a money that is used to run or manage a business. Finance also could be regarded as a story requirement for a successful business start- up and inventor any contemplated expansion or running of and existing business out fit (ICAN students journals, vol 10. No2, P:15 (2006)
(d) MICROFINANCE: Is an economic development approach intended to benefit small business. Also, it is a financial service that is initiated to boost productivity of cooperation business equally for small and medium scale industry.
(e) COOPERATIVE: According to Ogujiofor E.A (2001:80) cooperative business is an association of persons who voluntarily join together through a business organization to achieve their common needs while equitably contributing their required capital sharing in the risk and benefit and members participate actively and democratically.
(f) BUSINESS VENTURES: This is the activity of making, buying, selling and supplying of goods and services for profit purposes.