This research study concerns itself basically with the investigation with microfinance bank institution to capital formation in Nigeria, in analyzing this research study, unitary test was adopted and the instrument used for obtaining the data is secondary data from CBN statistical bulletin. The information collected from the secondary data, helps the researcher to analyse how micro-finance bank work and meet the expectation of the government and the people. Having the dependent variable as gross fixed capital formation testing the strength of independent variables inflation, loans and advances and interest rate which shows 65 percent change in the dependent variable. The researcher therefore went ahead to recommend that the importation of goods which can be produced in Nigeria should be banned as this will give our indigenous investors the zeal and challenge to do more exploits in research. Finally the researcher therefore concluded that financial support to micro-businesses, small and medium scale industries SMIS in developing countries like Nigeria.
TABLE OF CONTENT
Title Page i
Approval Page ii
Table of content vii
CHAPTER ONE: INTRODUCTION
Background of the study 1
Statement of the problem 3
Objectives of the study 4
Research questions 5
Hypothesis formulation 5
Significances of the study 7
Scope of the study 8
Limitation of the study 8
Organisation of the study 9
Definition of terms 10
Literature review 12
Background of the study 13
Overview of microfinance activities in Nigeria 16
Justification for the establishment of microfinance bank 18
Operational guideline for microfinance institution 27
Evaluation of microfinance bank 28
Evaluation of microfinance banks in other countries 35
Improving microfinance banking in Nigeria 39
The contribution of microfinance banking to capital formation
in Nigeria 44
Effective credit supply of microfinance 59
Research design 68
The model 69
Specification of variable 70
Economic apriori 71
Evaluation techniques 71
Presentation and analysis of result 74
Battery test 74
Presentation and interpretation of result 74
Economic apriori criteria 78
Statistical criteria (first order test) 79
Econometric criteria 83
I wish to acknowledge my profound gratitude to God Almighty for his Ebere and grace without whom this work would not have been consummated and to my mother of perpetual help who stood at the gate of mercy for me all through my stay in school.
I am also grateful to my able supervisor Mr. Ezekiel .O. Uche who used his endowed pearls of wisdom and fatherly love to supervise this project.
My thanks goes to Barr. P.C. Onwudinjo the head of department of Economics, Caritas University.
I am greatly indebted to my evergreen loving parents H.R.H. IGWE S.C.O. UDEOGU [F.C.A.I.] AGU GBURU GBURU 1 OF EMEORA NEKE and UGOEZE EUCHERIA UDEOGU for investing in me.
Will not forget to appreciate the reason why i came to be in the persons of LATE ELDER UDEOGU NNAMANI [ONYEISHI UMU-UHUTA NEKE] grand dad And LATE MRS. NWAEZE UDEOGU [NEE AGBO NNAJI OKARIA] grand mom, And LATE CHIEF ELIAS OKPO [NWA AGABAH] grand dad And MRS. FLORENCE OKPO [mama eha]
My thanks goes to my siblings PRINCESS NDIDIAMAKA ANN [nwaeze Udeogu], PRINCESS CHINENYENWA PERPETUAL [nwa mummy], PRINCE AMUCHE [Ammynido de neatest] and the last but not the least PRINCE CHINONSO [cash moni] For their prayers and support throughout my stay in school.
My heart filled thanks goes to my love EDEANI PHILIP NKEM for his emotional balance, prayers and support towards the success of this career.
Worthy of thanks to my lecturers prof. ONAH, prof. UDDBAH, DR. UMADI, Mr. ODIKE, Mr.RICHARD OJIKE, Mr. AUGUSTING ODOH, Mr. ODIONYE and Mr OSODIURU. And to my numerous friends, I can only mention but a few, KING-OGOKE CHINYERE FRANCES [SLASH], IBE UGOCHUKWU WINNER, ABOH SHARON, CHIGBU IJEOMA PERPETUAL, INAKWU USHANG baby and many others.
1.2 BACKGROUND OF THE STUDY
Microfinance has emerged as an effective strategy for poverty reduction. Across developing countries (Nigeria for example) micro, small and medium enterprises are turning to microfinance institutions (MFIS) for an array of financial service-microfinance is acknowledged as one of the prime strategies to achieve the millennium development goals (MDGs)- access to sustainable financial service enable owners of micro enterprises to increase their capital base, build assets and reduce their vulnerability to external stocks. Access to financial services enable poor household to move from everyday struggle for survival to planning for the future, investing in better nutrition their children’s education, health and empowering women especially.
However, the potency of microfinance as a development strategy is contingent upon the existence of microfinance institutions which:
1. Have adequate outreach and more impact on poverty
2. Achieve financial and operating self-sufficient
3. Deliver responsive services to micro and small enterprise
Microfinance is the study of loans, savings and other basic financial services to the poor who are traditionally not served by the conventional financial institution.
These owners of micro and small enterprise require a diverse range of financial instruments to meet working capital requirement, build assets, stabilize consumption and shield themselves against risk. According to Ehigiamusoe (2008) microfinance primarily focuses on alleviating poverty through provision of financial services to the poor or owners of micro enterprises. Services users include artisans, small holder farmers, food processors petty traders and other persons who operate micro enterprises according to (Okereke et al 2009). The financial services include working capital loans, consumer credit, savings pension etc. in practice, microfinance is much more than disbursement management and collection of little bits of loans.
Microfinance is not charity organization despite its application as “poverty lending”. Primarily microfinance seeks to create access to credit for the poor who ordinarily are locked out of financial services in the formal financial market for reasons of their poverty that is lack of command over assets. If therefore places
obligation on the borrowers for proper utilization and complete repayment of the borrowed amount even at commercial interest rate.
Microfinance is not new especially history we come across schemes and social arrangement, which enable people to poor their financial resources for on-ward distribution to co-operating and needy individual. Example includes “adachi” and several variants of “esusu”. Nigerian microfinance institutions have also intergraded best practice of traditional schemes into the operational procedures.