IMPACT OF MICROFINANCE INSTITUTIONS ON SMALL SCALE ENTERPRISES DEVELOPMENT IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

A microfinance institution is a semi-formal organization. It can be non-governmental or community development initiative. It is a subset of flexible structures and system which provide a wide range of financial and saving needs of small scale enterprises in developing countries where top-town formal financial institutions have failed to address the credit need of the real sector of the economy. The Nigeria microfinance institution have come a long way, a central bank study has identified as at 2001, 160 registered microfinance institutions in Nigeria with aggregate savings worth N99.4m and outstanding credit of N649.6m indicating huge business transactions in the business (Anyanwu, 2004). Institutional structures for the provision of micro credit vary and may be Government, NGO supported, traditional, or mixture of two or more of these. There are all those that operate on the line of informal models. They are credit and savings association which are based on the traditional experience, they provides savings and credit services to their members. Despite the availability of microfinance and the establishment of microfinance institutions in Nigeria, there are yet no established Government policies and mechanisms for regulating and supervising activities in the sector (Anyanwu, 2004). In 2000, a National conference on microfinance was organized by the Federal Government of Nigeria and the World Bank recommended that the central bank of Nigeria to take up the responsibility of developing an appropriate policy as well as regulatory and supervisory frame work for the operation of microfinance institutions. The workshop recognized that the development of appropriate microfinance policy was critical to the development of sustainable micro finance institutions and by implication through micro enterprises in Nigeria. (CBN, 2001). Hence the Objective of this study was to undertake a survey of microfinance institutions impact on the development of small scale enterprises in Nigeria, Assess how small scale enterprises have benefited from the micro finance institutions. In addition the study is out to provide basis for financing by microfinance institutions.

The small and medium enterprises contributions to economic growth and development have been recognized globally, Nigeria inclusive. Ofoegbu, Akanbi and Joseph (2013) agree that SMEs are the panacea for the economic development of many developing countries including Nigeria. They believe that interest on SMEs would contribute to creation of jobs, reduction in income disparity, production of goods and services in the economy, as well as providing a fertile ground for skill development and acquisition, serve as a mechanism for backward integration and a vehicle for technological innovation and development especially in modifying and perfecting emerging technological breakthroughs. SMEs contribute to improved living standards, bring about substantial local capital formation and achieve high level of productivity and capability. SMEs are recognized as the principal means of achieving equitable and sustainable industrial diversification and dispersal. Previous studies (Ogujiuba, Fadila and Stiegher, 2013; Musa and Aisha, 2012) agree that SMEs account for well over half of the total share of employment sales and value added SMEs constitute the most viable and veritable vehicle for self -sustaining industrial development, as they possess the capability to grow an indigenous enterprise culture more than any other strategy. SMEs represent the sub sector of special focus in any meaningful economic restructuring program that targets employment generation, poverty alleviation, food security, rapid industrialization and reversing rural urban migration. In Nigeria, one of the greatest obstacles that Small and Medium Enterprises (SMEs) have to grapple with is access to funds. This is further compounded by the fact that even where credit facilities are available, they may not be able to muster the required collateral to access such. This situation has led invariably to many of them closing shop, resulting in the loss of thousands of unskilled, semi and skilled jobs across the country. Microfinance emerged as a noble substitute for informal credit and an effective and powerful instrument for poverty reduction among people, who are economically active, but financially constrained and vulnerable in various countries. Microfinance covers a broad range of financial services including loans, deposits and payment services and insurance to the poor and low-income households and their micro enterprises. Microfinance institutions have shown a significant contribution towards the poor in rural, semi urban or urban areas for enabling them to raise their income level and living standards in various countries (Sunitha, 2010).

TOPIC: IMPACT OF MICROFINANCE INSTITUTIONS ON SMALL SCALE ENTERPRISES DEVELOPMENT IN NIGERIA

Format: MS Word

Chapters: 1 - 5, Abstract, References
Delivery: Email

Number of Pages: 50

Price: 3000 NGN

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