CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
According to Banda M. (2002), micro
finance industry is about providing finance service to the poor who are
traditionally not serve by the conventional financial institution in Nigeria
the formal financial system provides services to about 35% of economically
active population which the remaining 65% are excluded from the access to
financial services. The small and medium scale enterprises falls among the 6%
who are not catered for financially. The financial need of most of these small
and medium scale enterprises are catered for by the informal financial sector
via non-government organization (NGO’s), friends, money under relatives as well
as credit unions.
In order to enhance financial flow to
the poor Nigerians who want to start up a small and medium scale business, the
government has in the past initiated a series of publicly financed micro-credit
programe and policies targeted at the poor. Some of such programe were
agricultural credit guarantee scheme (ACGS), people bank of Nigerians community
banks (CB), now micro finance bank etc. all these are aimed at empowering
Nigerians and local productions.
Microfinance industry the main source of
funding micro enterprises in Nigerian Africa and even other developing regions.
This study is aimed at undertaking a
primary survey of micro finance institution or industry has helped
inconditioning poverty in the rural area. It will also examine the framework of
microfinance institution and also observed how the operation of micro-finance.
To this research work will make a critical education of micro finance
institution and wide examination of rural area (concentration on the level of
poverty) and how the operations of the institution have helped in reading
poverty.
1.2 THE FOLLOWING ARE THE PROBLEMS THAT
NECESSITATED OUR CHOICE OF THE TOPIC:
·
Conceptual framework of
microfinance and microfinance industry in .
·
Reason for the establishment
of microfinance banks
·
Regulation bodies and
regulatory guidelines the operation of micro-finance industry in .
·
Rate of poverty in the
rural area.
·
Reason for the
increasing rate of poverty in rural area.
·
Impact of microfinance
banks in eradication poverty in the rural area
·
Different and drawbacks
encountered by microfinance banks while performing their function of poverty
eradication.
·
Solution to the problem
of microfinance industry.
1.3 AIMS AND OBJECTIVES OF THE STUDY
The main purpose of this research work
is to examine the assessment of the impacts of micro finance banks in
eradicating poverty in the rural area. The aims and objective of the study are
as follows:
Ø
Examine the conceptual
framework of microfinance industry in
Ø
Enumerate the feature
and the meaning of a rural setting
Ø
Discuss the rate of
poverty in rural area
Ø
Highlight the reason
for the increasing rate of poverty in rural area.
Ø
Expatiate the role and
impact of micro-finance banks in eradicating poverty in rural area
Ø
Examine the problems
encountered by microfinance industry and the likely solution.
1.4 SIGNIFICANCE OF THE STUDY
This research work is descriptive in
nature and to describe the impact or roles of microfinance bank/industry in
eradicating poverty in rural area. This research work is also beneficial to the
micro finance banks because it will examine the problems of micro finance banks
critically and potters a solution to the problems.
Thus, this research will therefore, help
in the overall economic development as it will encourage rural dwellers on the
effective utilization of the microfinance banks never to them because this
research work is describe and will educate the general public on the use of micro
finance efficiently and effectively.
Finally, at the completion of this work
the following group will benefit one way as listed below
A. Micro finance institutions:
(i) This
research work will increase their scope of service and profitability
(ii) The research work will also assist the micro finance banks in
identifying their problems and proper likely dwellers.
B. Rural-dwellers
(i) This
research work will educate the rural dweller on the impact of micro finance.
(ii) The project will also educate the rural dweller on how to
increase their saving and productivity.
(iii) This research work will also eradicate poverty in rural area by
educating the dweller on the effective use of the bank.
Traditional authorities will as well benefit from
this project because it will increase their internal revenue generated as a
result on increase in their level of productivity.
Finally, local and state government will
benefit from this research work through the overall increase in standard of
living in the rural area and the state at large.
1.5 SCOPE OF THE STUDY
This research work focus on assessment
of the impact of microfinance banks in eradicating poverty in the rural area
but because of the existence of some limiting factors the research work
delaminate the study with special emphasis on Gaa-Akanbi community as the rural
area under study as our sample population.
As a result of this, the research work
is an historical case study and investigative based research. It emphasis on
Gaa-Akanbi micro finance banks as a case study of the project.
1.6 LIMITATIONS AND CONSTRAINTS TO THE STUDY
In carrying out this research work, some
of the limitation or problems encountered are:
(1)
Financial constraints,
because the research work is personally financed by the researcher.
(2)
Inadequate materials to
guide in carrying out the research work.
(3)
Unenthusiastic attitude
of some the respondent in divulging useful information about the research topic
(4)
Serious rubbing of
minds and brainstorming by the researcher, before unanimously putting down
point on the research topic.
(5)
Problems of
generalization of the final finding of the research to all rural areas in
Nigeria However, despite all the limitation encountered during the research
effort were made to ensure that the limitation did not serve as an obstacle or
hindrance toward the successful competition of this research.