MICRO FINANCE: A GUIDE TO EMPOWERING THE PUBLIC
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
MICRO FINANCE: A GUIDE TO EMPOWERING THE PUBLIC
1.0 BACKGROUND TO STUDY CHAPTER ONE OF MICRO FINANCE: THE WAY FORWARD TO EMPOWERING THE CITIZENRY
Microfinance is the provision of financial services to the very active poor, who are primarily members of the economy’s main stream sector. Apart from small loans, it also includes savings, microinsurance, and other financial innovations.
Microcredit, which is an essential component of microfinance, allows the “active poor” to borrow, save, invest, and insure their families against risk. Their economic situation may not have qualified them for regular credit provisions (CBN, 2005).
Microcredit is a United Nations Organisation innovation that was announced in 2005. While our former President, Chief Olusegun Obasanjo, inaugurated the National Empowerment Development Strategy at the federal, state, and local government levels on Thursday, December 15, 2005 (National Orientation Agency, 2005).
This, together with other evidence of its success in Asia (Bangladesh Prof Yunus), has enabled extremely poor people, particularly women, to engage in self-employment ventures that allow them to produce an income and, in many cases, begin to accumulate wealth and exit poverty.
The topic was chosen to add to the body of knowledge the necessary formula for launching small and medium-sized enterprises (mainstream sector) in our economy and therefore enhancing economic development. Individual economic empowerment, self sufficiency, rising above poverty, and, of course, communal development are all benefits.
Community bank failures, both structural and operational, can be traced back to bad corporate governance, insufficient internal control, poor deposit mobilisation, inappropriate risk management practises, tax credit administration, and a lack of seriousness in its development. This is why community banks have not improved their performance throughout the years.
As a result, on December 15, 2005, the Central Bank of Nigeria (CBN) established a micro finance strategy that recognises existing informal institutions and brings them under the supervision of the CBN. The policy is expected to complement emergent banking sector reforms, to construct strong pillars for the financial industry,
and to provide considerable outreach in service provision to the underserved element of the Nigerian economy, particularly the poor, low-income earners, small and medium-sized businesses, and so on.
It is intended to improve monetary stability and strengthen the country’s financial infrastructure in order to meet the financial needs of the lower sector of the market.
1.1 STATEMENT OF THE PROBLEM
The research is required because economic progress must be extended throughout all areas of the economy. In its true sense, micro finance is the provision of financial services (savings loans, etc.) to micro enterprises and micro entrepreneurs for meeting business needs, life cycle needs,
or taking advantage of opportunities for investment and savings for business or personal development, old age reserve wealth creation, and flexible delivery structures on a long-term basis. Recognising the unique characteristics and challenges of the active poor and microentrepreneurs who lack collateral;
i. Rather, the rich are getting richer while the poor are getting poorer.
ii. The issue of people living in poverty, particularly women (women’s economic empowerment).
iii. The inability of young graduates and economically engaged people to get funds for business or trade establishment.
iv. Previous administration’s inability to jump-start the economy by empowering small and medium-sized businesses.
v. The risk of money lenders and local thrift collectors fleeing with funds and charging exorbitant interest rates.
vi. The usage of Ekiosa Market in Benin City as a study location and to analyse the trickle-down effect of micro financing banks on their particular enterprises.
1.2 OBJECTIVES OF THE STUDY
The specific goal of this research is to demonstrate that a careful examination of microfinance options will:
i. Make financial services available to a huge segment of Nigeria’s potentially productive population that would otherwise have little or no access to financial services.
ii. To promise synergy and integration of the informal sector into the national financial system.
iii. Improve service delivery by microfinance institutions to micro, small, and medium entrepreneurs.
iv. Help with rural transformation (agricultural loans).
v. Encourage the development of connection projects between universal development, specialised institutions, and microfinance banks.
vi. Finally, assess the magnitude of the trickle-down effect of client business in Benin City on microfinance institutions (using Ekiosa Market as an example).
1.3 RESEARCH HYPOTHESIS
Hi: Microfinance banking services will be able to jumpstart the economy and empower citizens by enabling small and medium-sized businesses.
Ho: Microfinance banking services will not be able to jumpstart the economy and empower citizens while helping small and medium-sized businesses.
1.4 THE SIGNIFICANCE OF THE STUDY
This research is meant to expand the researcher’s knowledge of research methodology and economics, as well as the writer’s comprehension of the microfinance industry and its associated challenges, as well as its benefits if properly introduced and managed.
Furthermore, it is intended that the project work will give potential investors and clients with more informed knowledge of microfinance operations.
As Nigeria advances, its share of microcredit as a percentage of overall credit to the economy will rise from 0.9 percent in 2005 to at least 20 percent in 2020,
and its share of microfinance as a percentage of GDP will rise from 0.2 percent in 2005 to at least 5 percent in 2020. In addition, by 2020, the majority of the economically active people will be covered, creating millions of employment and decreasing poverty to its bare minimum.
To that end, anticipating the challenges that will likely block or reduce the pace of its development impacts, as well as potential solutions, cannot be overstated.
1.5 SCOPE OF THE STUDY
The treatment of the emerging regulatory supervisory of micro-finance banking since its inception will be primarily focused on the period 2005-2009, as this was when the most tangible and reliable attempts to institutionalise micro-finance banking were most recorded, as well as the aftermath of this period under study.
Need help with a related project topic or New topic? Send Us Your Topic