IMPACT OF MICROFINANCE BANK IN ECONOMIC GROWTH AND DEVELOPMENT OF NIGERIA

BACKGROUND OF THE STUDY
It would be observed that, despite the presumed developments in the Nigerian economy, the country is still largely being regarded as a developing country (Onyema, 2006). More so, its industrial growth is not quite impressive.

Before the emergence of formal microfinance institutions, informal microfinance activities flourished all over the country. Traditionally, microfinance in Nigeria entails traditional informal practices such as local money lending, rotating credit and savings practices, credit from friends and relatives, government owned institutional arrangements, poverty reduction programmes etc (Lemo, 2006). The Central Bank of Nigeria Survey in 2001 indicated that the operations of former microfinance institutions in Nigeria are relatively new, as most of them never registered after 1981.

Before now, commercial banks traditionally lend to medium and large enterprises which are judged to be credit-worthy. They avoided doing business with the poor and their micro enterprises because the associated cost and risks are considered to be relatively high (Anyanwu, 2004).

The Federal and State governments have recognized that for sustainable growth and development, the financial empowerment of the rural areas is vital, being the repository of the predominantly poor in society and in particular the SMEs. If this growth strategy is adopted and the latent entrepreneurial capabilities of this large segment of the people is sufficiently stimulated and sustained, then positive multipliers will be felt throughout the economy. To give effect to these aspirations various policies have been instituted over time by the Federal Government to improve rural enterprise production capabilities. (Olaitan 2006)

In view of this, the impact of micro finance bank in economic growth and development of Nigeria started showcasing itself. With the initiative of microfinance, rural areas are opportune to grow and develop as loan and fund are easily given to rural farmers and entrepreneur. Jobs opportunities were created since there is avenue for lending and investing.

1.2 AIMS AND OBJECTIVES
The mains objectives of this research work are to investigate the impact of micro finance bank in economic growth and development of Nigeria.
Other objectives are as fellows
i. it will explicate in detail ways in which micro finance banks can contribute in developing rural areas and improving the life of the poor people.
ii. It will investigate the ways microfinance bank can contribute in building entrepreneurship within the country.

1.3 STATEMENT OF RESEARCH PROBLEMS:
There are so many problems and challenges that hinders the functionality of the microfinance bank in carrying out their major role of improving economic growth ad development in Nigeria.
These problems include
– poor attitude of Nigerians towards MFBs
– insufficient support from the regulators and government
– There are communication gaps and inadequate awareness among the masses.
– Undue competition rather than cooperation from the mega banks, and undue malpractice/Sharp practices by microfinance bank operation.

The researcher will in the research find possible ways of solving or making better the conditions for the operation of MFBs.