The Project File Details
- Name: THE_IMPACT_OF_MICROFINANCE_ON_ENTREPRENEURSHIP_DEVELOPMENT_IN_NIGERIA
- Type: PDF and MS Word (DOC)
- Size: [310 KB]
- Length:  Pages
1.1 BACKGROUND OF THE STUDY
It is an undisputable fact that the contribution of
microfinance to entrepreneurship activities is increasing
being recognized as a primary engine of economic growth.
(The Economist, May 18th 1996). By combining existing
resources with innovative ideas, entrepreneurs add value
through the commercialization of new products, the creation
of new jobs and the building of new firms. The Global
Entrepreneurship Monitor (GEM) indicates that nations with
higher levels of entrepreneurial activity enjoy strong economic
growth. In short, entrepreneurs are the link between new
ideas and economic development. This is proper using the
experience of the industrialized countries of North America
and West Europe. Legislative actions has been taken by
countries like United States of America, the Netherlands and
Japan to see to the fact that entrepreneurial activities can
contribute to economic development. This may explain why
various governments around the world promoted it since
entrepreneurial skills and strategies are used to tackle
different social problem and addressing poverty as well as a
means of employing the disadvantaged.
Speaking at the conference with a theme “Improving
Access to Microfinance”, Soludo (2008) revealed that in order
to sustain increases participation of skilled entrepreneurs in
the credit and other financial service delivery to the micro,
small and medium enterprises in the microfinance sub
sector, Central Bank of Nigeria (CBN) is forging ahead in its
determination to develop a pool of articulate and well focused
entrepreneurs through setting up one Entrepreneurship
Development Centre (EDC) in each of the six geo-political
zones in the country. The three pilot entrepreneurship
development centres, he said,. Will commence January, 2008
are in Kano (North West), Ota (Southwest) and Onitsha
(Southeast). Also speaking at the international microfinance
conference and annual microfinance conference and annual
microfinance and entrepreneurships awards held at the
Sheraton Hotel and Towers, Abuja, Soludo (2008) stated that
access microfinance by the economically active poor and low
income earners in Nigeria is a collective responsibility for the
achievement of the Millennium Development Goals (MDGs);
He added that it provides a strong focus on macro-economic
stabilization, especially in the pursuance of massive trades
and investment liberalization program to encourage
entrepreneurial capacity to develop business and for the
business to success (Nwoye, 1997).
Despite the missing links in Africa’s development
process, researchers and scholars have increasingly
recognized the crucial role that entrepreneurship plays in
economic development of nations, especially through the
development of microfinance sub-sector. (Rashed, H.S, 2000,
Dozie, 2005 Aglion and Howilt 1997). For instance, Dozie
argued that this vital factor of production which forms the
basis of the Schumpeter’s dynamism is the bedrock to a
nation’s industrialization and development. According to
them, this is achieves through the innovation and risk taking
ability of the entrepreneurs. It is therefore, the entrepreneur
who generates the critical momentum an economy requires
for economic growth by breaking new grounds in human
endeavour as a result of the vital characteristics they possess.
However, on this note, this study intend to address the
entrepreneurship in Nigerian economy has the potential of
becoming the path to success and compete favourably at the
global market economy, when the technical and commercial
skills of the entrepreneur are effectively develops utilized.
Peter and Clerk (1997) affirm that entrepreneurial
development is a disposition to accept new ideas and try new
methods; a readiness to express opinions, a true sense that
make men and women more interested in the resent and
future than in the past, a better sense of punctuality, a
greater concern for planning, organization and efficiency, a
tendency to seek the world as calculated a faith in science
and technology and finding a belief in distributive justice.
The study is an attempt to show how successful
entrepreneurship development through microfinance
institutions will result in creation of jobs, develop greater
skills that can be more readily adopted by local residents (see
Green et al, 1990; Kovshling and Allen 2004). Entrepreneurial
development programmes offer sustainability and flexibility to
meet broader community development needs (Dabson Ricky
and Scheveke 1994, Loyons and Hamlin 2001, Lichtentein
Iyons and Kutzandua 2004(.
1.2 STATEMENT OF RESEARCH PROBLEM
In view of the forgoing, the Federal Government of
Nigeria (FGN) has been adopting monetary, fiscal, industrial
and developmental policy measures at the macro level to
facilitate and support entrepreneurial activities and at the
same time specific financing g arrangements are being made
in respect of funding programmes at the micro level to boost
entrepreneurship activities in Nigeria.
The community banking system is one of such
programmes introduce by decree 46 of 1992 (as amended) to
finance and support the growth of entrepreneurship in
Nigeria. The micro units in agricultural transport, commerce
and industry, textile, dying tanning, vulcanizing,
blacksmithing, health, architectural, entertainment and other
needs, this microfinance banking system is evidently fraught
with problems as regards to its ability to finance projects in
rural (and even semi-urban) communities. This is evident in
the reform process of the Nigerian banking system, at which
the community banks by the reform are to become
Microfinance Banks (MFBs) with a minimum of 20 million
capital base by December 31st 2007.
This research therefore, aims to make a close evaluation
of the impact of microfinance on the development of
entrepreneurial activities in Bauchi Local Government Area,
with special reference to some small scale entrepreneurs in
the three districts of Galambi Bauchi and Zunhur.
1.3 STATEMENT OF PROBLEM
Given the problem statement above, the major problems
which this research work aims to evaluate are captured in the
following research question.
What are the contributions of microfinance banks to the
entrepreneurial development and what are the modalities to
To what extent has their contribution (financing)
impacted on the growth of entrepreneurship?
What problems militate against the effective financing of
entrepreneurs by the microfinance banks and the attainment
of their objective?
How effectively and efficiently will microfinance banks
functions/to operate and perform better.
1.4 OBJECTIVES OF THE STUDY
Based on the research questions marshaled above the
specific objectives seeks;
i. To identify the role of microfinance on the
development of entrepreneurial activities in Nigeria
ii. Identify problems that militate against the effective
funding of entrepreneurship development (apart from
iii. To identify the viability of microfinance banks in
iv. Make policy recommendation.
1.5 JUSTIFICATION OF THE STUDY
This study is a build-up on the previous investigation by
various scholars and researcher on the impact of
microfinance banks on entrepreneurship development,
especially in Bauchi Local Government Area of Bauchi State
and is aimed at building up on the lapse of previous
The importance of this study lies in identifying the
various problems that have bedeviled the effectiveness of the
microfinance banking system.
More so, the study will add to knowledge on how Nigeria
policy makers can grow the economy through their support
on entrepreneurship development in Bauchi state. Which has
been identified as the momentum for Nigeria economic growth
Thus the justification of the research.
The findings of the research will therefore, provide a
veritable base for the effective functioning of microfinance to
the development of entrepreneurial activities.
1.6 RESEARCH HYPOTHESIS
Drawn from the research question marshaled above, and
objectives that this research aims to achieve, the following
hypothesis have been formulated to help in the conduct of
veritable and worthwhile research
H0: There is no significant relationship between microfinance
and entrepreneurship development.
H1: There is significant relationship between microfinance and
H0 = Null hypothesis
H1 = Alternative hypothesis
Both hypothesis are complementary.
1.7 SCOPE AND LIMITATION
Although there are many factors and variable
responsible for entrepreneurial development, this study
focuses only on the microfinance as the major factor
responsible for entrepreneurial growth using twenty
entrepreneurs from each district as selected sample size.
The limitations which include unavailability and
inaccessibility of relevant data and material necessary for
carrying out this study.
Another is the unwillingness on the art of the
respondents to give adequate and correct information
necessary to carry out the work. The researcher’s
inexperience in research is also another limitation.
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