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This study examines the Effect of Microfinance Banks on Entrepreneurship Growth in Nigeria. Data for the study were sourced from secondary sources and the period of that research spans from 2005 to 2017. The study uses ordinary Least Square regression to analyze results of the study. Findings from the study show that there is no significant relationship between microfinance banks and entrepreneurial activities.
Title Page i
Table of Contents vii
CHAPTER ONE: INTRODUCTION
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 4
1.4 Research Questions 4
1.5 Statement of Hypotheses 4
1.6 Significance of the Study 5
1.7 Scope of the Study 5
1.8 Limitations of the Study 6
1.9 Justification of the Study 6
1.10 Definition of Terms 6
CHAPTER TWO: LITERATURE REVIEW
2.1 Introduction 8
2.1.1 Concepts of Microfinance Bank 8
2.1.2 Concept of Entrepreneurship 9
2.1.3 Types of Microfinance 12
2.1.4 Conceptualizing Entrepreneurship Growth 13
2.2 Theoretical Literature Review 14
2.2.1 The Economic Perspective on Entrepreneurship 15
2.2.2 Modern Theory of Entrepreneurship 16
2.2.3 Innovation Theory of Entrepreneurship 17
2.3 Empirical Review 18
CHAPTER THREE: RESEARCH METHODOLOGY
3.1 Introduction 20
3.2 Area of Study and Coverage 20
3.3 Model Specification 20
3.4 Evaluation Procedure 21
3.5 Source of Data 21
3.6 Evaluation Based on Economic Criteria 21
3.7 Evaluation Based on Statistical Criteria 21
3.8 Evaluation Normality Test Based on Econometric Criteria 22
CHAPTER FOUR: RESULTS AND ANALYSIS OF FINDINGS
4.1 Introduction 25
4.2 Analysis of Regression Coefficients 26
4.3 Economic Criteria 26
4.4 Statistical Criteria 27
4.5 Econometric Criteria 29
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary 32
5.2 Recommendations 33
5.3 Conclusion 34
1.1 BACKGROUND OF THE STUDY
In consonance with the Millennium Development Goals (MDGs) of the United Nations, which include reduction elimination of poverty and disease, the Federal Government of Nigeria poverty eradication programmes. The strategies of previous governments to address poverty include establishment of Peoples Bank of Nigeria (PBN), Community Banks (CBs), Family Economic Advancement programme (FEAP), Better Life for Rural Women Programme among others. These strategies were unsuccessful because they were seen as programmes meant to distribute money to politicians. Since the 1980‟s Non-Governmental Organizations (NGOs) have emerged in the country to champion the cause of the micro entrepreneur with a shift from the supply-led approach to the demand driven strategy. The number of NGOs involved in micro finance activities has increased significantly in the recent times due largely to the inability of the formal financial sector to provide the service needed by the low income groups, the poor and entrepreneurs (Central Bank of Nigeria)CBN 2008.
The micro-finance firms fund their operations from the grants, interest on loans and contribution from members. They however, have limited outreach due largely to the unsustainable nature of their funds. The Central Bank of Nigeria (CBN) in accordance with section 28(1) of the CBN Act No 24 of 1991 (as amended) provides the framework guideline for micro finance banks in Nigeria.
The guideline recognizes the existing information institutions and brings them within the supervisory purview of the CBN would not only enhance monetary stability, but also expand the financial infrastructure of the country to meet the financial requirements of the micro, small and medium enterprises (MSMEs) and also entrepreneurship. Such a policy would create vibrant micro finance sub-sector that would be adequately integrated into the mainstream of the national financial system and provide the stimulus for growth and development. It would also harmonize operating standards and provide a strategic platform for the evolution of micro finance institutions. On the other hand, entrepreneurship has been seen as the engine of Nigeria economy. Right from 1960 when Nigeria got her independence, the federal Government of Nigeria has taken bold steps to empower entrepreneurship using monetary, fiscal and industrial policies. All the policies failed to yield a positive result owing to lack of transparency, accountability and trustworthiness of their leaders and those entrusted with those responsibilities. According to the United Nations Institution Development organization (UNIDO 1969:100) Nigeria is among the countries classified as developing. The organization further defined a developing economy as an economy where there is acute shortage of natural resources and also where there is dearth of trained manpower to manage the available scarce resources.
However, the report is not entirely true of the Nigerian economic system firstly, Nigeria is rich in natural resources such as mineral deposit (crude oil, coal and tin ore etc.) and fertile land for agriculture among others. Secondly, Nigeria as at the period of the UNIDO report (1969) had about three tertiary institution responsible for man power training and development.
Failure to empower small business and entrepreneurship fully or transparently will increase poverty and escalate unemployment which according to international labour organization (ILO 2017) is already growing by more than 3 million people or approximately 25% annually while the economy grows by 6% or 3% when discounts for population.
In the light of the foregoing for Nigeria to be able to produce future and efficient multinational SMEs and entrepreneurship fully supported and financially and technically empowered by government, growing from grass roots, transcending their territory can eventually become Nigeria’s symbol of economic power and prosperity. Adequately making use of financial institutions, entrepreneurs in Nigeria will be doing very well and this should be the role of microfinance institution in Nigeria.
1.2 STATEMENT OF THE PROBLEM
In a general sense it is essential to recognize the effect of micro-finance institutions towards the development of entrepreneurship in Nigeria. However, if the micro-finance firms perform up to expectation, entrepreneurship will experience tremendous growth. The problem of this study therefore is to critically look at the gradual growth of entrepreneurship in Nigeria and the causes of it. In this, entrepreneurship in Nigeria is not developing as expected as a result of so many problems facing it. It is resulted from lack of financial motivation and encouragement among entrepreneurs in Nigeria. These may lead to low productivity and turnover in industry.
These problems go a long way to stifle their growth and development, thereby limiting their potential contributions to the development of the national economy.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study is to examine the effect of micro finance banks on entrepreneurship growth.
Other specific objectives include:
1.4 RESEARCH QUESTIONS
This research project will be developed from the following research questions;
1.5 STATEMENT OF HYPOTHESIS
Drawn from the research questions marshaled above and the objectives that this research aim to achieve, the following hypotheses have been formulated to help in the conduct of veritable and worthwhile research
There is no significant relationship between microfinance banks and entrepreneurship growth.
There is significant relationship between microfinance banks and entrepreneurship growth.
There is no significant relationship between microfinance banks and entrepreneurial activities.
There is significant relationship between microfinance banks and entrepreneurial activities.
There is no significant relationship between microfinance banks and entrepreneurial financing.
There is significant relationship between microfinance banks and entrepreneurial financing.
1.6 SIGNIFICANCE OF THE STUDY
This study dealt primarily with the examination of the effect of micro-finance firms on entrepreneurial growth.
Therefore, this study will be useful to stakeholders of microfinance firms and also to entrepreneurs in Nigeria. It will help organizations involved in the advancement of entrepreneurs in formulating development programmes and policies. It will also provide necessary professional advice to organizations involved in the advancement of small business enterprises in Nigeria. It will also be useful to educationists, scholars and students who wish to carry out further research on the subject matter or even produce textbook to add to existing literature on the topic.
1.7 SCOPE OF THE STUDY
This study covers the effect of Micro-finance banks with great emphasis laid on Entrepreneurship growth in Nigeria from 2005-2017
1.8 LIMITATIONS OF THE STUDY
However, a study of this nature cannot be carried out without some limitations some of the problems were, insufficient data, there was also difficulty in convincing some of the respondents of Micro-finance Bank to supply the needed information. There was problem of finance in carrying out this research due to poor economic situation in the country.
1.9 JUSTIFICATION OF THE STUDY
This study is a build-up on the previous investigations by various scholars and researchers on the effect of microfinance banks on entrepreneurship growth and is aim at building up on the lapse of previous investigations.
The importance of this study lies in identifying the previous 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 economy through their support on entrepreneurship growth in Nigeria which have been identified as the momentum for Nigeria economic growth (Onuoha2017).
Thus, the justification of the research. The finding of the research will therefore provide a veritable base for the effective functioning of microfinance to the growth of entrepreneurial activities.
1.10 DEFINITION OF TERMS
Growth: An increase in amount, size, or degree or importance of something.
Development: The gradual growth of something so that it become bigger, stronger or more advanced.
Micro-credit: Small loans made to low-income individuals to sustain self-employment or to start up very small business.
Small-scale: Small scale are those enterprises that have relatively little capital investment that produces in small share of the market, that employ not more than fifty workers.
Industry: A group of firms that produce similar products or services.
Entrepreneur: The Oxford Advanced Learners dictionary defined entrepreneur as a person who makes money by starting or running businesses which involves taking financial risks.
Enterprise: This is a term in the commercial world used to describe a project or venture undertaken for gain.