1.1 Introduction
Microfinance institution is a semi formal organization, it can be Non-governmental or community development initiative. It is a subset of flexible structures and system which provide a wide range of financial and saving needs of small scale enterprises in developing countries where top town formal financial institutions have failed to address the credit need off the real sector of the economy. ICT can be a strategic tool in making Microfinance Institutions (MFIs) more efficient and effective. MFIs can reach more people in a more economic way by implementing the right Management Information System (MIS). While a few MFIs are making good use of technology, the majority are facing difficulties in getting the right solution.
As a prelude to other parts of this study, this chapter will discuss the background upon which this study was initiated, the statement of problems that led to this study, the Aim and Objectives of the study. Others are Significance of the study, Scope of work, Research hypothesis and questions, Limitations of the Study and Definition of technical terms.
1.2 Background of Study
The Nigeria microfinance institution have come along way, a central bank study has identified as at 2001, 160 registered microfinance institutions in Nigeria with aggregate savings worth N99.4m and outstanding credit of N649.1m indicating huge business transactions in the business (Anyanwu, 2004). Institutional structures for the provision of micro credit vary and may be government, NGO supported, traditional, or mixture of two or more of these, there are all those that operate on the line of informal models. They are credit and savings association which are based on the traditionally experience, they provides savings and credit services to their members.
Despite the availability of microfinance and the establishment of microfinance institutions in Nigeria, there are yet no established government policies and mechanisms for regulating and supervising activities in the sector (Anyanwu, 2004).
The establishment of microfinance banks in Nigeria provides an additional finding source to small and medium scale enterprises on lending basis. This is so because the microfinance banks have grassroots orientation and greater expertise in financing small and medium scale enterprises. But inspite of the prospect of microfinance banks in financing small and medium scale enterprise, they are constraint with myriad of problems ranging from managerial to their inability to properly evaluate loan application and improper credit risk management which has resulted to a high degree of unpaid debt and consequently the closure of so many micro finance bank in the recent past. It is against this that the subject matter is seen as a empirical problem worthy of being investigated. Micro Finance Bank is constituted to provide banking services to the general public ranging form.
- Handling of cash and provision of over – draft
- Keeping of accounts for its customers
- Transfer of funds to another in different remote stations.
- Self keeping of important documents.
- Stock brokeage for its customers etc.
In 2000, a national conference on microfinance was organized by the federal government of Nigeria and the World Bank recommended that the central bank of Nigeria to take up the responsibility of developing an appropriate Policy as well as regulatory and supervisory frame work for the operation of microfinance institutions. The workshop recognized that the development of appropriate microfinance policy was critical to the development of sustainable microfinance institutions and by implicated through micro enterprises in Nigeria (CBN, 2001).
1.3 Statement of Problem
There are difficulties experienced in the manual system in financial sectors. These factors therefore necessitate the implementation of a computer – base system in other to overcome the short comings of the manual system of simulation of Basic Banking Operation of Micro Finance Bank. The establishment of microfinance banks in Nigeria provides an additional finding source to small and medium scale enterprises on lending basis. This is so because the microfinance banks have grassroots orientation and greater expertise in financing small and medium scale enterprises. But inspite of the prospect of microfinance banks in financing small and medium scale enterprise, they are constraint with myriad of problems ranging from managerial to their inability to properly evaluate loan application and improper credit risk management which has resulted to a high degree of unpaid debt and consequently the closure of so many micro finance bank in the recent past. It is against this that the subject matter is seen as a empirical problem worthy of being investigated.
1.4 Aim and Objective of the Study
The main aim of this work is to simulate the Basic Banking Operation of Micro Finance Bank using Adamawa State as a case study. In achieving this aim, the following specific objectives were laid out as follows to simulate banking operation in order:
- To aid in monitoring and controlling of fraudulent.
- To provide quick enquiry about information in financial sectors.
Furthermore, the study will show the effect in the manpower of the security department because on most occasions charging the manual information system to an automated information system will equally cause redundancy.
1.5 Significance of Study
The Simulation of Basic Banking Operation of Micro Finance Bank System would lead to an effective and comprehensive fraud control in banking sectors. The study would be beneficial to microfinance bank and government agency incharge of microfinance institution and capacity building for small and medium scale enterprises, especially and they utility the finding of this research as basis for policy formulation. The study would also contribute to the existing knowledge on the problem and prospect of microfinance bank in financing small and medium scale enterprises. The study will also be a spring board for further research.
1.6 Scope of the Study
This project work focus mainly on the Simulation of Basic Banking Operation of Micro Finance Bank using Adamawa State as a case study. The study will provide well developed software to automate the existing system.
1.7 Limitations of the Study
During the course of this study, many things militated against its completion, some of which are:
- Time Constraint: The time frame given to accomplish this project was very short due to school academic calendar and it was carried out under pressure which made the researcher not to implement some necessary features.
- Establishment Policies: Establishment policies posed a serious limitation as most staffs are not ready to release information needed for this project work. There were lots of information needed from the staffs of this institution to enhance the study which took them time to release or they did not release at all for security purposes, hence the scope was reduced.
- Research material: availability of research material is a major setback to the scope of the study.
- Frequent power failure: This made the researcher append more money on fuel to ensure sustainable power.
- Financial Constraint: Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet).
1.8 Definition of Terms
Fraud: Is defined as deception deliberately practiced with a view of gaining an unlawful or unfair advantage.
Economic Crime: This is the manifestation of criminal act done either solely or in an organized manner with or without associates or group with the propose earning wealth or being rich through all illegal means.
Identity Theft: This is an action that proceeds enable a fraud to occur.
False Billing Fraud: This occurs when a business or an individual receives a bill for a product whereby the representation of the product by the promoter was either false or misleading or whereby the product were either never ordered or received.
Internet Fraud: This refers generally to any type of fraud scheme that uses one or more components of the internet such as chat room, e-mail, message boards or websites to present fraudulent transactions or to transmit the proceed of fraud into in financial institutions or to others connected with the scheme.
Password: This is a measure of protection against intruders from gaining access to the documents and secretes information.
System Investigation: This is an in-depth and study of an existing system with regard to its producers in working out an improved system.
