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The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria

The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria

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Reference ID: PS-118-TM


This research material titled “The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria” is dedicated to God for his enabling grace, and to all computer enthusiasts who contributed to make life a pleasant experience during my research documentation.


I extend my sincere gratitude to all those who contributed to the completion of this project. Special thanks to my Supervisor (Name of your Supervisor), the Head of Department (Name of your HOD), the Lecturers in the department of Accountancy / Accounting, Book Authors and Profound Scholars of existing or related project material on “The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria” for their invaluable guidance, support, and expertise throughout the journey.

I am also grateful to your study area (mention any funding organizations, if applicable) for their financial assistance. This research would not have been possible without the encouragement and assistance of some stakeholders (mention any mentors, teachers, or colleagues). Additionally, I would like to acknowledge the understanding and patience of my family and friends during this endeavor. Your unwavering support has been a constant source of motivation. Thank you all for being part of this meaningful endeavor.

The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria




  • 1.0 Introduction
  • 1.1 General overview of the study
  • 1.2 Statement of the problems
  • 1.3 Objectives of the study
  • 1.4 Scope of the study
  • 1.5 Research Questions
  • 1.6 Significance of the study
  • 1.7 Limitation of the study
  • 1.8 Definitions of terms



  • 2.0 Literature
  • 2.1 Introduction
  • 2.2 Rural populace embrace micro finance banking
  • 2.3 Micro finance banks:helping and promoting the local economy.
  • 2.4 Micro finance banks and economic empowerment.


  • 3.0 Research Methodology
  • 3.1 Sources of data collection
  • 3.1.1 Primary source of data
  • 31.2 Secondly sources of data
  • 3.2 Method of data collection
  • 3.2.1 Oral interview
  • 3.2.2 Questionnaire Survey
  • 3.2.3 Observation.
  • 3.2 Data analysis techniques



  • 4.0 Presentation and analysis of data
  • 4.1 Presentation of data
  • 4.2 Analysis of data
  • 4.3 Research findings/Question



  • 5.0 Summary, conclusion and recommendation
  • 5.1 Summary
  • 5.2 Recommendations
  • 5.3 Conclusion


  • Supplementary page




    The role of micro finance banks in the economic empowerment of the Nigerian masses had been a controversial issue weighed along side the conventional banks.

    In this research work, I tried to show that the micro finance banks as forms of grassroots banking actually contributed to the empowerment of their patronizes using Alvana Micofinance Bank as a case study.

    Today, a lot of people have tried their small business grown to a high level as a result of assistance got form micro finance bank in their localities

    Some micro finance banks have also aided their customers to develop the habit of savings for their future use and had also made life more meaningful to them while contributing to the Nigerian economy in the positive side

    The central bank of Nigeria knowing the importance of micro finance banks instructed the conventional banks to open specified number of rural branches of their bank in the rural areas.

    These research works try to make on further research on the best ways to make to the micro finance banks in Nigeria to perform like other counter parts in the developed nations even though there are other conventional banks that do operate over there as in Nigeria.

    The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria


    1.0 Introduction

    1.1 General Overview of the Study

    Micro finance banking or otherwise grassroots banking is a new phenomenon in Nigeria which attempts to reach the masses who have not been able to tape with modern system of banking with its attendant complex and sophisticated operations which emphasis much on collaterals.

    The ideas of micro finance banking was the brain child of the former military president, general Ibrahim badamosi Babangida who ruled the country between August 1985 and august 1992 as a means of involving the rural populace in economic development of their various communities.

    Prior to this time, the central bank of Nigeria, CBN which has the sole responsibility of licensing balance as well as the major supervisor of banking operations in the country had instructed the conventional banks to open specific number of the rural branches to of their banks in the rural area.

    This is because the C.B.N known the importance of the rural populace in the economic development of the nation and also to highlight the importance of carrying them along in the scheme of things.

    It was evident that the rural dwellers were shortchanged in the daily transaction of the convention banks because as it were, they are certain rules and regulation and worst of it all being that their numerous requests for credit and loan audience were never met so all these tend to alien cite them further and made them feel lost in their ways to get entrenched in the banking system.

    However, the global banks directive could not properly give solution to these unseeing intractable problems faced by the rural dwellers and this led to further effort being made to find a lasting solution to it through the establishment of micro finance Banks.

    The rural people have always led viable and functional local credit mobilization schemes, which through informal, served their intents and purposes. In this part of the country, these informal arrangements have various names varying form ajo” Isusu, Akawo” Bam, Adashi etc.

    These local systems of financial transactions are characterized by voluntary contributions from member on daily, weekly or monthly basis while some of these money so collected are given out as loans to needy members according to the rules with nominal interest changed on the loans while appropriate firms are imposed on any member who defaulted in repayment of such loans taken.

    The then directorate for food, roads and rural infrastructure (DFFR) came up with the idea of grassroots unit banks which would aid the programmes of rural development, self reliance and better economic well being for the majority of the people in the sub-urban and rural areas, an idea which the CBN quickly gave heed to and as a result micro finance banking came into being.

    1.2 Statement of Problems

    Although evidence abound about the role being played micro finance banks in empowering the masses there is still the need to clearly define the concept of micro finance banking

    Knowing that after more than a decade of its existence, people are yet to know the importance of micro finance banks in their problem here is to find out the wants ands methods which micro finance banks are using to empower the Nigerian masses economically.

    1.3 Objectives of the Study

    Micro finance banks are expected to play certain roles in the overall economic life of the people where they some of these clauses include:

    1. Consideration: The reason for tasking the guarantee is always sated most often as the giving of advance is any form.

    2. Whole debt: This means that the guarantee is for whole debt, which implies that the liability of the guarantor is not reduced in the presence of other securities there, is also liable to pay interest on outstanding balance until final liquidation.

    3. Effect of Guarantors Death: Notice of death of a guarantor is not deemed to determine the guarantee until his personal representatives give notice to determine it.

    4. Payable on demand: By executing the guarantee the guarantor undertakes to make good his guarantee on demand. This implies that demand is necessary for his liability to become due.

    5. Joint and several guarantee: This clause is necessary so that where two or more guarantors are involved, their liability on the guarantee becomes joint and several instead of jointly only which will make a guarantor only liable for has share of the debtors commitment.

    6. Subordinate clause: This makes it possible for whatever, claims the guarantor and debtor may have against each other to queue behind the indebtedness of the debtor of the micro finance bank.

    1.4 Scope of the Study

    Microfinance banks in Owerri orlu and okigwe in the state will form the nucleus of this study ands the findings can be generalized to the entire nation bearing in mind some factor in the areas of social political and religious of the people life.

    1.5 Research Questions

    1. Do micro finance banks have significant roles to play in the economic empowerment of the masses?

    2. Does lack of qualified staff affect the performance of micro finance banks?

    3. Do micro finance banks have significant roles to play in the economic empowerment of the Nigerian masses?

    1.5 Significance of the Research

    Students often make the mistake of taking methods of settlement for payment and vice versa. While methods of payment refer to different ways an oversea buyer pays for the goods supplied to him. Methods of settlement refer to the instrument in use for the payment.

    NOSTRO AND VOSTRO ACCOUNTS: It will be pertinent to mention here that all the accounting procedures in respect of the methods of settlement passes through nostro and vostro accounts. Nostro is a Latin word for our while nostro means for your.

    Nostro accounts are assets account i.e. The account that a bank keeps in foreign currency with its correspondent bank overseas while Nostro is the reverse. We say it is an assets account for simplicity because it will be come a liability if the account is overdrawn.

    A nostro account refers to the account held in naira by a Nigeria bank on behalf of its correspondent bank abroad.

    Remember that a nostro account to one bank is a vostro account to another. Example Union bank of Nigeria PLC in Nigeria has account with Midland bank PLC London its correspondent bank. To union bank Nigeria PLC, the account at midland bank is a nostro account while it is a vostro account to midland bank.

    1.7 Limitation of the Study

    This project work is expected to cover among other specific issues the root or foundation of micro finance in Nigeria and its background history of the study will also appraise the achievement of the micro finance bank in Nigeria and Imo state in particular and ethicizes the lapses. There may have to be some suggestions by this researcher on the way forward in the micro finance bank.

    Every research study is not without some limitations encounter in the process of assembling the work. So this study was faced with the following problems.

    Upon all the books which authors published in the study of banking and finance as a discipline it was difficult to find the very few that deals the inability of the operations to release accurate information of their operations as well as the financial limitations of the researcher, all contributed to make this study a hectic one.

    1.8 Definition of Terms:


    The expected functions, which a thing is to perform to realize certain objectives.

    Micro Finance Bank/Banking:

    This is a new phenomenon in the Nigeria banking sub-sector, which tires to encourage the rural dwellers to participate actively in the economic emancipation.

    Economic Empowerment:

    The ability of a people to the part and parcel of the economic development of their area through gainful employment.

    Nigerian Masses:

    This is the population of Nigeria as was put forward by the 1991 census figure.

    National Board For Economic Finance Banks:

    The body charged with the responsibility of promoting developing monitoring and general supervision of micro finance.

    Co-Operative Societies:

    A collection of individuals with the aim of assisting members achieves their financial and other obligations.

    Central Bank of Nigeria CBN:

    The apex banking regulatory body in Nigeria and the lender of the last resort.

    Micro Finance Development Association CDAS:

    One of the bodies that are expected to partake ion the ownership of a micro finance bank in a locality.

    United Banking:

    A situation where a bank cannot open branches outside the micro finance where it is situated.


    2.0 Literature Review

    2.1 Introduction

    This chapter focuses on the review of related literature. A literature review includes the current knowledge as well as theoretical and methodological contributions to a particular topic. It documents the state of the art with respect to the topic you are writing. It surveys the literature in the topic selected. In this research work the literature review includes the …

    Summary Headlines for The Impact of Micro Finance Bank in the Development of Small Scale Industries in Nigeria

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