1.0 Introduction
1.1 General Overview of the Study
It has been estimated that there are 500 million economically active poor people in the world operating small scale and medium businesses. Most of them do not have access to adequate financial services.
Microfinance services are financial services that poor people can qualify for. More broadly, it refers to a movement in which as many poor and near-poor household as possible have permanent access to.
Theoretically, microfinance encompasses any financial service used by poor people including those they access in the informal economy, such as loans, from a village money lender. In practice, however, the term is usually only used to refer to institutive and enterprises whose goods include both finance and empowerment of the poor.
The concept of the credit union was developed by Friedrich W. Raiffeisen and his supporters. Their altruistic action was motivated by concern to assist the rural population to break out of their dependence on money lenders and to improve their welfare.
Although much progress has been made, the problem has not been solved yet, and the overwhelming majority of people who earn less especially in rural areas, they lack access to formal financial leverage.
The concept of modern microfinance was developed in 2004 by consultative group to assist the poor (CGAP) and endorsed by the group of eight leaders at the G8 Summit on June 10th 2004.
(Christian, Robert Peck, Jayadeva, Vena and Rosenbery. Financial institutions with a double bottom line, consultative group to assist the poor from encyclopedia Washington 2004). The practical of microfinance in Nigeria is culturally rooted and dates back to several centuries.
They are mainly of the informal self — help group (SHGs). Rotating savings and credit Association (ROSCAS), savings collectors and cooperative thrift savings societies.
These informal financial institutions generally have limited resources to meet up with the demand. In order to enhance the flow of financial service to Nigerian rural areas, government has in the past initiated a series of publicly financed micro/rural credit programmes and policies targeted at the poor.
Notable among such programmes were the rural Banking programme, Agricultural credit guarantee Selene Fund (AGSF) Nigeria Agric Agricultural Cooperative and Rural Development Bank (NACROB) Nigeria Directorate of employment (NDE), Community Bank (CBS) and family Economic Advancement Programme (FEAP)
In 2000, the federal government merged the NACB, PBN and FEAP to form the Nigeria Agricultural cooperative and Rural Development Bank Limited (NACRDB) to enhance the provision of finance to the agricultural and cooperative sectors. It also created the National poverty eradication programme (NAPEP) with the mandate to provide material and equipment training.
Though these services have made several impacts in the economy, their activities were short lived due to the unsustainable nature of the programme.
1.2 Statement of the Problem
Microfinance has evolved as an economic development approach intended to benefit low income businesses.
Most small and medium businesses do not have access to funds, yet microfinance scheme is created to meet sustained demand in the management of microfinance, and such problems are identified as following:
Some microfinance institutions target a segment of the population that has no access to business opportunities.Poor management constraint of some microfinance scheme.
1.3 Objective of the Study
The core objective behind this study is to access the activities of microfinance institutions in boosting production activities, identify strengths and weakness of microfinance scheme.
It also shall consider the impact of microfinance to small and medium scale business outfits.
Furthermore, it will identify some constraint of management of microfinance institution.
1.4 Scope of the Study
In the course of this study, the scope of this project writing shall be limited to Imo State Cooperative Financing Associations Limited at Egbu Road.
It is to find out how far, microfinance has facilitated its business activities.
1.5 Hypothesis
- Ho: Microfinance institutions have not contributed to any economic growth.
- Ha: Microfinance institutions have contributed to robust economic growth.
- Ho: High increase productivity in cooperative business does not have any relationship with microfinance activates.
- Ha: Microfinance activities enhances cooperative business for increase productivity.
1.6 Significance of the Study
This research work is highly significant in many ways. It's significance is to the entire business world because it would expose how microfinance intends to benefit the low income earners and enhance service deliver by microfinance institutions to small and medium enterprise. Also, this study will serve as an eye opener, on how microfinance reduces poverty and enhance self employment among the teeming populace or citizenry of Nigeria.
Furthermore, it will show how a microfinance mechanism encourages high productivity of both small and medium scale as well as cooperative businesses.
1.7 Limitation of the Study
In the course of writing this project, I will not fail to unfold certain constraint encountered. Firstly, the subject matter on study does not have much materials because of the newness of the scheme in the national economy, hence the relevant literatures.
Apart from materials, there were financial constraint, another problem was that of time in most cases lecture periods were used in other to get materials.
1.8 Definition of Terms
For clarification purposes and clearance of doubt, this project work was done paripasue with some definitions of notable key works as follows:
Relevance:
According to Oxford Advanced Leaner's Dictionary 6th ed. The word “Relevance” is a noun and it means a closely connected with the subject you discussion.
Micro:
Means that which is small in size or nature.
Finance:
Is a money that is used to run or mange a business. Finance also, could be regarded as a story requirement for a successful business start-up and inventor any contemplated expansion or running of and existing business outfit. (ICAN Students Journals, Vol. 10. No2, P: 15, 2006)
Microfinance:
Is an economic development approach intended to benefit small business. Also, it is a financial service that is initiated to boost productivity of cooperation business, equally for small and medium scale industry.
Cooperative:
According to Ogujiofor E.A. (2001: 80) cooperative business is an association of persons who voluntarily joined together through a business organization to achieve their common needs while equitably contributing their required capital sharing in the risk and benefit and members participate actively and democratically.
Business Ventures:
This is the activity of making, buying, selling and supplying of goods and services for profit purposes.
