Project Abstract

Project Overview

<p> </p><p><b>INTRODUCTION</b></p><p><b>1.1 &nbsp; BACKGROUND TO THE STUDY</b></p><p>Effectively functioning financial markets<br>like micro finance banks have fundamental roles to play in fostering<br>development among small and medium scale enterprises in developing countries<br>like Nigeria. Small and Medium Scale Enterprises are sub-sectors of the<br>industrial sector which play crucial roles in industrial development (Ahmed,<br>2006). Following the adoption of Economic reform programme in Nigeria in 1981,<br>there have been several decisions to switch from capital intensive and large<br>scale industrial projects which was based on the philosophy of import<br>development to Small and Medium Scale Enterprises which have better prospects<br>for developing domestic economy, thereby generating the required goods and<br>services that will propel the economy of Nigeria towards development. It is<br>based on this premise that Ojo (2009), argued that one of the responses to the<br>challenges of development in developing countries particularly, in Nigeria, is<br>the encouragement of entrepreneurial development scheme. Despite the abundant<br>natural resources, the country still finds it very difficult to discover her<br>developmental bearing since independence. Quality and adequate infrastructural<br>provision has remained a night-mare, the real sector among others have<br>witnessed downward performance while unemployment rate is on the increase. Most<br>of the poor and unemployed Nigerians in order to better their lots have<br>resorted to the establishment of their own businesses. Consequently,<br>Entrepreneurship is fast becoming a household name in Nigeria. This is as a<br>result of the fact that the so called white collar jobs that people clamour for<br>are no longer there. Even, the touted sectors (Banks and companies) known to be<br>the largest employer of labour are on the down-turn following the consolidation<br>crisis and fraudulent practices of the high and mighty in the banking sector.<br>The companies of course are folding up as a result of erratic power supply,<br>insecurity and persistent increase in interest rate which has led to high cost<br>of production and undermines profit making potentials of companies operating in<br>Nigeria (Hassan, 2003).</p><p>Since the office jobs that people desire are<br>no longer there for the teeming population, and the few ones that succeeded in<br>getting the jobs are thrown out as a result of the factors identified above,<br>the need for the government and the people to have a rethink on the way-out of<br>this mess became imperative. Hence, the need for Small and Medium Scale<br>Enterprises (SMEs) became a reality as a means of ensuring self-independent, employment<br>creation, import substitution, effective and efficient utilization of local raw<br>materials and contribution to the economic development of our dear nation<br>(Nigeria). All the afore stated benefits of Small and Medium</p><p>Scale Enterprises cannot be achieved without<br>the direct intervention of the government and financial institutions like micro<br>finance banks. Over the years a number of policies have been formulated by the<br>government with a view to developing Small and Medium Scale Enterprises. The<br>Nigerian government under the then leadership of Chief OlusegunObasanjo<br>promulgated micro-finance policy and other regulatory and supervisory frame<br>work in 2005. However, the researcher is examining the contribution of<br>microfinance banks to the Small and medium Scale enterprises in Nigeria.</p><p>Microfinance, according to Otero (1999, p.8)<br>is “the provision of financial services to low-income poor and very poor<br>self-employed people”. These financial services according to Ledgerwood (1999)<br>generally include savings and credit but can also include other financial<br>services such as insurance and payment services. Schreiner and Colombet (2001,<br>p.339) define microfinance as “the attempt to improve access to small deposits<br>and small loans for poor households neglected by banks.” According to Wikipedia definition, a bank is a financial institution<br>that accepts deposits from the public and creates credit. Lending activities can be performed<br>either directly or indirectly through <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/Capital_market">capital<br>markets</a>. Due to their<br>importance in the financial stability of a country, banks are <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/Bank_regulation">highly<br>regulated</a>&nbsp;in most<br>countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets<br>equal to only a portion of their current liabilities. In addition to other<br>regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of<br>capital standards, known as the <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/Basel_Accords">Basel<br>Accords</a>. Therefore,<br>microfinance bank involves the provision of financial services such as savings,<br>loans and insurance to poor people living in both urban and rural settings who<br>are unable to obtain such services from the formal financial sector.</p><p><b>1.2<br>STATEMENT OF THE PROBLEM</b></p><p>Most of the small and medium scale<br>enterprises in Nigeria have remained relatively small and seen stunted growth<br>over the years. This is due to the fact that a large percentage of<br>entrepreneurs in the country remain unserved by the formal financial institutions.<br>The microfinance institutions available in the country prior to 2005 were not<br>able to adequately address the gap in terms of credit, savings and other<br>financial services. As reported by the CBN, the share of micro credit as a<br>percentage of total credit was 0.9%, while its contribution to GDP was a mere<br>0.2% (CBN, 2005). The CBN in 2005 identified the unwillingness of conventional<br>banks to support micro-enterprises, paucity of loanable funds, absence of<br>support institutions in the sector, as well as weak institutional and<br>managerial capacity of existing microfinance institutions among other reasons<br>as the major reasons for the failure of past microfinance initiatives in the<br>country. In order to remedy the situation, the Microfinance Policy, Regulatory and<br>Supervisory Framework (MPRSF) for Nigeria was launched by CBN in 2005 to<br>provide sustainable financial services to micro entrepreneurs. However,<br>although microfinance has proven to be one of the ways of bridging the resource<br>gap created in the Nigerian economy, the country has not enjoyed the full<br>benefits from it due to problems militating against its proper execution. The<br>lack of documentation of the practice of micro financing in Nigeria has made it<br>difficult to formulate supportive programmes for the growth of the sector. As a<br>result of this, the high rate of failures of SMEs has become a matter of major<br>concern in developing economies. International Finance Corporation (IFC)<br>reported in 2002 that only 2 out of every 10 newly established businesses survive<br>up to the fifth year in Nigeria. The report was corroborated by Small and<br>Medium Enterprise Development Agency of Nigeria (SMEDAN, 2007) that only 15% of<br>newly established businesses survive the first five years in Nigeria. This is a<br>pointer to the fact that there is a problem. The indispensable role of finance<br>to the growth and performance of SMEs and the adoption of microfinance as the<br>main source of financing SMEs in Nigeria therefore makes it imperative to study<br>the extent to which microfinance can enhance SME growth and performance.</p><p><b>1.3<br>OBJECTIVES OF THE STUDY</b></p><p>i) To examine the role of microfinance banks in<br>enhancing entrepreneurship among women in Nigeria.</p><p>ii) To determine the effectiveness of<br>microfinance banks in Nigeria.</p><p>iii) To identify the factors limiting the<br>development of microfinance banks in Nigeria.</p><p>iv) To<br>determine the effect of financial services of micro finance banks on women<br>empowerment in Nigeria.</p><p><b>1.4<br>RESEARCH HYPOTHESES</b></p><p><b>H0:<br></b>There is no significant difference in the<br>level of awareness of micro finance banks supports by Nigerian women.</p><p><b>H1:<br></b>There is a significant difference in the<br>level of awareness of micro finance banks supports by Nigerian women.</p><p><b>H0:<br></b>There is no significant difference in the<br>difficulties women face when accessing finance from various sources.</p><p><b>H2:<br></b>There is a significant difference in the<br>difficulties women face when accessing finance from various sources.</p><p><b>1.5 SIGNIFICANCE OF THE STUDY</b></p><p>A study of this<br>nature is very imperative as it provides an average Nigerian a means to access<br>to financial services in their localities to boost their standard of living in<br>a sustainable manner in line with the millennium development goal of<br>alleviating poverty in developing countries. The study will assist micro finance institutions to adopt<br>the necessary measures needed to ensure the desired growth in the small and<br>medium scale business enterprises (SMEs) industry. It is also beneficial for<br>formulation of policies and programmes by the federal and state government as<br>they might be looking forward to taking necessary steps to prevent the collapse<br>or failure of small scale businesses in Nigeria and Cross River State in<br>particular. Again, it will enable the entrepreneurs to have more understanding<br>of how businesses should be financed, thus having knowledge on funding further<br>research in this area. Finally, the study would serve as a source of reference<br>for other researchers or members of the general public who need information in<br>the subject. More importantly, entrepreneurs of small and medium scale<br>enterprises may find it useful in the successful operation of their enterprises<br>as the study will unveil some of the reasons why some small and medium scale<br>business enterprises (SMEs) finds it hard to repay their loans.</p><p><b>1.6<br>SCOPE AND LIMITATION OF THE STUDY</b></p><p>This study covers the operations of<br>microfinance banks in Nigeria but particularly focused on Nsehe Micro Finance<br>microfinance with a view of identifying their contributions towards the<br>development of women entrepreneurship in Nigeria. In the cause of the study, the researcher encounters some limitations<br>which limited the scope of the study;</p><p><b>Staff Reluctance:</b>&nbsp;In most cases<br>the staffs of Nsehe Micro Finance microfinance often feels reluctance over<br>providing required information required by the researcher. This result in<br>finding information where the structured questionnaires could not point out.</p><p><b>Researcher’s Commitment:</b>&nbsp;The<br>researcher, being of full time student spent most of her time on other academic<br>activities such as test, class work, assignment, examination etc which takes<br>average focus from this study.</p><p><b>Inadequate Materials:</b>&nbsp;Scarcity of<br>material is also another hindrance. The researcher finds it difficult to long<br>hands in several required material which could contribute immensely to the<br>success of this research work.</p><p><b>Financial constraint:</b>&nbsp;Insufficient fund<br>tends to impede the efficiency of the researcher in sourcing for the relevant<br>materials, literature or information and in the process of data collection<br>(internet, questionnaire and interview).</p><p><b>1.7 </b><b>DEFINITION OF TERMS</b></p><p><b>Microfinance:<br></b>Micro finance is defined as providing micro loan to<br>poorest of the poor (basically those are neglected by banks, microfinance<br>provides them loan facility), and a source of financial services for entrepreneurs and small businesses lacking<br>access to banking and related services.</p><p><b>Bank: </b>A bank is a financial institution that accepts deposits from the public and creates credit. Lending activities can be performed either<br>directly or indirectly through <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/Capital_market">capital<br>markets</a>. Due to their<br>importance in the financial stability of a country, banks are <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/Bank_regulation">highly<br>regulated</a>&nbsp;in most<br>countries. Most nations have institutionalized a system known as fractional reserve banking under which banks hold liquid assets<br>equal to only a portion of their current liabilities. In addition to other<br>regulations intended to ensure liquidity, banks are generally subject to minimum capital requirements based on an international set of<br>capital standards, known as the <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/Basel_Accords">Basel<br>Accords</a>.</p><p><b>Contribution:</b>&nbsp;Contribution refers to the act of<br>contributing or the thing contributed (such as personal time, money, ideas,<br>private property or assistance).</p><p><b>SMEs:</b>Small and<br>medium-sized enterprises (SMEs, also small and medium enterprises) or small and medium-sized businesses (SMBs) are businesses whose personnel numbers fall below<br>certain limits. The abbreviation “SME” is used in the <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/European_Union">European<br>Union</a>&nbsp;and by<br>international organizations such as the <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/World_Bank">World<br>Bank</a>, the <a target="_blank" rel="nofollow" href="https://en.wikipedia.org/wiki/United_Nations">United<br>Nations</a>&nbsp;and the World Trade Organization (WTO). Small enterprises outnumber<br>large companies by a wide margin and also employ many more people. SMEs are<br>also said to be responsible for driving innovation and competition in many<br>economic sectors.</p><p><b>1.8<br>ORGANIZATION OF THE STUDY</b></p><p>This research work is organized in five<br>chapters, for easy understanding, as follows Chapter one is concern with the<br>introduction, which consist of the (overview, of the study), statement of<br>problem, objectives of the study, research question, significance or the study,<br>research methodology, definition of terms and historical background of the<br>study. Chapter two highlight the theoretical framework on which the study is<br>based, thus the review of related literature. Chapter three deals on the<br>research design and methodology adopted in the study. Chapter four concentrate<br>on the data collection and analysis and presentation of finding. Chapter five gives summary, conclusion, and<br>recommendations made of the study.</p> <br><p></p>