Microfinance and Poverty Alleviation in Southwest Nigeria: Empirical Evidence

Abstract

In order to alleviate poverty and improve the living standard of the people of South-West Nigeria, it is imperative that micro/small financial services such as credit, insurance, money transfer, etc. are provided in order to engage them actively in productive activities. Globally, there are several failed policies by governments, particularly in Nigeria over the years aimed at poverty alleviation. This study examines microfinance scheme towards the dispersion of credit amongst the working poor; draws from the data collected from field survey and these were reported using tables, frequency counts and cross-tabulations to draw inferences and a loan demand model was specified and estimated using the Ordinary Least Squares (OLS) econometric technique.The study used cross-sectional data collected from selected respondents in selected areas of both the Lagos and Ogun States of Nigeria respectively. The study found that majority of the Microfinance banks in Nigeria are model after the Grameen Bank which is aimed at the poor and people with basic, little or no education and that loan demand is interest rate insensitive. Therefore, MFIs should design appropriate products that are flexible enough to meet the different needs of the poor for both production and consumption purposes. Besides, governments (local, state and Federal) should urgently tackle the infrastructural gaps such as electricity, water and efficient transportation system which impact greatly on the standard of living of the people.

Impact of Microcredit on Employment Generation and Empowerment of Rural Women in India

“…Microcredit supports to finance self-employment activities that most often complement income for borrowers rather than drive fundamental shifts in employment patterns (Morduch 1999). Moreover, Taiwo (2012) observes that microfinance influences on various dimensions of the borrowers’ lifestyle, from building up savings habit, employability and income generation, and growth of microenterprises among the small and microentrepreneurs in Nigeria.…”

“…The above literatures support the fact that MFIs do have a positive supportive role among the borrowers and in the society as well (Shankar 2013). It helps reduce poverty (Christabell and Raj 2012; Park and Mercado 2015; Taiwo 2012) and also acts as a way towards economic betterment (Adhikari and Shrestha 2013; Pathak and Gyakali 2010). Beyond that, it also helps to bring down another crucial issue, that is, women empowerment (Lakwo 2006; Loice and Razia 2013).…”

Does Access to Formal Finance Matter for Welfare and Inequality? Micro Level Evidence from Nigeria

“…Among the main supply side constraints are infrastructural bottlenecks, including roads, electricity and internet. Yet, aside from a few qualitative analyses and a handful of empirical studies, mostly conducted at the macro and state, regional and sectoral level (Aliero and Ibrahim, 2012;Ihugba et al, 2013;Taiwo et al, 2014;Yinusa, 2015) little rigorous and comprehensive effort has been made to explore the precise identity of excluded households and the determinants of their exclusion, as well as the welfare implications of exclusion from the formal financial sector.…”

Contribution of Micro-Finance on Socio-Economic Development of Rural Community

“…For example, these poor peasants might have more family members willing to help in agricultural farming. But if they cannot afford improved crop varieties and better farm inputs, therefore, becomes inefficient and unproductive (Taiwo, June, 2012). Many governments and donor agencies regard that lack of financial services as one of the most important factor hindering poor households from efficient and successful production.…”