THE SOCIAL AND ECONOMIC SIGNIFICANCE OF

MICROFINANCE INSTITUTIONS IN NIGERIA TOWARDS

ECONOMIC SELF-RELIANCE

BY

OBUSEH AMBROSE ONYISI

MGS0609960

DEPARTMENT OF ACCOUNTING
FACULTY OF MANAGEMENT SCIENCES
UNIVERSITY OF BENIN
BENIN CITY.

DECEMBER, 2012.

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 THE SOCIAL AND ECONOMIC SIGNIFICANCE OF
MICROFINANCE INSTITUTIONS IN NIGERIA TOWARDS
ECONOMIC SELF-RELIANCE

BY

OBUSEH AMBROSE ONYISI

MGS0609960

BEING A PROJECT WORK SUBMITTED TO THE DEPARTMENT

OF ACCOUNTING, FACULTY OF MANAGEMENT SCIENCES,
UNIVERSITY OF BENIN IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS OF THE AWARD OF BACHELOR OF SCIENCE
(B.Sc) IN ACCOUNTING, BENIN CITY.

DECEMBER, 2012.

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 DECLARATION

I hereby declare that:

1.) This project work is based on the study undertaken by me in the

Department of Accounting, University of Benin, under the

supervision of Mr. Eriagbe

2.) This work has not been previously submitted for the award of degree

elsewhere, at least to the best of my knowledge.

3.) All ideas, opinions and views are products of my personal research

and where the views of others have been expressed, they have been

duly acknowledged.

_______________________________
OBUSEH AMBROSE ONYISI

_____________________
DATE

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 CERTIFICATION

We the undersigned, do hereby certify that OBUSEH AMBROSE

ONYISI carried out this research and that the work is adequate in scope and

quality for the partial fulfillment of the award of Bachelor of Science Degree

in Accounting of the Department of Accounting, University of Benin.

____________________ _______________________
J.P. OTAKEFE MR. O.J. ILABOYA (FCA)
Project Supervisor Project Coordinator

Date: ________________ Date:_________________

_________________________
DR. A.O. ENOFE
Head of Department

Date: ____________________

iv
 DEDICATION

I dedicate this project work to God Almighty for his everlasting love,

care, guidance and protection throughout my stay in University of Benin.

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 ACKNOWLEDGEMENTS

My most sincere gratitude goes to God Almighty for making this

project work a success.

I am grateful and thankful to Almighty God for his protection and

guidance through out my educational programme and for his continues

blessings.

My greatest appreciation goes to my supervisor J.P. Otakefe for his

constructive criticism and encouragement which made this project a reality.

I am also grateful to the entire Accounting department for giving me

the opportunity to carry out this study.

My regards also goes out to all well wishers, for giving me the much

needed physical and moral support during the course of my studies, they

include Aninye, OnyebyGod, Austin and others who I did not mention,

thanks to you all.

Lastly to the entire staff of Boji-Boji Microfinance Bank, Agbor Delta

State, who assisted me through out my research, without you this entire

project wouldn’t have been completed. Thank you all.

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 TABLE OF CONTENTS

Title Page - - - - - - - - - ii

Certificate - - - - - - - - - iii

Dedication - - - - - - - - - iv

Acknowledgement - - - - - - - - v

Table of Contents - - - - - - - - vi

Abstract - - - - - - - - - vi

CHAPTER ONE

1.1 Introduction - - - - - - - 1

1.2 Statement of Research Problems - - - - - 6

1.3 Objectives of the Study - - - - - - 7

1.4 Statement of Research Hypotheses - - - - 9

1.5 Significance of the Study - - - - - - 10

1.6 Scope And Limitation of the Study - - - - 11

CHAPTER TWO: LITERATURE REVIEW

2.1 Evolution of Microfinance - - - - - 13

2.2 Microfinance Institutions in Nigeria - - - - 17

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2.3A Informal Microfinance System in Nigeria - - - 18

2.3 B Formal Microfinance System in Nigeria - - - 21

2.4 The Need for Microfinance Institutions - - - 27

2.5 Microfinance and Poverty Alleviation - - - - 30

2.6 Microfinance in Livelihood Security - - - - - 35

2.6.1 Social Impact Analysis of Microfinance Projects - - - 38

2.7.1 Microfinance in Reaching the Poor - - - - 40

2.7.2 Microfinance Institution and Financial Sustainability - - 42

2.8 Challenges Facing Microfinance Institutions in Nigeria - - 46

2.9 The Roles and Responsibility of Stakeholders in Microfinance

Institution in Nigeria - - - - - - - 48

CHAPTER THREE

3.1 Introduction - - - - - - - 64

3.2 Research Design - - - - - - - 64

3.3 Research Population - - - - - - 65

3.4 Sampling Procedures - - - - - - 65

3.5 Sample Size - - - - - - - - 65

3.5.1 Sources of Data - - - - - - - 66

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3.6 Research Instrument and Field Work - - - - 66

3.7 Data Presentation - - - - - - - 68

3.8 Method of Data Analysis - - - - - 68

3.9 Model Specification - - - - - - -- 68

CHAPTER FOUR

4.1 Introduction - - - - - - - - 71

4.1.1 Interpretation of Graphical Result - - - - 74

CHAPTER FIVE

5.1 Summary of Findings - - - - - - 79

5.2 Conclusion - - - - - - - - 80

5.3 Recommendations - - - - - - - 82

Bibliography - - - - - - - 86

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 ABSTRACT

This paper studies the social and economic significance of

microfinance institutions in Nigeria towards economic self-reliance.

The research was prompted by the fact that all Eyes are focused on the

fast and quick ways to set the economy up and go so as to enable Nigeria

compete in the International Market and Standard, and at doing this, the

basis for boosting any economy has been neglected and almost forgotten.

Also it is an obvious fact that the major problem facing Small and Medium

Scale Enterprises in Nigeria is inadequate finance hence this neglected parts

refers to the simple and slow but tremendously effective ways of achieving

economic growth and development. Microfinance is one of such way. The

goals to achieve through this research work are as follows:

1) To show the present level of contributions to Nigeria’s economic

self-reliance Microfinance Institutions.

2) To show the growth trend of Microfinance Institutions.

3) To find out the impact of microfinance institutions on the

Expansion of Small and Medium Scale Enterprises (SMEs) in

Nigeria.

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4) To disclose the problems and challenges constraining the

effectiveness of Microfinance Institutions in Nigeria.

5) To show the extent to which the poor and small scale enterprise

have embraced and utilized the products and services offered by

the microfinance institutions in Nigeria.

6) To examine and disclose the possible future for Microfinance

Institutions in Nigeria.

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