ROLE OF MICROFINANCE BANKS IN THE ECONOMIC DEVELOPMENT OF NIGERIA
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1.1 GENERAL BACKROUND OF THE SUBJECT MATTER
Scriptural looking into the Bible when God created Man, He left man with a divine injunction as rewarded in the Holy Scripture, which Says, be fruitful and multiply and replenish the earth and subdue it, and have dominion over the fish of the sea and of the air.
And every living thing that moves upon the earth (Genesis 1.28) was the command. The wheel of change has been rolling on throughout the entire world transforming virgin lands, desert, ocean and sea to economic advantage of Man. Nigeria was unknown then.
The first step in the British acquisition in Nigeria Ondon who later becomewas the annexation of Lagos in 1861. This marked the first step taken by the British Government in the 19th century to acquires economic and political domination over the people of Nigeria.
The Hunder land of Nigeria north of Lokaja was being administered on behalf of the British by a Government had declared a protectorate over areas cleared by the land company in 1887. Then on January 1990, it took over direct administration of the area from the Royal Niger Company and named it the protectorate of Northern Nigeria with Lugard as its first High Commissioner. This great political unit was christened “Nigeria” in 1990 by “Floral Show” Forum colonial correspondent of the times of London who later become Lugards Wife (Onwubike 1973). Lastly the two separate Government in the colony and the defectorate of southern Nigeria and the protectorate of Northern Nigeria were alonagated as the colony and protectorate of Nigeria on January 7 St 1914, Lugard became the Nigeria first Governor General. He continued in the March towards development in every fact of life as a new emerging nation. In the West African region and by October 1st 1960, Nigeria was further granted with a follow- up step by its political freedom and emancipation when she was granted an independent status. She was also granted the Republican status in 1963.
Furthermore, the plans for the growth and development of Nigeria was granted in one year 1970 – 1974 but was extended to one year 1975 in the third month and experienced a lot of problems. Recovery from one civil war displayed one implementation of some project. The fund that were anticipated were not forth coming and there was a lack of technical partners needed to carryout some aspect of the plan (Anderson 1976). Also came the third development plan. The plan covered a period of 5 years consecutively 1975 – 1980. The principal long – run objectives are similar to those of the proceedings past independent plans.
The objectives are to make Nigeria.
(a) A great and dynamic country.
(b) A united, strong and self- reliant nation.
(c) A just and exaltation society.
(d) Aland of bright and full opportunities for all citizens.
(e) A free and democratic society.
A 9% per annum rate of growth of Gross Democratic Party (GDP) was assumed for the plan period and the total consumed and capacity invested was to be N30 Billions, the plan strategy was to utilize the country’s resources to develop the production capacity of the economy. The plan was received up wards in 1976 (Ojo 1982). Some of its highlights of these plans were agricultural N1.400 million. The building of the two new oil refineries at Warri and Kaduna while the one at Port Harcourt was to be expanded. The iron and steel industry with features in both the previous plan was to be established at Ajaokuta in Kwara
State. A total of N6000 millions allotted to the industrial sector. Development of the infrastructures also took a large shy with a total of N4000 millions being allotted. More roads were to come under the control of the Federal Government (F.G) and a modernization of the railways was planed. The electricity capacity was to be extended to 1500 megawatts with N 2000 million going to education, while health services were to be expanded =N=2400 million were budgeted for armed forces (Anderson 1976).
The forth plan lasted for 4 years 1981 – 1985 and it described adequately the development of Nigeria.
Development could be defined as a displayed discipline which is the mooing force behind the socio – economic transformation of society.
Most micro financeleaders saw development as more provision for schools, health centers, hospitals, post offices, town halls, churches, mosques, good roads, portable waters electricity and telephones (Ewulu 1996). However, in the post-independent era, the development process came to put more emphasis on the improvement in the “materials” condition and living (of man) through the use of resources available to him. In other words, development came to stress production and productivity.
Some of the indications of development are as follows:
1. Economics power (per capita income)
3. Savings investment
4. Level of literacy
5. Rural population
6. Nature/ Systems of Agricultural production
7. Quality of goods (1996)
Subsequently, several programmers and strategies have been actively encouraged, promoted and supported by the government amongst which are as follows:
1. Various agricultural development programme operation feed the Nation (O F N). Green Revolution, National Acceleration Food Project (NARFPP) and the Agricultural Development Project (ADP).
2. Directorate of Food, Roads and Rural Infrastructure (DFRRI).
3. The promotion of co-operatives:
4. Agricultural Credit Government Scheme and,
5. Rural Banking Policy.
The transformation of country into an economic giant has engaged the attention of successive Nigeria government through the listed economic efforts and various developing plans.
1.2 PROBLEMS ASSOCIATED WITH SUBSECT MATTER
Despite all the institutional frame work put in place and the above development in Nigeria, the giant stride expected to be made in the economical development have been abysmally low and the situation has been yearning for a well laboured attention.
The oiling rehabilitating and growling rate of development economically has caught the attention of the researcher and prompted her into making statements, she visualized that the problems acting is a load in the wheel of economic progress of Nigeria.
Since Nigeria detached itself from the dominion of British rule in 1960 by using politically independent, it has not detached from British in terms of policy formation and articulations. Most of the policies embarked upon from 1960 even to greater extent today are fashioned after the British modalities.
1. Some of the economic policies initiated are being done, obvious of the fast that other co-operating restitution that will be argue in the development are not yet in place like micro financeBanks that will address adequately the need of the realities which are integrated parts of the geo-political entity called Nigeria.
2. Where the banks exist or existed they could not as an economic catalyst because some of the reasons of inadequate collaterals or to some on right lack of collateral to pledge against the loan being sought.
3. Some of the economic development policies being vigorously and also religiously pursued seen the side treat in the rural areas where he 65% - 70% of the population resides.
4. Another problem observed then was that, it has been in link up to full realization of our economic dreams in improper re-appraisal of the lapsed policies with a view to know the difficult areas in terms of meeting the envisioned target.
5. Other problem is to the transformation of Nigeria into a strong viable and reliable, a robust economic collision dreamed is the death of banking habit or culture among the citizens.
The chemically of role funds from the surplus sector of the economy to the deficit could not be made. These worries were trying follow in a pillow or banned aground in various homes.
6. Lastly, another problems in the economic development of Nigeria is the topside economic concern various orthodox banks station in the rural areas act as cash centers and the funds mobilized are not ploughed into development. The areas rather they are reputed to the township head office for onward lending to beneficiaries outside the catchments areas from where the said funds were mobilized.
1.3 IMPORTANT OF STUDYING AREA
With decree 46 of 28th April 1990 establishing micro financeBanking System. It marked another landmark in the annual of Nigeria Economic development. The researcher has the under listed purpose when venting to address the issues of micro financebanking System in Economic Development of Nigeria.
a) To know the extent the establishment of micro financebanking system wills galvanize economic development in Nigeria.
b) To ascertain thinking trend of doming influence of “Few money bag” in the conventional banks have been put to list by micro financedevelopment association. Having a controlling share of 30% of the called and fully paid up sharks capital.
c) To determine to what extent funds guaranteed from the rural areas are extended to them to subsidies economic development in these areas.
d) To assess how personal reorganization to collateral has succeeded in leading people into taking loan to generate economic activity.
e) To asses how adequately it has utilized the provision of section 4:1:12 of the revised micro financebank prospectus which read “perform non-banking functions that promotes grass root development such as supporting individuals co-operate and group formation activities assisting clients in making of agriculture, in rural individuals and others products and providing financial and other extension chart and other micro financemembers.
f) To determine to what extent the banking of micro financebanking system as contain in sector 4:1:13 of caused micro financebank prospects which read inter ales “shall not engage in soplusticated banking services like foreign exchange transaction or international micro financepapers, corporate finance in order to enable them retain their local focus and concentrate on micro financeservices will determine economic development in Nigeria.”
g) Ascertaining the impacts of central Banking of Nigeria (CBN) and other financial institution Decree (BOFID) and companies allied matters Act (CAMA) on the micro financeBanking system in its vowed determinant to coach this country into economics.
h) To re-appraise the negative input of non-provision of a centre clearing house for the micro financebanking system in the economic development training in Nigeria.
i) To know to what extent the unfriendly disposition of the conventural banking system terms of shifting bank charges for service reudened to these micro financebanks will be another barricade in the movreh to a new economic down for Nigeria.
j) Finally, to evolutes how the funds of the micro financebanks trapped in the distressed commercial merchandise and financial house has been putting legs of economic development art from moving at the expected pace.
1.4 IMPORTANT TERMS
This research work may be of valuable assistance to individuality managers of financial institutions, small and medium scale industrialist policy makes and other researcher in this field.
Some of the affendant benefit include the following; Industrialist, small and medium scale industrialist will be able to see micro financebanking system as another source of financial at its disposition, which they had hither to been ignorance of.
To the managers of financial institution including orthodox banks. It will expose to them how unfriendly by disposition to this micro financebanking system in terms of change or services affected on their behalf will geopardize the dream of a giant economic nation. Also, it will expose how miss- appropriation of placement made in these institution by micro financebank have adversely affected, since a lot of them have closed shops as a result of illegitimatize occasions by distress syndromes that has set a shifting hand into the banking sector.
To the policy, it will act as an eye opener, so that when policies are being made, it should be well articulated and every minutes detailed built in so, that such policy should be avoided to loose – ends. Such loose-ends and in articulated policy characteristics of the micro financebanks decree is the non- provision of clearing house of the micro financebanking system which left them and the many of the micro financebanks, in item of detrimental charges handed down to them.
To student, researchers and those which curiously and injury wound. It will extend itself as a pedestral or subtraction upon which expansionary and follow up study offering courses on micro financebanking, it will be added to the words of literature available for references.