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THE ROLE OF
MICROFINANCE BANK IN ECONOMIC DEVELOPMENT IN NIGERIA
CHAPTER ONE
INTRODUCTION
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)
2. Employment
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.
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