THE ROLE OF FINANCE ON THE GROWTH OF SMALL-SCALE ENTERPRISES IN NIGERIA(A CASE STUDY OF OCTPUS MICROFINANCE BANK IN OJO LOCAL GOVERNMENT AREA)

ROLE OF MICROFINANCE BANK IN SMALL AND MEDUIM SCALE BUSINESSES

(A CASE STUDY OF OCTPUS MICROFINANCE BANK IN OJO LOCAL GOVERNMENT AREA)

CHAPTER ONE

ABSTRACT

Thestudyprovidedetailedunderstandingtothe role of microfinance insmallandmeduimscalebusinessatoctpusmicrofinancebankojolocalgovtarea.Chapteronedealswiththegeneralintroductionthechaptercontainsthescopeandthelimitationoftheproject,etcchaptertwocoversareviewofrelevantliteratures.Chapterthreepresentresearchmethodology,researchtechniquesandsamplingproceduresthatdataareanalysedinchapterfourtoseeandevaluateandcalculate.Chapterfivedrawnsummaryandconclusionoftheprojecttogetherwithsuggestedremediesandrecommendations.

INTRODUCTION
1.1 Background to the Study

Theconceptofmicrofinanceisnotnewinnigeriabecausetherehasalwaysbeenthetraditionofpeoplesavingtakingsmallloanfromindividualandgroupswithincontextofselfhelptostartbusinessonfamilyventures.

FISRTCREDITUNIONINAFRICAwasestablishedinnorthern(GHANA)in(1955)byCanadianCatholicmissionaries.

Howevethe(SUSU)whichisoneoftheschemesstartedinNigeriaandspreadtoGhanaintheearly20thcentury.Theobjectivesofmicrofinanceamongotherarethatthepoor,mostlywomenbecauseoftheirengagementinunpaidworkneedaccesstoproductiveresourceswithfinancialservicebeingakeyresources.Thesectorischaracterizedbypeopledominanceandlackofaccesstocreditfromtraditionalsecurity.Thereforetheeffectivenessofanymicrofinanceschemeorprogrammeshouldbeassesedbasedonhowitasbeenableempowerpeopleeconomically,politicallyandsocially.

1.2     STATEMENTOFTHEPROBLEM

1.Lackofaccesstomicrofinanceinstitutionhindersmallbusinesstoengageinnewbusinessventure.

2.Smallbusinesseslargelydependonfinancesfromtheproprietors.

3.Thesourceoffinanceissomethingonirregularornotreliable.

4.Unabletokeepproperrecordandunabledistinguishprofitfromworkingcapital.

1.3     RESEARCHQUESTIONS

i.Towhatextenthavethemicrofinanceinstitutionssupportedtheoperationsofsmallscalebusiness?

ii.Arethesmallscalebusinessesmakinggooduseoftheiradvances?

iii.Towhatextenthavesmallscalebusinessesbenefitedfromthecreditschemedesignedforthem?

1.4     HYPOTHESIS OF THE STUDY

HypothesisI

HO=Thereisnosignificantrelationshipbetweensmallscalebusinessandmicrofinancebank.

HypothesisII

HO=smallscalebusinessesarenotmakinggooduseoftheiradvancesfrommicrofinanceinstitutions

HypothesisIII

HO=theloangivenoutbymicrofinanceinstitutionshasnotimprovedthegeneralPerformanceofthesmallscalebusiness

HypothesisIV

HO=smallscalebusinesseshavenotbenefitedfromthecreditschemedesignedforthembymicrofinanceinstitutions

1.5     OBJECTIVE5OFTHESTUDY

ThegeneralobjectiveistoexaminetheroleofmicrofinanceinstitutionsinsmallscaleandmediumscalebusinessesinOJOlocalgovernment.Apartfromtheobjective,theresearchworkalsoaimedatthefollowingobjectives:

Tofindoutextenttowhichthemicrofinancebankhavesupportedthesmallscalebusiness?

Tofindouttheextenttowhichthesmallscalebusinessesbenefitedfromthecreditschemedesignedforthembymicrofinanceinstitutions.

Tofindoutifthesmallscalebusinessaremakinggooduseoftheiradvances.

1.6     SIGNIFICANCEOFTHESTUDY

Therelevanceoftherolesplayedbymodernmicrofinanceinstitutionscannotbeoverlooked.WhentheobjectivesofthisstudyareachieveditwillgoalongwaytocreateawarenessamongsmallandmediumentrepreneursabouttheexistenceofMFIsaswellascorrecttheperceptionsofsmallandmediumentrepreneursthathaveunfoundedreservationsabouttheoperationsofthemodernMFIs.

1.7     SCOPEANDDE.LIMITATIONSOFTHESTUDY

Microfinanceinstitutions(MFIs):aredesignatedfinancialinstitutionsdedicatedtoassistingsmallenterprises,thepoor,andthehouseholdswhohavenoaccesstothemoreinstitutionalizesfinancialsystems,inmobilizingsavings,andobtainingaccesstofinancialservices.(Elahietal2004).

Smallmediumscale:thisisanoutlinewhichrequiressmallamountofcapitalandhassomereasonablenumberofemployees.(Anderson1998).

Microfinance:isdefinedastheprovisionsofverysmallloans(micro-credit)tothepoor,tohelpthemengageinnewproductivebusinessactivitiesand/ortogrow/expandexistingones.(Kimotho,2005).

Smallmediumscale:thisisanoutlinewhichrequiressmallamountofcapitalandhassomereasonablenumberofemployees.(Anderson1998).

Microcreditisbroadlyrecognizedasthepracticeofofferingsmall,collateral-freeloanstomembersofcooperation’swhootherwisewouldnothaveaccesstothecapitalnecessarytobeginsmallbusinesses(Hossain,2002).

1.8LIMITATION OF THE STUDY 

The study was limited by both time and financial constraints. In view of this data was not collected from all areas in Ojo but cluster that fairly represent the population. In the process of carrying out this research, some constraints are identified these include. The unwillingness of microfinance bank to release relevant information ( fact and figure ) of individual amount of small scale businesses.   

CHAPTER TWO
LITERATURE REVIEW
2.1     INTRODUCTION

The chapter examines the basic theories and models underlying the subject of microfinance.

Hence, the reviews of literature on theories that constitute microfinance as a policy and theories that explain microfinance as a concept will be carried out in this chapter.

Again the chapter contains the review of similar and related works done by different scholars, with regard to financing of small scale business by microfinance institution in Nigeria.

Also it contains the overview of microfinance activities in Nigeria, the various microfinance models, the summary of microfinance policy, the roles of small scale businesses, the roles and challenges of microfinance institutions.

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