IMPACT OF MICRO CREDIT SCHEME ON POVERTY ALLEVIATION POLICY IN NIGERIA.
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IMPACT OF MICRO CREDIT SCHEME ON POVERTY ALLEVIATION POLICY IN NIGERIA.
Chapter one
BACKGROUND FOR THE STUDY
1.1 Introduction
Many developing countries recognise microcredit as an effective tool for poverty reduction. According to numerous research, microcredit programmes have increased incomes while also promoting gender empowerment, improved nutrition, higher educational attainment, and decreased consumption variability.
Human livelihoods are marked by a stark contrast of growing disparities between the rich and the destitute. Poverty alleviation has consequently emerged as one of the most pressing issues confronting policymakers in many developing countries. Financial services for low-income households are thought to eliminate poverty by transforming social and economic infrastructure (Morduch, 2000).
However, there is limited evidence and debate about whether microcredit would contribute more to poverty reduction or small and micro enterprise development in most developing countries than investments in social and economic infrastructure.
It has continued unchecked despite numerous commendable efforts aimed at alleviating it. Furthermore, the country was placed 142nd in human development. Thus, poverty has become a key concern for development specialists and international organisations.
Poverty levels and incidence have risen since the 1989 Structural Adjustment Programme (SAP) was implemented. According to reports from UNDP (2010), the Federal Office of Statistics (2001), and the World Bank (2001), the frequency of poverty increased from 28.1% in 1980 to 43.6% in 1985, and 65.5% in 1996.
The UNDP Human Development Report from 1990 defined Nigeria as a prosperous country with a poor population, as well as the poorest and most impoverished OPEC country (UNDP, 2010).
Furthermore, the country was placed 152nd in human development. Aside from the rise in poverty rates, the population of the poor has grown.
According to a report from the Federal Office of Statistics (2001), the percentage of the core poor climbed from 62% in 1980 to 93% in 1996, while that of the moderately poor increased from 28.9 to 36.3% during the same period.
The percentage of income spent on consumption reflects the depth and severity of poverty. The core and moderately poor spent 75 and 73% of their total income on spending, respectively, whilst the non-poor spent only 53%.
This is essentially an indication that the economy is still in its early stages.
It goes without saying that poverty is the bane of rural development in terms of development, standard of living, efficiency, and labour production.
Rural communities suffer from social, economic, cultural, political, and environmental deprivation. Among other things, rural areas are plagued by a vicious cycle of poverty, which includes low income, poor productivity, low saving, low capital formation, low investment, and a return to low productivity.
One of the most pressing issues facing rural development is a shortage of rural loan facilities from formal financial institutions due to their inability to offer adequate collateral assets.
On the other hand, lending facilities from the informal sectors are frequently accompanied by high interest rates, making them unattractive for poor small holders.
As a result, the implementation of microcredit in rural areas will go a long way towards breaking the cycle of poverty and so accelerating rural development.
1.2 Statement of Research Problem
To achieve substantial progress in poverty reduction, there must be a significant increase in the creation of microcredit in order to expand business in the country.
Microcredit is one of the most effective methods for poverty alleviation since it lowers operational costs and increases competition in small and medium-sized businesses.
The introduction of microcredit has resulted in a greater emphasis on poverty alleviation for low-income individuals than ever before. The difficulty so arises.
How can we articulate microcredit as a key tool for strengthening poverty alleviation operations, and will this result in the expansion of small and medium-sized firms in the economy? This is the i:pSion that the researcher will address in following chapters.
1.3 Object of the Study
The purpose of the study is to review the impact of microcredit on poverty alleviation in Nigeria. The study’s objectives include:
(i) To give thorough knowledge on the process of acquiring and using (IT) gadgets in Nigerian poverty reduction policies in Ijaye Local Government Area.
(ii) Determine the benefits or drawbacks of using microcredit to implement poverty reduction policies in Nigeria.
(iii) To investigate the impact of microcredit on the implementation of Nigeria’s poverty reduction policies.
1.4 Conceptual Framework of Microcredit to Poverty Alleviation Policy.
In this atmosphere, we introduce microcredit. While we are unsure about the underlying innovation behind microcredit, we see it as a collateral-free institutional loan to jointly liable poor members for self-employment and income production.
In theory, everyone has access to microcredit because we model it for the entire economy. However, because the wealthy already have access to funding beyond the micro credit and micro finance limits, micro credit effectively expands the options available to the poor, who have low poverty alleviation productivity. Other services, such as savings, insurance, and payment, may not be included in microcredit.
1.5 RESEARCH QUESTIONS.
The study effort tends to ask the following question about the usefulness of microcredit in poverty alleviation policies.
(i) How would microcredit effect the performance of poverty reduction policies in Lagos State’s Ifako Ijaye Local Government Area?
(ii) Will microcredit have a meaningful role to play in poverty alleviation policies in the Ifako-Ijaye Local Government Area of Lagos State?
(iii) Will microcredit be an important tool in improving poverty alleviation policies in Ifako Ijaye Local Government Area, Lagos State?
1.8 Research Hypothesis
Hypothesis is frequently characterised as hypothesis, a presupposition taken for the sake of argument, a theory to be proven or rejected by reference to data, and a provisional expiration of anything.
As a result, for the purposes of this study, the following hypothesis will be investigated to determine the impact of microcredit on poverty alleviation policies.
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