Site icon Premium Researchers

IMPACT OF MICRO-FINANCE SCHEME ON PETTY TRADER

IMPACT OF MICRO-FINANCE SCHEME ON PETTY TRADER

Need help with a related project topic or New topic? Send Us Your Topic 

DOWNLOAD THE COMPLETE PROJECT MATERIAL

IMPACT OF MICRO-FINANCE SCHEME ON PETTY TRADER

Chapter one

INTRODUCTION

1.1 Background of the Study

Most developing countries’ commercial banks exclude the poor and the ultra-poor by implementing stringent loan application requirements.

The demand for commercial banks’ products and services is low among the poor, not because the poor do not want financial services, but because the products and services are not intended to fulfil their needs.

Microcredit was originally designed to address the capital gap left by rural cooperatives and commercial banks. It’s a set of banking techniques designed to make modest loans and accept small savings deposits.

According to Otero (1999), microcredit gives access to capital, allowing the poor self-employed to generate productive capital, protect their existing capital, deal with risk, and avoid capital loss. It aims to establish assets and produce wealth among the poor and extremely poor people.

Microfinance is a phenomena that involves the provision of lending and savings services to low-income individuals. This providing of funds in the form of credit and microloans enables the poor to engage in productive economic activities, thereby increasing their income and alleviating poverty in the economy.

Microfinance has recently become a key priority in most developing nations due to increased knowledge of its potential for poverty reduction, economic growth, and development, as well as an increase in the number of microfinance organisations.

The monetary authority (CBN) is spearheading this drive in Nigeria, and it serves as the sub-sector’s supervisory and regulating body. The funding of the industrialization process, which is a significant priority for Nigerian policymakers, cannot be overstated.

To be successful, any poverty-relief programme requires a viable industrial sector that can support the country’s economic and production processes.

Poverty reduction in the majority of emerging countries in Asia, Africa, South America, and elsewhere is based on the growth of small and medium-sized businesses.

This is owing to these countries’ low technological capacity; the bulk of their citizens participate in low-productivity activities. Economic development in these regions relies heavily on the success of small and medium-sized firms.

The poor’s lack of access to finance choices has hampered the growth and survival of the majority of these businesses, exacerbating poverty in these nations. Improving small-scale production is critical to the development process of a developing economy.

Aside from raising per capita output and expenditure, it improves regional economic balances by dispersing industries and encouraging better resource allocation.

Robust economic growth can be accomplished by putting in place policies that target countries’ poverty. These projects empower people by improving their access to the factors of production, particularly capital.

The provision of microfinance services considerably increases the poor’s potential for entrepreneurship. Financial services allow the poor to engage in economic activities that make them self-sufficient, increase their household income, and help them build wealth.

Thus, the potential of microfinance extends far beyond the micro level, scaling up to address macro-problems connected with poverty reduction.

,

It has been established that microfinance catches parts of popular perception, widening, intensifying, and speeding up the link between poverty alleviation and economic growth.

Schreiner and Colombet (2001, p.339) define microfinance as “the attempt to improve access to small deposits and small loans for poor households neglected by banks.”

According to Olaitan (2001) and Akanji (2001), microfinance techniques include enhanced lending, greater savings, repositories, and other financial services for low-income earners or poor households. Microfinance, simply defined, is a development method that provides microcredit and savings services to small-scale entrepreneurs.

The Olaitan and Akanji perspectives on microfinance are consistent with Schreiner’s explanation of the term. Schreiner (2001) also recommended defining microfinance as “uncollateralized loans to the poor and small-scale entrepreneurs”.

This means that microfinance provides financial support to low-income workers, allowing them to continue with economic activities that can earn them a higher standard of living.

Need help with a related project topic or New topic? Send Us Your Topic 

DOWNLOAD THE COMPLETE PROJECT MATERIAL

Exit mobile version