ASSESSMENT OF MICRO FINANCE BANK ON POVERTY ALLEVIATION IN NIGERIA. A RESEARCH PROJECT MATERIAL ON BANKING AND FINANCE
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Microfinance has gradually developed to be a worldwide movement, no longer being a subject matter of microfinance practitioners alone. Governments, donors, development agencies, banks, foundations, corporations, business communities, civil societies, researchers, universities, consultants, philanthropists and others are taking an increasing interest in it (Sale Huddin and Hukinil, 2004).
The increasing level of acceptance of microfinance among the various groups of stakeholders worldwide presents the following questions: is microfinance becoming popular because it is a good business to make money or is it a powerful tool to fight poverty or is it because of both (Annibale and Bob: 2006). Since the concept was born is Bangladesh almost three decades ago, microfinance has proved its values in many countries, as a weapon against poverty and hunger. It really can change people’s live for the better, especially the lives of those who need it most (Ashmawians El-fouadh: 2006) it has been evidenced worldwide that microfinance helps the poor to overcome poverty and not through charity. It is a financial system that serves the poor with financial services in a most effective and productive way.
The experience of many microfinance institutions so far strongly suggests that it is possible for the institutions to reach the goal of serving people in extreme poverty without having to sacrifice their profitability. This is mostly because microfinance is designed with the poor in mind, while at the same time being founded on market principles of competitiveness, pricing and sustainability. There is nothing wrong in earning money while serving the poor, as long as earning money does not become the prime or the only goal of microfinance providers. Microfinance institutions throughout the developing world are proving small loans to the poor for self-employment and providing to be sustainable enterprises in the fight against poverty (Daley – Harris: 2006).
The global picture regarding microfinance outreach is quite impressive from a mere 7.6million poorest families in 1997, the micro-credit of more than 92million clients by December 31, 2004, this number includes 66.6million families who were among the poorest when they started with a program (Adams and Ivatury: 2004): of these 66.6million poorest clients, 55.7million or 83.6% were served by the 52 largest individual institutions, all with 100,000 or more clients. Among these largest microfinance institutions, 79% is in Asia, 17% are in Africa and only 4% are in Latin America.
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