A Study of the Microfinance Institutions and Their Effects on Fun...

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A Study of the Microfinance Institutions and Their Effects on Funding of Small Scale Enterprises in Edo State

By | Jan. 2013
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A STUDY OF THE MICROFINANCE INSTITUTIONS AND THEIR EFFECTS ON FUNDING OF SMALL SCALE ENTERPRISES IN EDO STATE BY AMADASUN ESE INTRODUCTION One factor inhibiting the attainment of development goals in less developed countries is the populace’s general inability to access factors of production, especially finance. This limits the entrepreneurial ability of the people, especially the poor. Consequently, potential employment opportunities and household prospects for creating wealth and improving income are lost. Microcredit has been one framework adopted to address this problem. Its evolution reflects acknowledgement of credit market failures especially in the formal financial sector. There has been, therefore, a shift from the formal financial sector to microfinance Micro finance practice has had a long history in Nigeria and Africa as a whole, long before economist and world financial analyst recognized it as weapon against poverty. The practice of micro finance in Nigeria is as old as man; it has been a long-term practice in our context. It is mostly practiced in less developed countries, where per capita income is very low. In the mid twentieth, theorists were concerned over the poverty and process of development with specific attention on “under developed nations” as developing countries were then tagged. According to the World Bank’s World

Development Report 1999/2000: Entering the 21st century, in 1998, about 1.2 billion people 24 percent of the population in developing and transition economies lived on less than $1 a day. In 1999, 4.5 billion people of 75 percent of the world’s population lived in low-and-lower-middle income economies. Of these, 2.4 billion were from low income economies with an average annual Gross National Product (GNP) per capita of $410, while 2.1 billion lived in lower middle income economies with an average annual GNP per capital of $1,200 (World Bank, 2000/2001). W.W. Rostows, a leading proponent on state of progression or growth,...