Abstract
This study examines the problems and prospects of MFLS in Nigeria. The importance of MFLS in Nigeria’s economy cannot be over-emphasized; this is because it plays a vital role in the financial intermediation process and also the lives of the low income earners who constitute over 70 percent of the Nigerian population. The sample size used at random selection is 262, and the simple random sampling technique will be used in selecting the sample. The objectives of this study is to mobilize savings for intermediation, to render payment services, such as salaries, gratuities, and pensions for various tiers of government. Percentage was used to analyse data collected and it was found that the outreach performance (financial and otherwise) of MFLS is discouraging and MFLS in Nigeria experience varying degree of problems. The following findings were; that microfinance banks stand the chance of surviving the banking heat or competition going on in Nigeria because of loan. That C.B.N staff as a result could not adequately keep to the regularly monitoring and supervision of microfinance bank. Some recommendations were made, prominent amongst, which was that C.B.N should breast up to their function, which is imperative to the survival of the microfinance by: employing adequate staff that will enable adequate and regular monitoring and supervision of the microfinance banks so that this microfinance bank not die immediately after conception.
CHAPTER ONE
INTRODUCTION
1.1 Background of the Study
In this chapter the following subheadings will be reviewed, background of the study, statement of problems, objectives of the study importance of the study research questions, scope of the study, limitations of the study, definition of terms.
Microfinance as a specialized scheme aims at providing funds in form of loans to poor households who are mainly small savers that cannot afford obtaining loans from money deposit banks or other money lending institutions microfinance has been proven to be an effective and powerful tool for poverty reduction. It has sufficiently penetrated the poorer states of society especially in developing countries, though not rampant in Nigeria yet.
The microfinance policy was introduced in exercise of the powers conferred on the Central Bank of Nigeria (CBN) by the provisions of section 28, sub section (16) of the CBN Act 24 of 1991. the policy recognizes existing informal institutions and brings them within the supervisory purview of the (CBN) creating a platform for the regulation and supervision of microfinance banks through specially crafted Regulatory Guidelines. Though the microfinance policy and framework was launched on December 15th, 2005 which saw an unprecedented rise in microfinance institutions in Nigeria financing in micro set-ups is a practice that was culturally rooted and dated back to many centuries in Nigeria. These were in the form of self-help groups, rotating savings, co-operative set-ups (still existing) and money-lending activities. All these were means of getting access to credit and finances. Subsequently, most of these self-help groups grew into recognized community banks while some community banks were products of government programmes, most came into being through self-help gathering. The government induced community bank was an attempt to reduce the people’s poverty. But like all other government’s pro-poor projects, it also failed.
In 1986 Gen Ibrahim Babangida came and established Directorate of foods, Roads and Rural Infrastructure (DFRRI) to accelerate rural development under his regime, various projects such as the Peoples Bank of Nigeria as well as the Community banks were established.