THE RELEVANCE OF MICRO-FINANCE COOPERATIVE ENTERPRISE DEVELOPMENT A CASE STUDY OF IMO STATE COOPERATIVE FINANCE ASSOCIATION LIMITED ISCFA

ABSTRACT

Against the background of severe and high incidence of poverty in Nigeria, the past Nigeria governments have established institution to ameliorate and alleviate this un-presented poverty in the land.

Among the institutions established by the previous administrations are as follows. Operation Feed the Nation (OFN) of Gen. Obasanjo 1979, Green Revolution of Shehu Shagari, 1982, Structural Adjustment Programme (SAP) of Gen Babangida 1985, Better Life Programme (BLP) of Dr. Mrs. Mariam Babangida, Agricultural Credit Guarantee Scheme fund. Etc, these programmes were aimed at boosting the agricultural production of the citizenry and raising the standards of living of the people.

In spite of all these moves it has been discovered that most small scale enterprises and medium business organizations which cooperative organization belong to, do not have access to adequate financial service.

To this end, the CBN, on 15^th of December 2005, launched a Micro Finance Policy which is also aimed to enhance and boost economic activities of small business.

In this work or study, I shall consider the all importance of microfinance, and how it promotes the activities of cooperative businesses.

TABLE OF CONTENT

TITLE PAGE

CERTIFICATION   ii

DEDICATION   iii

ACKNOWLEDGEMENT  iv

ABSTRACT  vii

TABLE OF CONTENT  ix

CHAPTER ONE  1

1.0    INTRODUCTION  1

1.1    GENERAL OVERVIEW OF THE STUDY  1

1.2    STATEMENT OF THE PROBLEM   4

1.3    OBJECTIVE OF THE STUDY  4

1.4    SCOPE OF THE STUDY  5

1.5    STATEMENT OF HYPOTHESIS  5

1.6    SIGNIFICANCE OF THE STUDY  6

1.7    LIMITATION OF THE STUDY  6

1.8    DEFINITION OF TERMS  7

CHAPTER TWO   9

2.0      REVIEW OF RELATED LITERATURES  9

2.1    THE CONCEPT AND BACKGROUND OF MICRO-FINANCE  9

2.2    MICRO-FINANCE DEFINED  11

2.3    MICRO-FINANCE POLICY AND FRAMEWORK NIGERIA’S PERSPECTIVE  13

2.4    REASONS FOR ESTABLISHMENT OF MICRO-FINANCE BANKS  16

2.5    INSTITUTIONS IN MICRO-FINANCE ACTIVITIES  18

2.6    WHAT IS COOPERATIVE BUSINESS  22

2.7    MICRO-FINANCE AND COOPERATIVES AS FRAMEWORK FOR DEVELOPMENT  23

2.8    CONCLUSION  26

CHAPTER THREE  28

3.0    RESEARCH METHODOLOGY  28

3.1    INTRODUCTION  28

3.2    RESEARCH DESIGN  28

3.3    SAMPLING DESIGN  28

3.4    METHOD OF DATA COLLECTION  29

3.5    PROCEDURE FOR PROCESSING DATA  29

CHAPTER FOUR  32

4.0    PRESENTATION AND ANALYSIS OF DATA  32

4.1    PRESENTATION OF DATA  32

4.2    ANALYSIS OF DATA  36

4.3    DECISION FOR TEST OF HYPOTHESIS  38

CHAPTER FIVE  45

5.0    SUMMARY, CONCLUSION AND RECOMMENDATION  45

5.1    SUMMARY  45

5.2    CONCLUSION  48

5.3    RECOMMENDATIONS  50

QUESTIONNAIRE  54

BIBLIOGRAPHY  57

CHAPTER ONE

1.0   INTRODUCTION

1.1   GENERAL OVERVIEW OF THE STUDY

It has been estimated that there are 500 million economically active poor people in the world operating small scale and medium businesses. Most of them do not have access to adequate financial services.

Microfinance services are financial services that poor people can qualify for. More broadly, it refers to a movement in which as many poor and near-poor household as possible have permanent access to.

Theoretically, microfinance encompasses any financial service used by poor people including those they access in the informal economy, such as loans, from a village money lender. In practice, however, the term is usually only used to refer to institutive and enterprises whose goods include both finance and empowerment of the poor.

The concept of the credit union was developed by Friedrich W. Raiffeisen and his supporters. Their altruistic action was motivated by concern to assist the rural population to break out of their dependence on money lenders and to improve their welfare.

Although much progress has been made, the problem has not been solved yet, and the overwhelming majority of people who earn less especially in rural areas, they lack access to formal financial leverage.

The concept of modern microfinance was developed in 2004 by consultative group to assist the poor (CGAP) and endorsed by the group of eight leaders at the G8 Summit on June 10^th 2004.

(Christian, Robert Peck, Jayadeva, Vena and Rosenbery. Financial institutions with a double bottom line, consultative group to assist the poor from encyclopedia Washington 2004). The practical of microfinance in Nigeria is culturally rooted and dates back to several centuries.

They are mainly of the informal self – help group (SHGs). Rotating savings and credit Association (ROSCAS), savings collectors and cooperative thrift savings societies.

These informal financial institutions generally have limited resources to meet up with the demand. In order to enhance the flow of financial service to Nigerian rural areas, government has in the past initiated a series of publicly financed micro/rural credit programmes and policies targeted at the poor.

Notable among such programmes were the rural Banking programme, Agricultural credit guarantee Selene Fund (AGSF) Nigeria Agric Agricultural Cooperative and Rural Development Bank (NACROB) Nigeria Directorate of employment (NDE), Community Bank (CBS) and family Economic Advancement Programme (FEAP)

In 2000, the federal government merged the NACB, PBN and FEAP to form the Nigeria Agricultural cooperative and Rural Development Bank Limited (NACRDB) to enhance the provision of finance to the agricultural and cooperative sectors.  It also created the National poverty eradication programme (NAPEP) with the mandate to provide material and equipment training.

Though these services have made several impacts in the economy, their activities were short lived due to the unsustainable nature of the programme.