IMPACT OF MICROFINANCE BANKS ACTIVITIES ON POVERTY ALLEVIATION IN NIGERIA 1993 – 2012

IMPACT OF MICROFINANCE BANKS ACTIVITIES ON POVERTY ALLEVIATION IN NIGERIA 1993 – 2012

ABSTRACT

The fight against extreme poverty has been at the front burner of global discourse for a very long time. Poverty is deemed as a state of deprivation but more specifically, where an individual or group has insufficient income for securing basic goods and services. Microfinance has been globally acknowledged as a vehicle that drives the poor out of extreme poverty zone. This study set out to examine the impact of microfinance banks activities on poverty alleviation in Nigeria. Annualized time series data for 20 years, covering the period 1993-2012, were collated from the Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS) and National Population Commission (NPC). Five hypotheses were tested with multiple linear regression technique. Poverty Index (PI), Employment Ratio (ER), and Standard of Living (RGDP-TP) were the dependent variables while microfinance banks’ activities and investments were adopted as the independent variables. Also, liquid liability (M2), interest rate and Federal Government capital expenditure were the controlled variables. The result was a mixed grill.  For hypothesis one, microfinance banks’ activities do not have a significant positive impact on poverty alleviation in Nigeria, in hypothesis two, microfinance banks’ activities have a significant positive impact on employment generation in Nigeria and for hypothesis three, microfinance banks’ activities do not have a significant positive impact on standard of living in Nigeria. For hypothesis four, microfinance banks’ investments have a significant positive impact on poverty alleviation in Nigeria and in hypothesis five, microfinance banks’ activities do not have a significant positive impact on the Gross Domestic Product (GDP) in Nigeria.  This suggests that the operation of microfinance banks’ activities in Nigeria needs a review. It is fairly flawed. This should bring the relevant authorities back to the drawing board. Recommendations were offered. Further study on this subject is highly encouraged.