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THE IMPACT OF MICRO-FINANCE ON ECONOMIC DEVELOPMENT OF WOMEN IN EDO STATE, NIGERIA


BY
Omorogbe Osamudiamen Victor
Department Of Economics 
Achievers University Owo, Ondo State
Nigeria.
And
Mr Jonathan Ososuakpor
Oceanic  Bank Plc.


Abstract

The aim of this study is to access the impact of micro finance on economic empowerment of women in Edo State. For practical purposes, questionnaires were administered and divided into groups. The questionnaires were sent to four hundred and sixty micro credit beneficiaries throughout Edo State. Through semi-structured interview, questionnaire administration and participant observation, this paper identified some of the key actors/agencies involved in developing the rural areas in Edo State, their activities, and some of the problems they are facing; the general perception of how these problems could be solved are also discussed. Some of those agencies are those of the government, NGOS and self-help groups in the region. They are into community self-help projects, roads construction, agro-forestry, building of schools and, contributions among group members.

INTRODUCTION
            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 Repot 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, noted that the critical “take off stage” recognize certain minimal rate of investment to take place, to foster development and better the standard of living of individuals. In an attempt to improve the live of the poor and to raise the standard of living in the country, the United states Agency and Implementation Development (USAID), 1995), recognizes while Government are involved in different programs because most government want to encourage the development of business, to supplement general, policy goals that apply to business, with specific policies and programs aimed at micro and small enterprises. More also, policies that minimize the costs of licensing and registering a business, provide easy access to information about laws and regulations, and facilitates commercial codes, which establish rules to minimize the cost of doing business by defining the rights and responsibilities of all parties to a transaction.
            Hence the involvement of Federal Government, and other international agencies in the program of reducing the poverty level amongst Nigerians. Such programs as Directorate for Food, Roads and Rural Infrastructure (DEFRRI), Nigeria Agricultural Cooperative Bank (NACB) and Peoples Bank of Nigeria e.t.c. The aim of the program was to assist and deliver financial services and development to rural communities.
            The purpose of this study is to access the impact of micro finance in economic development of women, who over the years has been denied of financial services. From the formal financial sector, because of lack of access to collateral securities to secure credit.
            Among the economically active poor women of Edo State, there is a strong demand for small scale financial services for both credit and savings. Micro finance institutions try to bridge the gap by accessing credit to low income people to improve household and enterprise management, increase productivity, smooth income flows and consumption costs, enlarge and diversify their micro businesses, and increase their incomes. In the words of Boutrous Ghalli (1996) reducing poverty is now regarded by many as the most important goal of development. “At its core, development must be about improvement of human well being; removal of hunger, diseases and ignorance; and productive employment for all, its first goal must be to end poverty and satisfy, the priority needs of all people in a way that can be productively sustained over future generations”. This is necessary since it will provide the much needed information and policy recommendations to how micro finance activities can reduce poverty and improved the well-being of women in Edo State.
LITERATURE REVIEW
            Most known existing related studies have largely been addressed to the issue of and the needs for women empowerment to enable them contribute to the development process. This state of affairs is largely attributable to what seems to be the consensus of opinion among researchers and scholars that poverty has an increasingly feminine face, UNDP (1997) argued that poverty widens inequalities and when adversity strikes it is women who are often the most vulnerable.
            Micro-finance is defined “as the provision of financial services-savings and credit to marginal resource poor people” (Adedoja 1999). The provision of these services to very poor household creates opportunity for the poor to create, own and accumulate assets and to smoothen consumption.
            Micro finance deals with small scale financial services – primarily credit and savings provided to people who farm or fish or herd; who operate small enterprises or micro enterprises where goods are produced, recycled, repaired, or sold; who provide services, who work for wages or commissions; who gain income from renting out small amounts of land, vehicles, draft animals or machinery and tools; and to other individuals and groups at the local levels of developing countries, both rural and urban. (Robinson, 2001).
            Holcombe (1993) writes that grassroots organization and development advocates are to a large extent “responsible for directing current attention to the poverty question. She argues that the enormous development investment of post world war II period not only failed to transform the situation of the poorest but may also have exacerbated poverty”.
            As a result of the problem of poverty, an approach known as people centred development strategy was formulated. This approach recognizes the potentials of the people especially the poor women. Micro finance has been regarded as an effective strategy for development. Ehigiamusoe (2000) recognizes micro finance as vital means for the poor to access capital and aimed at enhancing income generating capacity of the poor. The assumption is that the poor know what to do to improve their socio-economic condition and that what is required is capital. Small loans as reasonable terms to very poor household for financing additional income generation activities has been suggested as an effective and efficient way to reduced extreme rural poverty (Gibons and Kasim, 1999).
            This view corroborated by Khandker (1998) who holds the view that “providing the poor with financial services increases their income and productivity, thereby reducing poverty. In many countries, traditional financial institutions, which require physical collateral worth three (3) to four (4) times the amount of their loans, have failed to reach the poor. This situation has led to calls for changes in the mode of financial services delivery
Toby (1998) quoting Awosika (1993) has noted that “the relatively low savings ratio of rural household in Nigeria is not entirely caused by low productivity but also by the absence of institutional agencies which could mobilize savings and channel them into productive investment”. The absence of these institutional agencies have been replaced by micro-credit program, which Khandker (1998) says, “have been developed to fill this gap”.
Adetunbi (1999) writes that micro credit doubles both as a poverty reduction strategy and as a vehicle for providing financial services to the poor. Its effectiveness in many parts of Asia, and now Africa, recommends it readily as a veritable tool in the development process. Through micro credit, a nation can develop a large basis of micro entrepreneurs whose activities and aggregate contribution to the economy could become significant. “The importance of saving lies in the fact that it makes possible real investment, that is the accumulation of goods (Keynes, 1936), Hebbel et al (1994) have shown that savings depend upon income population growth and government financial policies.
According to International Fund for Agricultural Development (IFAD) 2000, “Rural finance is one of several essential tools to be used in combating rural poverty”. The world famous bank to the poor is the Grameen Bank of Bangladesh (Holcombe, 1993, Rutherford, 1999). It had about 2 million client (most of them village women) in the mid 1990s. it sets up groups which are customer groups that is a set of customers brought together at the same time in the same place, each week to facilitate loan services. The bank owns the funds and enjoys the income earned from the interest paid on loans. Loans go to the individuals directly from the bank and not from the group. Group members cross guarantee each other’s loans, but the group does not own the fund out of which the loans are made. Like money lenders, Grameen offers a lump sum which is recovered in a services of part payment and unlike money lenders, it does accept some savings deposit in small, regular, fixed weekly installment that cannot be withdrawn until the client has been in the system for ten years. It also deduct 5 percent of the value of each loan for a group tax, that is money that is put into the fund owned by the client, but held by the bank that can be used to pay out clients who get into trouble with their loans. Clients can claim these after 10 years.
Gibbons and Kasim (1999) argues that if one of the family members has to starge, it has t o be the traumatic experience of not been able to feed their children during the days of famine and scarcity. In corroborating this statement, Gibbons and Kassims wrote that women experience hunger and poverty in much more intense ways than they are experienced by men. Women traditional have to stay at home and manage the family with virtually nothing to manage with. A study conducted by the World Bank on Grameen Bank in 1990 reveals that real income of the loans increased by 35 percent with a period of two and half years.
DATA PRESENTATION AND ANALYSIS
            The aim of the study is to access the impact of micro finance on economic empowerment of women in Edo State. For practical purposes, questionnaires were administered and divided into groups. The questionnaires were sent to four hundred and sixty micro credit beneficiaries throughout Edo State.
            A total of 88 percent of the beneficiaries of micro-credit completed and returned the questionnaire. For the purpose of our analysis, these four hundred and five (405) women beneficiaries constitute a representative sample.
            The results of data collected from the respondents have been divided into groups. Table 1 describes the age distribution of the respondents. Majority of the respondents were from the 41-50 age group, respondents in this age group constitute 34 percent. This shows that micro credit women beneficiaries are within that age group. The next dominant is the 31-40 age group. Respondents in this age group accounted for 28 percent.
Table 2 describes the marital status of the beneficiaries. Majority of them (respondents) are married. Married respondents constituted 71 percent of the total beneficiaries. This means that most micro-finance beneficiaries are married people. Others are single which constituted 13, widows 8, separated 7, others 1 percent respectively.
Table 3 shows the responses on educational attainment of the beneficiaries (respondents). From the study, it shows that majority of the beneficiaries are stack literates, which constitute 28 percent of the total respondents. The next dominant class are those with primary school certificate, which constituted 25 percent. From the study, it shows that graduates are not given priority in area of micro-credit.
Table 4 describes the family size of the beneficiaries. From the responses, it shows that majority of the family size were from the 4-6 group. Family size in this group constituted 42 percent of total respondents, and next group 6 – 8 which constituted 33 percent. Others 1-3, 15 percent greater than 8 group 10 percent.
Table 5 shows that traders constituted the bulk of the respondents (Beneficiaries), it constituted 70 percent of the total respondents, followed by farming which is 23 percent of the total respondents. Table 6 shows that before micro-credit scheme, the profits margin of the beneficiaries was N4,500, after micro credit was granted, it rose to N7,000, representing 67 percent increase.
            The study equally revealed the income position of the clients, I shows that before micro credit scheme, the client average income was N6,000, after micro credit was granted, it increases to N11,500 representing 77 percent increase. From the study, Table, question 4, it was revealed that the micro credit facility was not interest-free, the loan attracts 3 percent rate per month. The findings from questions 5, Table 6 shows that the average loan size of the beneficiaries are N10,000.
            The loan duration is 8 months, this is confirmed from the question 5, Table 6. From Table 6, question 7, before micro credit scheme, it shows that the beneficiaries were unable to support the family with income from their business, after micro credit was granted, they could support the family.
            The study also revealed from Table 6, question 8 that non of the beneficiaries has been able to access credit facilities from the commercial bank. Question 9 from Table 6 shows that 100 percent of the beneficiaries have been affected economically by the loan from micro-credit. The study shows that, the clients (beneficiaries) spent average amount of N4,800 for feeding before micro-credit scheme, after micro credit was granted, it rose to N8,500 representing 77 percent increase.
Table 1: Age Distribution
Age Group
Respondent
Percentage
<20
22
5
21-30
44
11
31-40
112
28
41-50
136
34
>50
91
22
Total
405
100
Source: Field Survey, 2002


Table 2: Marital Status
Marital Status
Respondent
Percentage
Single
52
13
Married
286
71
Widow
34
8
Separated
28
7
Others
5
1
Total
405
100
  Source: Field Survey, 2002
Table 3: Educational Attainment
Educational Attainment
Respondent
Percentage
Illiterate
113
28
Primary
192
25
<Secondary
78
19
Secondary
64
16
Certificate/Diploma
42
10
Degree
0
-
Not Stated
6
2
Total
405
100
Source: Field Survey, 2002

Table 4: Family Size 
Family Size
Respondent
Percentage
1-3
60
15
4-6
172
42
6-8
134
33
>8
39
10
Total
405
100
  Source: Field Survey, 2002

Table 5: Occupational Distribution
Occupation
Respondent
Percentage
Farming
94
23
Trading
282
70
Civil Servant
14
35
Private Business
13
2.5
Others
2
1
Total
405
100
Source: Field Survey, 2002


       
Table 6: Economic and Income Status Before and After Micro-credit
Before Micro-Credit
Period of Micro-credit
S/N
Questions Considered Pertinent
Total Respondents
Answers/Average Amount Per Client
Total
Answer/Average Amount Per Client
1.
What is your total capital for your business?
405
N25,500
405
N45,000
2.
What is your profit margin in your business per month?
405
N4,500
405
N7,500
3.
What is your income per month i.e. from your husband, relations and your business?
405
N6,500
405
N11,500
4.
At what interest rate is the credit facility granted?
405
-
405
N300.00 (3% per month)
5.
What is the average loan size?
405
-
405
N10,000
6.
How many months are you expected to complete your payment?
405
-
405
N1,550 (8 months)
7.
Have you been able to support your family with the income from your trade?
405
A little
405
Yes we have been able to support the family
8.
Have you been able to borrow money from Commercial Bank?
405
No
405
No. we have not been able to borrow from Commercial Banks
9.
Have you been affected economically by the loan from micro-finance?
405
-
405
Yes, income has increased since micro-credit scheme
10.
Can you estimate how much you spent for feeding every month? 
405
N4,800
405
8,500
CONCLUSION
            Government over the years has always neglected or failed to recognized the important role of women in the development process. In the recent times, the government has put in place a few measure designed to assist women to realize their potential and contribute to the goal of sustained economic growth and development.
This study sought to:
Investigate the effect of micro-credit in business activities of the beneficiaries (women) in Edo State.
Determine how increase in capital base of the business can affect the income of the women (beneficiaries).
How the credit facility from the micro-credit scheme, have been useful in the family support.
From the study, it was shown that the capital base of business activities of the beneficiaries has increased with almost 76 percent prior after loan was granted.
Secondly, the economic power of the woman also increased. They can now support their families in area of education, feeding and housing because of increase in their income.
Given the high incidence of poverty, income inequality, he bottleneck involved in getting credit facilities from the commercial banks in the country, empowering the women through micro-credit will enable them to contribute meaningfully to the upkeep, upbringing and smooth running of their home.
With the credit facilities from the micro-finance industry, women economic empowerment will be improved in area of providing funds for petty trading activities, providing income to meet their immediate needs and improved economic status.  














REFERENCES

Adetunmbi .O. (1999). “Micro Credit scheme in Nigeria. Major Issue in Micro       credit Delivery in the Niger Delta”. Paper presented at SPDC Forum.  

Adeyemo .O.A. (1991). “Women in Development”: An NCEMA National Workshop Report, NCEMA Ibadan.

Aganmwonti F.E and Omo Omoruyi .O. (Undated) “Report on the Evaluation of Lift above Poverty Organization (LAPO)” Operations January 1998”   Unpublished Thesis.

Anyanwu J.C. Oyefusi, A. Oakhena, H. and Dimowo F.A. (1997).  The Structure of the Nigerian Economy. Onitsha: Joanee Educational Publishers.

Awolowo Dosumu; O. Amah, N. Samuel K and Ahuchogu V. N. (1997).   Community Development Finance in Nigeria Lessons Opportunities and     Challenges Lagos: Malthres Press Ltd.

Ehigiamusue G. (2000). Poverty and Micro Finance in Nigeria. Benin: OBZED     Publishers.

Gibbons D. S and Kasim S. (1991). Banking on the Rural Poor in Peninsular.        Malaysia Centre for Policy Research Malaysia.  

Hans Dieter Scibel (2000). Incorporating International Best Practices in Micro       And Rural Finance Markets in Nigeria: Establishing An Enabling      Government and Building Institutional Capacity. International fund for             Agricultural Development (IFAD) Rome.

Holcombe S. (1993). Managing in Empower: The Grameen Bank’s Experience of Poverty Alleviation. Dhakar :University Press Dhakar.

John S. and Rogaly B. (1997). Micro Finance and Poverty Alleviation. Oxfam        United Kingdom.

Khandker S.R. (1998). “Micro credit to Advance women: Fighting Poverty with     Micro credit. Experience in Bangladesh” Grameen Dialogue pp 1.3

Ogiemudia, O. (1999): “Micro finance in Nigeria a case study of Lift Above             Poverty organization (LAPO) Unpublished thesis.

Ohikhueme S. (1997). “Global poverty Alleviation: A Ruse “First Bank Monthly    Business and Economic Report Sept. pp. 1-8

Okunmadewa .F. (1998). “Essence of Micro credit Scope, Dimension and   Reduction of Poverty in Nigeria” Business Concord August 10 and 15.

Robinson S. Marguerite: (2001). The Micro Finance Revolution: Sustainable           Finance for the Poor: World Bank: Open Society Institute, Washington    D.C.

Rutherford .S. (1999). The poor and their Money: An essay about Financial           services for poor. Institute of Development, Policy and Management          University of Manchester.

2000, World Development Report 1999/2000; Entering the 21st Century. New        York: Oxford University Press,

2001, World Development Report 2000/2001; Attacking poverty. New York;          Oxford University Press.

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