ABSTRACT

The study presented empirical findings on the impact of Microfinance on welfare and poverty alleviation in Southwest Nigeria.  It also examined Microfinance as key to poverty alleviation and economic development.  It assessed the extent to which Microfinance Institutions had successfully helped the poor to improve their standard of living and social status.  The study employed multiple regression analysis of the Ordinary Least Square (OLS) technique of estimation in order to make tentative predictions concerning outcome variable.  The Linear Probability Model was also adopted in the study.  This study establishes that Microfinance
Programme have impacted the businesses and lives of the beneficiaries (Microfinance Clients) in several positive ways particularly in their economic circumstances. It also gave them access to essential life-enhancing facilities and services.  It suggested that Microfinance Institutions in Nigeria should seek long-term capital from the Pensions and Insurance companies so that they can grant larger volumes of loans to greater number of their clients.  They should also strive to put in place procedures, policies and products that would ensure gender responsiveness and equity. In order to enhance healthy competition among the Microfinance Institutions, there should be a mandatory policy for the Microfinance Institutions to publish their interest rates and other charges at frequent intervals. This would improve the levels of efficiency of the Microfinance Institutions.

TABLE OF CONTENT
CHAPTER ONE: INTRODUCTION                 Pages
11  Background of the Study - - - - - - - 1  
12  Statement of the Research Problem - - - - - -   4  
13  Research Question - - - - - - - -   5  
14  Objectives of the Study - - - - - - - 6
15  Statement of Research Hypotheses - - - - - -   6
16  Significance of the Study - - - - - - - 7
17  Scope of the Study - - - - - - - - 7
18  Outline of the Thesis - - - - - - - 8
19  Method of Data Collection & Analysis - - - - - 8

CHAPTER TWO: LITERATURE REVIEW
21  Introduction - - - - - - - - - 10
22   Microfinance: A Review of Background, Operations and Structure/Models -   10
221  Brief Historical Background - - - - - - - 10
23       Review of Microfinance Models - - - - - - 13
24        Review of Empirical Studies - - - - - - -   16
241    Microfinance Experience in United States of America - - - -   16
242    Microfinance Experience in Europe - - - - - - 17
243   Asian/Latin America - - - - - - - - 18
244   Africa - - - - - - - - - 26
245  Nigeria - - - - - - - - - 34
246  Lending Activities of Microfinance Banks in Lagos State in 2011 to Empower
  The Poor - - - - - - - - -    38
25  Roles of Microfinance in MSMES - - - - - - 39
251  Some Innovative Ideas - - - - - - -   39
252  Interventions of Non-Governmental Organizations (NGOs) - - - 42
253  Funding Services for Microfinance Banks - - - - - 44
254  Key Success Factors in Nigeria - - - - - - 47
255  Sustainability of Microfinance Institutions - - - - - 49
256  Challenges Confronting Microfinance Institutions - - - - 50
26       A Global Perspective on Microfinance - - - - -   53
261  Global Status of Microfinance Worldwide - - - - -   53
262  Steady Growth of Microfinance Institutions Globally - - - - 55
263  Lending Portfolio of the Larger Microfinance Institutions in Africa as at 2005 -   56
264  Activities of Borrowers Financed by Microfinance Institutions in Bangladesh - 58
265  Microfinance Performance in Nigeria - - - - - - 60
27       Some Individual Experiences - - - - - -      67 

CHAPTER THREE: RESEARCH METHODOLOGY - - - - - 72
31  Introduction - - - - - - - - - 72
32  Theoretical/Conceptual Framework - - - - - - 72
321  Theoretical Framework - - - - - - - 72
322  Conceptual Framework - - - - - - - 77
33  Research Methodology - - - - - - - 81
331  Research Design - - - - - - - - 81
34  Population and Sample Design - - - - - - 81
35   Sampling Technique - - - - - - - - 82
36  Data Collection and Sources of Data - - - - - -    83
37  Reliability of Instrument - - - - - - -    83
38  Questionnaire - - - - - - - -    83
39  Model Specification - - - - - - - - 84
310   Analytical Technique - - - - - - - -    88 

40  CHAPTER FOUR: DATA ANALYSIS AND DISCUSSION OF REPORTS  89
41  Some Characteristics of the Respondents - - - - - 89
411Microfinance Institutions (MFIs) and their Characteristics in the Study Area   90
412  Socio-economic characteristics of customers of MFIs - - - 92
42  MFIs and Microcredit Dispersion among Respondents - - -    99
421  Level of Patronage of MFIs by Respondents - - - - - 100
422  Types of Accounts Maintained with MFIs - - - - - 103
423  Analysis of Loans Facilities Received - - - - - -   104
43  Loan Demand in Microfinance Institutions - - - - -    110
  431  Volume of Loan Demanded by Respondents among the MFIs - -     110
432  Determinants of Loan Demand - - - - - 114
433  Loan Demand Probability Function - - - - -   118
44  Microfinance Banks and Personal Welfare among Respondents - -   124
441   Utilization of Loan Facilities Received from the MFIs - - - 124
442   Savings, Earnings and Personal Welfare of Respondents   - -   132
4421 Savings - - - - - - -    132
4422 Earnings - - - - - - -     135
443  Determinants of Income Distribution Among Respondents - -      141
 45     Microfinancing and  Micro-Enterprise Growth - - - - -   148
            451  Microfinancing and the Growth of Sales Revenue - - -   148
            452  Microfinancing and Growth of Employment - - - -   150
46      Main Summary of the Analysis - - - - - -    153

CHAPTER FIVE: Summary, Findings, Conclusions and Recommendations -    154
51  Summary - - - - - - - - - 154
52   Findings - - - - - - - - - 155
53       Conclusion of Study - - - - - - - 160
54       Policy Implications and Recommendations - - - - - 162
541 For Microfinance Bank - - - - - - - 162
42 For Government - - - - - - - - 163
55  Contribution to Knowledge - - - - - - - 163
56  Suggestions for Future Research - - - - - - 164
References - - - - - - - - - - 165


List of Tables
Table 21: Total Cost of Administering Loan - - - - - - 50
Table 22: Number of MFIs and Total Clients Reporting to Microfinance Submit - 55
Table 23: Lending Profile of Some African MFIs - - - - - 57
Table 24: Sub-Sectoral allocation of disbursement of funds by microfinance institutions in    
                 Bangladesh - - - - - - - - 59
Table 25: Distribution of Microfinance Banks by Geo-Political Zones as at Dec  , 2008   62
Table 31: List of Variables and Descriptions - - - - - - 86
Table 41: Some Characteristics of Sampled Microfinance Banks - - -    91
Table 42: Average Number of Employees at Inception and Now - - -     92
Table 43: Distribution of Respondents by Age Group - - - - - - 93
Table 44: Distribution of Respondents by Highest Educational Qualification - - - 94
Table 45: Occupation Distribution of Respondents by occupation - - - -    95
Table 46: Distribution of Respondents by Gender and Marital Status - - -      96
Table 47: Distribution of Respondents by Status in the Household - - - - 98
Table 48: Distribution of Respondents by Nationality and State of Origin - - 98
Table 49: Distribution of Respondents by Religious Affiliation - - -      99
Table 410: Names of the Microfinance Banks Patronized by Respondents - - -    100
Table 411: Distribution of MFI Customers by the Type of Banks Patronized - - -    100
Table 412: Distribution of MFIs by Some Selected Characteristics of Respondents -      102
Table 413: Year Savings (Personal) Account was Opened - - - -      104   
Table 414: Distribution of Respondents by Whether or not Loan has Ever Been Received  106
Table 415: Distribution of Respondents by Loan Received after Savings Account was    
                   Opened - - - - - - - - - 106
Table 416: Quality of Service on the Savings Account - - - -     107
Table 417: Distribution of MFIs by the Quality of Service Offered on Savings Account 108
Table 418: Distribution of MFIs by the Average and Total Loan Advanced to Customers 119
Table 419: Distribution of Respondents by Loan Status - - - -    119
Table 420: Distribution of Respondents by Volume of Loan Obtained - - -    112
Table 421: Loan Demand Function - - - - - - -      116
Table 422: Distribution of Respondents by Whether or not they have ever Received any Loan
                   Facilities - - - - - - - -     119
Table 423: Linear Probability Function for Loan Request from MFI - - -     122
Table 424: The Distribution of MFIS by the Average Amount of Loan Granted to Customers 125
Table 425: Frequency Distribution of Respondents by the Percentage Utilization of first loan   
                   Received - - - - - - - -   126
Table 426: Frequency Distribution of Respondents by the Percentage Utilization of Second   
                    Loan Received - - - - - - - -   127
Table 427: Frequency Distribution of Respondents by the Utilization of Third Loan Received    128
Table 428: Distribution of Loan Usage Pattern Among Respondents - - -   128
Table 429: Distribution of Respondents by Patterns of Loans Utilization - -     131
Table 4:30: Volume and Percentage Change - - - - - - 134
Table 431: Distribution of Respondents by Average Nominal Income before and after Loan  
                  Facility was Received - - - - - - - 136
Table 432: Distribution of Respondents by Weekly Earnings Before and After Receiving   
                   Loan Facilit ies from MFIs and by Some Selected Characteristics - - 137
Table 433: Growth Rate of Nominal Weekly Income - - - - 138
Table 434: Percentage Changes Within Income Groups - - - - 139
Table 435: Descriptive Statistics of the Variables Used in the Models - - 142
Table 436 (a): Model Summary - - - - - - - 142
Table 436 (b): Regression Coefficients of the Distribution of Income - - - 143
Table 437: Anova Table for the Regression Estimate in Table 434 - - - 143
Table 438: Model Summary - - - - - - - - 145
Table 439: Regression Coefficient of Income Distribution Functions - - -   146
Table 440: ANOVA Table for Models 1 to 4 - - - - - - 147
Table 441: Frequency Distribution of Micro-Enterprises by Nature of Business -   148
Table 442: Distribution of Weekly Sales Revenue and Its Growth Rate by Some Selected   
                  Characteristics of Enterprises and Entrepreneurs - - - -    149
Table 443: Frequency Distribution of Micro-Enterprises by Number Employed Before  
                  Microfinancing and After - - - - - -    151
Table 444: Distribution of Employment Level and its Growth Rate by Some Selected  
                  Characteristics of Enterprises and Entrepreneurs - - - -   152
Table 445: Distribution of Respondents by their Perception on Microfinancing and Poverty   
                   Reduction - - - - - - - - 153

APPENDICES - - - - - - - - - 172
Appendix A: Questionnaire: Bank Officials           - - - - -    
177
Appendix B: Questionnaire: Bank Customers - - - - - - 180

List of Abbreviations and Acronyms
ACGS â€" Agricultural Credit and Grant Scheme
ADB â€" African Development Bank  
ASHO â€" Anambra Self Help Organization
BOI â€" Bank of Industry
BIDS â€" Bangladesh Institute of Development Studies
CAMELS
(C) Capital Adequacy
(A) Asset Quality
(M) Management  
(E) Earnings  
(L) Liquidity  
(S) Sensitivity to Market Risk
CB â€" Community Banks
CBN â€" Central Bank of Nigeria
CGAP â€" Consultative Group to Assist the Poorest
CMFB â€" Covenant Micro Finance Bank
COWAD â€" Community Women and Development
DEC â€" Development Exchange Centre
EEC â€" European Economic Commission
EMPL â€" Employment
FADU â€" Farmers Development Union
FCF â€" Full Cycle Fund
GDP â€" Gross Domestic Product
GFF â€" Good Faith Fund
GPP â€" Global Poverty Publicat ion
HND â€" Higher Nat ional Diploma
IFAD â€" International Fund for Agricultural Development  
JD â€" Jordanian Dollar
LAPO â€" Lifting Above Poverty Organization
LOP â€" Levels of Profit
MAIN â€" Microfinance African Institutions Network
MDGs â€" Millennium Development Goals
MFBs â€" Microfinance Banks
MFIs â€" Microfinance Institutions
MSMEs â€" Micro Small and Medium Scale Entreprises
NACB â€" Nigerian Agricultural and Cooperative Bank
NACRDB â€" National Agricultural Cooperative and Rural Development
Bank
NDE â€" National Directorate of Employment
NDIC â€" Nigerian Deposit Insurance Corporation
NEEDS â€" National Economic Empowerment and Development
Strategy
NGO â€" Non Governmental Organization
OSI â€" Open Society Institute
PAR â€" Portfolio At Risk
PB â€" Peoples Bank
PRSP â€" Poverty Reduction Strategy Paper
RBP â€" Rural Banking Programme
ROA â€" Return On Asset  
SEAP â€" Self Reliance Economic Advancement Programme
SHG â€" Self Help Group
SMEs â€" Small and Medium Scale Entreprises
TEACH â€" Training, Education And Credit Health
VEF â€" Village Entreprise Fund
WDI â€" Women Development Init iat ive
WSEP â€" Women Self Employment Project