Micro-Finance Operations and Socio-Economic Development of Nigeria Rural Communities

Abstract

This paper focused on the role of Microfinance banks on the socio-economic development of rural communities in Nigeria. The operations of microfinance institutions date back to the pre – independence period in Nigeria when traditional thrift saving systems and activities of local people could not really handle the growing expansion and needs of the rural people and transformation. Also, the failure of conventional banking in Nigeria to meet the socio-economic complexities of the rural communities that consistently experiences rapid growth and changes as well as government desire to reach rural areas in development, gave rise to the emergence of microfinance institutions as a way of providing financial answers to the low income people so as to finance and improve their income generating activities. Key concepts such as conceptual overview and basic issues in microfinance, the role of microfinance banks in the socio-economic development of rural communities among others were analyzed. The paper adopted the demand following and supply leading hypothesis to support its argument. The paper concluded following its findings that small scale business men and women especially those operating within the rural communities are always confronted with the problem of financing their business; getting proper education to sustain the business and enlarge same. Therefore, the paper recommended that government should set up a more practical and result oriented monitoring and evaluation team to facilitate a cordial link between small scale business enterprises and microfinance banks in rural com munities.

DOI: 10.5901/mjss.2014.v5n23p742