Contributions of Microfinance Banks to Small and Medium Scale Entrepreneurial Development in Nigeria (A Case Study of Lagos State)

Abstract

Rural microenterprise is undoubtedly very crucial and has a very high significance in spurring economic development. The importance of microfinance to entrepreneurial development made the Central Bank of Nigeria adopt it as the main source of financing entrepreneurship in Nigeria. Despite this, however, finance is still considered as one of the major hindrances to entrepreneurial development in Nigeria (Ubom, 2003). This study examined the role of microfinance banks in financing rural microenterprise development in Nigeria.The research designs adopted for the purpose of this study were the Survey and Explanatory Research Methods in which case both primary and secondary data were used for analysis purposes.  The analysis of data indicated that the microfinance banks are not adequately financing the rural entrepreneurs. There is a significant difference in the number of entrepreneurs who used the MFBs and those who do not.It is therefore being recommended that there is need for the Microfinance Banks (MFBs) to put more effort in financing the rural micro entrepreneurs. Their role needs to be felt in terms of structured framework for proper and acceptable repayment period and single digit interest rate. Also, all tiers of Government in Nigeria should also improve the existing security apparatus in the economy. The guarantee of having a secured investment and life is paramount to microfinance and banking business in any part of the world.Conclusively, a well structured microfinance institutional system in the country will lead to higher returns on equity, rural development, access to fund for the poor both in the rural and urban areas and will spur entrepreneurship in Nigeria.