Impact of Microfinance Intervention on Rural Poverty Alleviation in Nigeria: An Application of Difference in Differences Technique

Abstract

In this study, Difference-in-Differences methodology was used to assess the impact of microfinance loan on rural poor in Nigeria. The sample is classified into four groups: the microfinance loan beneficiaries (treatment group) before obtaining the loan and after the programme implementation. Likewise the non-beneficiaries (control group that were also qualified but could not get the loan) were considered before their application for the loan and after the programme was implemented. The result revealed that microfinance loan has favourable contributions to poverty alleviation in the study area. However, there is still need for government aid in order to make the poor people benefit more from the microfinance programme and enhance economic development. Government should support the MFIs with funds that would be disbursed at concessionary interest rates. In addition, provision of more physical, social and economic facilities would encourage the establishment of more MFIs in the rural areas.

Keywords: economic development, poverty, microfinance, difference in differences, Nigeria

DOI: 10.7176/JESD/11-16-06

Publication date:August 31^st 2020