Microcredit Operations and Human Development Nexus in Nigeria: A Multi-Sectoral Analysis

Abstract

Motivated by the need to evaluate the extent to which microcredits disbursed to classified sectors of economic activity as utilized by the active poor do influence Nigeria’s human development index in both the short and long run, this study employs published data obtained from Central Bank of Nigeria over the period 1992 to 2016 (25 years). Estimation techniques involving Stationarity, Multiple Regression, Johansen’s Cointegration and Vector Error Correction tests were employed. While the Cointegration results indicate significant long run relationship among the study variables, the Multiple Regression and Vector Error Correction estimates both point to microcredits allocated to mining/quarrying, real estate/construction and transport/general commerce sectors as the sectoral microcredits that significantly influence Nigeria’s human development index both in the short and long terms respectively. The study concludes that microcredits allocated to mining/quarrying, real estate/construction and transport/general commerce are the sectoral microcredit allocations which are important in predicting Nigeria’s human development index. On the whole, it is recommended that (i) operating microcredit institutions should increase their quantum of lending to the mining/quarrying, real estate/construction and transport/general commerce sectors (ii) Nigerian microcredit institutions should be encouraged to invest more in development of microcredit and deposit products in order to enhance their sectoral lendings and consequently Nigeria’s human development index.

Keywords: Microcredit, Sectoral Credit, Human Development Index.