Analysis of the Impact of Microfinancing on Poverty Alleviation in Nigeria

Abstract

A survey was carried out in Ogbomoso Metropolis, Oyo-State of Nigeria to critically evaluate the impact of microfinance banks as a strategy for poverty alleviation in Nigeria. The Standard of living of the respondents was examined and the extent to which microloans are available to develop small and medium enterprises were also evaluated. Evaluation of the strategies was carried out through direct administration of questionnaires on the microfinance banks’ customers. Primary data were analysed using Chi-square Test, Pearson correlation and Analysis of Variance (ANOVA) test. The results revealed that the relationship between the standard of living of the respondents and the impact of microfinance banks on their household was positive and significant with p < 0.05 and r = 0.212, the result also revealed that the poor have good access to credit facilities from microfinance bank for the development of micro-enterprises as the t-statistic test showed a value of 16.383 with p < 0.05. Given the result of the evaluation of the impact, a conclusion was drawn that microfinance banks have the potential to alleviate poverty especially by improving the standard of living of the poor and making available microloans for micro-enterprise. Hence, a persistent increase in microfinance credit led to a drastic reduction in poverty in Nigeria.