Essay on Microfinance Banks Investments And Poverty Alleviation

Essay on Microfinance Banks Investments And Poverty Alleviation

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Microfinance Banks Investments and Poverty Alleviation in Nigeria

I.G. Okafor
Department of Banking and Finance, Caritas University, Enugu, Nigeria.
E-mail: igfnmann@yahoo.com


Abstract
The industrialized economies of the world have been associated with heavy investments. Investments create jobs, increase income per capita, reduce poverty level, increase standard of living and increase domestic product (GDP). It is for these that the Central Bank of Nigeria (CBN) in 2005, established the Microfinance Policy Framework. That framework gave birth to microfinance banks. Among the products of the microfinance banks were investments. This study therefore looked at the impact of microfinance banks investments on poverty alleviation in Nigeria for the period 1993 – 2012. Annualized data were collated from the Central Bank of Nigeria (CBN) and the National Bureau of Statistics. Poverty index was the dependent variable while the microfinance banks investments was the independent variable. The controlled variables were the liquid liabilities (M2), the Federal Government capital expenditure and interest rate. Multiple linear regression model was adopted for the test of the hypothesis. The result showed that microfinance banks investments did not have significant positive impact on the poverty alleviation in Nigeria during the period of study. Recommendations offered included conscious encouragement of deposits with microfinance banks, government provision of necessary infrastructure such as power, water and passable roads so as to reduce running costs for the microfinance banks. The savings out of these will swell the available fund for investments.

Keywords: Microfinance, Banks,Investments, Poverty Alleviation

1.0 Introduct...


... middle of paper ...


... it, there will be non-performance of physical capital and this will impede economic growth (Harbison, 1964).
Basically, for economic growth to translate to reduction in poverty and unemployment, it should be human centered (Wilson and Briscoe, 2003): The role of human capital in the growth process of any nation is crucial. It is a major tool for poverty alleviation.

2.2 Empirical Review
Okorie et. al (2015), in their study investigate the impact of investment on economic growth in Nigeria economy. They applied an error distributed lag model via least squares. Their results showed that increase in private sector credit led to increased domestic investment. They also find that the total domestic investment in Nigeria, in the long run, had a positive impact on the Nigeria’s economic growth as increased total domestic investment led to increase in economic growth.

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