CHAPTER ONE
INTRODUCTION
1.1 GENERAL BACKROUND OF THE SUBJECT MATTER
Scriptural looking into the Bible when God created Man, He
left man with a divine injunction as rewarded in the Holy Scripture,
which Says, be fruitful and multiply and replenish the earth and subdue
it, and have dominion over the fish of the sea and of the air.
And every living thing that moves upon the earth (Genesis
1.28) was the command. The wheel of change has been rolling on
throughout the entire world transforming virgin lands, desert, ocean and
sea to economic advantage of Man. Nigeria was unknown then.
The first step in the British acquisition in Nigeria Ondon
who later becomewas the annexation of Lagos in 1861. This marked the
first step taken by the British Government in the 19th century to
acquires economic and political domination over the people of Nigeria.
The Hunder land of Nigeria north of Lokaja was being
administered on behalf of the British by a Government had declared a
protectorate over areas cleared by the land company in 1887. Then on
January 1990, it took over direct administration of the area from the
Royal Niger Company and named it the protectorate of Northern Nigeria
with Lugard as its first High Commissioner. This great political unit
was christened “Nigeria” in 1990 by “Floral Show” Forum colonial
correspondent of the times of London who later become Lugards Wife
(Onwubike 1973). Lastly the two separate Government in the colony and
the defectorate of southern Nigeria and the protectorate of Northern
Nigeria were alonagated as the colony and protectorate of Nigeria on
January 7 St 1914, Lugard became the Nigeria first Governor General. He
continued in the March towards development in every fact of life as a
new emerging nation. In the West African region and by October 1st
1960, Nigeria was further granted with a follow- up step by its
political freedom and emancipation when she was granted an independent
status. She was also granted the Republican status in 1963.
Furthermore, the plans for the growth and development of
Nigeria was granted in one year 1970 – 1974 but was extended to one year
1975 in the third month and experienced a lot of problems. Recovery
from one civil war displayed one implementation of some project. The
fund that were anticipated were not forth coming and there was a lack of
technical partners needed to carryout some aspect of the plan (Anderson
1976). Also came the third development plan. The plan covered a
period of 5 years consecutively 1975 – 1980. The principal long – run
objectives are similar to those of the proceedings past independent
plans.
The objectives are to make Nigeria.
(a) A great and dynamic country.
(b) A united, strong and self- reliant nation.
(c) A just and exaltation society.
(d) Aland of bright and full opportunities for all citizens.
(e) A free and democratic society.
A 9% per annum rate of growth of Gross Democratic Party (GDP)
was assumed for the plan period and the total consumed and capacity
invested was to be N30 Billions, the plan strategy was to utilize the
country’s resources to develop the production capacity of the economy.
The plan was received up wards in 1976 (Ojo 1982). Some of its
highlights of these plans were agricultural N1.400 million. The
building of the two new oil refineries at Warri and Kaduna while the one
at Port Harcourt was to be expanded. The iron and steel industry with
features in both the previous plan was to be established at Ajaokuta in
Kwara
State. A total of N6000 millions allotted to the industrial sector.
Development of the infrastructures also took a large shy with a total of
N4000 millions being allotted. More roads were to come under the
control of the Federal Government (F.G) and a modernization of the
railways was planed. The electricity capacity was to be extended to
1500 megawatts with N 2000 million going to education, while health
services were to be expanded =N=2400 million were budgeted for armed
forces (Anderson 1976).
The forth plan lasted for 4 years 1981 – 1985 and it described adequately the development of Nigeria.
Development could be defined as a displayed discipline which is the
mooing force behind the socio – economic transformation of society.
Most micro financeleaders saw development as more provision for
schools, health centers, hospitals, post offices, town halls, churches,
mosques, good roads, portable waters electricity and telephones (Ewulu
1996). However, in the post-independent era, the development process
came to put more emphasis on the improvement in the “materials”
condition and living (of man) through the use of resources available to
him. In other words, development came to stress production and
productivity.
Some of the indications of development are as follows:
1. Economics power (per capita income)
2. Employment
3. Savings investment
4. Level of literacy
5. Rural population
6. Nature/ Systems of Agricultural production
7. Quality of goods (1996)
Subsequently, several programmers and strategies have been actively
encouraged, promoted and supported by the government amongst which are
as follows:
1. Various agricultural development programme operation feed the
Nation (O F N). Green Revolution, National Acceleration Food Project
(NARFPP) and the Agricultural Development Project (ADP).
2. Directorate of Food, Roads and Rural Infrastructure (DFRRI).
3. The promotion of co-operatives:
4. Agricultural Credit Government Scheme and,
5. Rural Banking Policy.
The transformation of country into an economic giant has engaged the
attention of successive Nigeria government through the listed economic
efforts and various developing plans.
1.2 PROBLEMS ASSOCIATED WITH SUBSECT MATTER
Despite all the institutional frame work put in place and the above
development in Nigeria, the giant stride expected to be made in the
economical development have been abysmally low and the situation has
been yearning for a well laboured attention.
The oiling rehabilitating and growling rate of development
economically has caught the attention of the researcher and prompted her
into making statements, she visualized that the problems acting is a
load in the wheel of economic progress of Nigeria.
Since Nigeria detached itself from the dominion of British rule in
1960 by using politically independent, it has not detached from British
in terms of policy formation and articulations. Most of the policies
embarked upon from 1960 even to greater extent today are fashioned after
the British modalities.
1. Some of the economic policies initiated are being done, obvious
of the fast that other co-operating restitution that will be argue in
the development are not yet in place like micro financeBanks that will
address adequately the need of the realities which are integrated parts
of the geo-political entity called Nigeria.
2. Where the banks exist or existed they could not as an economic
catalyst because some of the reasons of inadequate collaterals or to
some on right lack of collateral to pledge against the loan being
sought.
3. Some of the economic development policies being vigorously and
also religiously pursued seen the side treat in the rural areas where he
65% - 70% of the population resides.
4. Another problem observed then was that, it has been in link up
to full realization of our economic dreams in improper re-appraisal of
the lapsed policies with a view to know the difficult areas in terms of
meeting the envisioned target.
5. Other problem is to the transformation of Nigeria into a strong
viable and reliable, a robust economic collision dreamed is the death of
banking habit or culture among the citizens.
The chemically of role funds from the surplus sector of the economy
to the deficit could not be made. These worries were trying follow in a
pillow or banned aground in various homes.
6. Lastly, another problems in the economic development of Nigeria
is the topside economic concern various orthodox banks station in the
rural areas act as cash centers and the funds mobilized are not ploughed
into development. The areas rather they are reputed to the township
head office for onward lending to beneficiaries outside the catchments
areas from where the said funds were mobilized.
1.3 IMPORTANT OF STUDYING AREA
With decree 46 of 28th April 1990 establishing micro financeBanking
System. It marked another landmark in the annual of Nigeria Economic
development. The researcher has the under listed purpose when venting to
address the issues of micro financebanking System in Economic
Development of Nigeria.
a) To know the extent the establishment of micro financebanking system wills galvanize economic development in Nigeria.
b) To ascertain thinking trend of doming influence of “Few money
bag” in the conventional banks have been put to list by micro
financedevelopment association. Having a controlling share of 30% of
the called and fully paid up sharks capital.
c) To determine to what extent funds guaranteed from the rural
areas are extended to them to subsidies economic development in these
areas.
d) To assess how personal reorganization to collateral has
succeeded in leading people into taking loan to generate economic
activity.
e) To asses how adequately it has utilized the provision of
section 4:1:12 of the revised micro financebank prospectus which read
“perform non-banking functions that promotes grass root development such
as supporting individuals co-operate and group formation activities
assisting clients in making of agriculture, in rural individuals and
others products and providing financial and other extension chart and
other micro financemembers.
f) To determine to what extent the banking of micro
financebanking system as contain in sector 4:1:13 of caused micro
financebank prospects which read inter ales “shall not engage in
soplusticated banking services like foreign exchange transaction or
international micro financepapers, corporate finance in order to enable
them retain their local focus and concentrate on micro financeservices
will determine economic development in Nigeria.”
g) Ascertaining the impacts of central Banking of Nigeria (CBN)
and other financial institution Decree (BOFID) and companies allied
matters Act (CAMA) on the micro financeBanking system in its vowed
determinant to coach this country into economics.
h) To re-appraise the negative input of non-provision of a centre
clearing house for the micro financebanking system in the economic
development training in Nigeria.
i) To know to what extent the unfriendly disposition of the
conventural banking system terms of shifting bank charges for service
reudened to these micro financebanks will be another barricade in the
movreh to a new economic down for Nigeria.
j) Finally, to evolutes how the funds of the micro financebanks
trapped in the distressed commercial merchandise and financial house has
been putting legs of economic development art from moving at the
expected pace.
1.4 IMPORTANT TERMS
This research work may be of valuable assistance to individuality
managers of financial institutions, small and medium scale industrialist
policy makes and other researcher in this field.
Some of the affendant benefit include the following;
Industrialist, small and medium scale industrialist will be able to see
micro financebanking system as another source of financial at its
disposition, which they had hither to been ignorance of.
To the managers of financial institution including orthodox
banks. It will expose to them how unfriendly by disposition to this
micro financebanking system in terms of change or services affected on
their behalf will geopardize the dream of a giant economic nation.
Also, it will expose how miss- appropriation of placement made in these
institution by micro financebank have adversely affected, since a lot
of them have closed shops as a result of illegitimatize occasions by
distress syndromes that has set a shifting hand into the banking
sector.
To the policy, it will act as an eye opener, so that when
policies are being made, it should be well articulated and every minutes
detailed built in so, that such policy should be avoided to loose –
ends. Such loose-ends and in articulated policy characteristics of the
micro financebanks decree is the non- provision of clearing house of the
micro financebanking system which left them and the many of the micro
financebanks, in item of detrimental charges handed down to them.
To student, researchers and those which curiously and injury
wound. It will extend itself as a pedestral or subtraction upon which
expansionary and follow up study offering courses on micro
financebanking, it will be added to the words of literature available
for references.