Impact of Microfinance Banks on Poverty Reduction in Ogbomoso Zone of Oyo State

Select Volume / Issue:

• Volume 1,Issue 4, July 2014

Year:

2014

Type of Publication:

Article

Keywords:

Impact, Microfinance Banks, Poverty Reduction

Authors:

A., Sanusi W.; B., Abdulsalam M.

Journal:

IJRAS

Volume:

1

Number:

4

Pages:

273-277

Month:

July

Note:

This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License. CC BY-NC-SA 4.0 Creative Commons License: https://creativecommons.org/licenses/by-nc-sa/4.0/

Abstract:

This study was to assess the impact of microfinance bank on poverty alleviation in Ogbomoso zone of Oyo state, Nigeria. It identified people’s opinion about microfinance existence, their activities and how effective they are on alleviating poverty among beneficiaries in the study area. The data were collected from 125 respondents in the study area through interview schedule using multistage sampling. The data collected were analyzed using descriptive statistics, FGT poverty model and Tobit regression model. The findings revealed that the average age was about 41years, 72.8% were single, majorities were male-headed (60%) and majority of the respondents had an average household size of 4. About 62.4% of the respondents had increase in their annual or monthly income while the loan obtained led to increase in production of about 83.2% of the respondents. The microfinance programme appears to be a medium of poverty reduction by empowering the people. The FGT poverty profile indicated that microfinance had an effect on the poverty level i.e. the poverty level of the respondents was relatively high before they obtained loan from microfinance bank and an appreciable decrease in the poverty level was seen after the loan were obtained. Poverty level before obtaining micro finance loan was high as compared to its level after obtaining the loan. The incidence of poverty (P0) reduced from 0.592 to 0.542, the poverty dept (P1) also decreased from 0.356 to 0.326 and the severity (P2) from 0.246 to 0.218. The result obtained shows 5% reduction in the incidence of poverty, 3% reduction in the debt and 2.8% reduction in the severity of poverty before the loan was obtained compare to after it was obtained. The result of tobit model, as specified in the methodology shows that the sigma (δ) is 0.1935 with a t-value of 15.811; hence sigma is statistically significant (p

Full text: IJRAS_92_Final.pdf