ASSESSMENT OF THE IMPACTS OF MICRO-CREDIT ON WOMEN ENTREPRENEURS IN SOKOTO METROPOLIS

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Entrepreneurship is generally recognized as the engine of growth of developing countries since it has the capacity to reduce poverty. It is a key factor that helps many individuals, especially women in the promotion of self-reliance and self-esteem (Taiwo, Agwu, Adetiloye, & Afolabi, 2016). Adjei, Arun and Hossan (2015) assert that entrepreneurship is the answer to the economic challenges of most developing countries. These entrepreneurial activities would contribute immensely to the creation of jobs, decrease in income disparity, manufacturing of goods and services in the economy, as well as delivering opportunities for skill development and acquisition. According to Soludo (2014), a healthy economic development cannot be accomplished without setting up well focused and implemented programmes aimed at reducing poverty by empowering the people through access to factors of production, particularly credit facilities. There is a momentous increase in the number of female entrepreneurs in Nigeria. Women are considered to be the poorest among the hapless. Women are presently involved in micro, small and medium scale enterprises (MSMEs). They can be found engaging in various forms of trade in almost all parts of the country. This is because it has the ability to enhance the quality of life and create a long-run enormous wealth, first to the individual and, second to the society at large. And since many Nigerian women are bread winners who financially run their families, support their spouses and relatives, female entrepreneurship has become a welcome development. Several economic policies that would ensure economic independence have therefore been engaged by Nigerian government. A variety of policies aimed at capacity building and utilization has been launched by the federal government over the years. The introduction of Structural Adjustment Program (SAP) in the early 1980s has increased the poverty rate among the Nigerian women this was because during the privatization of public corporations the women were the foremost to be retrenched before the men. In Nigeria, most of the women found relief in the informal sector after leaving the formal sector which the informal sector is known for its vulnerability and, poverty is high in the shadow economy. Poverty is predominant in the informal economy in least developed nations (Khalex, 2010). The tenacity of the women to snap off the circle of poverty and increase their entrepreneurship level made them initiated traditionally financial services such as the ‘Ayo’ and ‘Esusu.’ However, there is a high risk in these indigenous savings and credit associations because the sector is unregulated. The Nigerian government have initiated a series of empowerment programmes in order to support the women to vanquish poverty. Some of these programmes include Peoples’ Bank, Family Economic Advancement Programme (FEAP), Better Life for Rural Women and Poverty Alleviation Programme (PAP). Despite these laudable programmes, they have failed to address the empowerment and poverty reduction among the Nigerian women (Awojobi, 2013). Credit is the contractual agreement in which a borrower receives something of value now and agrees to repay the lender at some later date. Micro credit is however a programme that extends small loans to the very poor people for self employment and to generate income for themselves. Micro credit programmes are currently being promoted as key strategy for simultaneously addressing both poverty alleviation and women empowerment. Micro credit is considered from its ability to energize or motivate other factors of production. It can make latent potentials or underused capacities functional and in such situations, credit acts as a catalyst, which activates the engine of growth in agriculture (Olagunju and Babatunde, 2011). Generally, the accessibility of a good financial service is considered as one of the engine of economic development. Micro credit enhances productivity and promotes standard of living by breaking the vicious cycle of poverty of the women entrepreneurs. The crucial role of credit in entrepreneurship development can also be appraised from the perspective of the quantity of problems emanating from the lack of it. Women still face numerous challenges in accessing education and health services, as well as economic development. The women entrepreneurship is a critical element in the world and special attention is given to the women in the nations. Women entrepreneurship development in the economic and social fields constitutes one of the fundamental objectives of all development efforts in the rural areas and it has emerged as an important issue in recent times. Microcredit is described as a powerful tool to improve economic development in a post-conflict context and to support post-conflict rehabilitation assistance. It is Nigeria’s experience that attaining high levels of human development is a necessary precondition for creating greater opportunities for rural women. The contentious debates on the validity of micro-finance impacting women who took micro-credits from microfinance institutions prompted this research to investigate the impact of micro-credit in empowering women entrepreneurs in Sokoto Metropolis, Nigeria. Although, there have been some studies that have investigated the correlation between microcredit and women’s entrepreneurship development in Nigeria, but none of these studies have been able to validate the positive impact of micro-credit on Nigerian women.

1.2 STATEMENT OF PROBLEM

Micro credit factors influence on women entrepreneurs development but there is no sustainability and growth. Micro credit increases the income generating opportunity of the women but there is no evidence for their survival and growth of the businesses. Lack of capital to start or run business led them to request for credits from micro-finance institutions (Ibru, 2009; Kuzilwa, 2010). This is due to poverty, unemployment, low household and business income and inability to save (May, 2007; Otero, 1999; Porter & Nagarajan, 2010; Roomi& Parrot, 2008). Women entrepreneurs, mostly in developing countries, lack the ability to save (Akanji, 2014; Mkpado & Arene, 2007), yet savings are needed to protect income, act as a security for loan and could be re-invested in the business (Akanji, 2014). In Nigeria in Northern part of Nigeria women face challenges and difficulties to enhance their business activity. Hamida, (2010), A case study from Tunisia’ revealed that the women entrepreneurs face several obstacles to their desire for self employment, including difficult access to capital, low level of knowledge including literacy and numeracy skills, lack of training, inadequate market knowledge, for both purchases and sales, conservative traditions in their families and society at large, shyness and lack of public experience. Generating and controlling income is the starting point it enables women to learn to handling cash and, by running their micro enterprises, to learn how to handle the family budget and managing loan responsibility. This leads to impress their perspective on family decision making and to take certain decisions alone. By gaining promotion through their own efforts and willingness to take risks, from home cleaner or factory worker to independent business individual and the micro entrepreneur gets position and independence. Okafor, Oluwakemi, & Samuel, (2011) found from their study on ‘empowering women entrepreneurs in Ogun State through micro credit: Challenges and Prospects’ that there is no significant relationship between the objectives of microfinance institutions and the financial needs of the respondents. This shows that although micro credit scheme is a good strategy for reduction of the poverty level of Nigerian women entrepreneurs, more awareness need to be created among Nigerian women entrepreneurs especially those in the rural areas. If much awareness will be created to enlighten the poor on the activities of microfinance, it has been identified as the best option for reduction of poverty, and a strategy for helping the poor and women entrepreneurs to access financial services. Helping women entrepreneurs with facilities to save and to have better access to credit will enable them manage risk, build assets, increase income, enjoy a better life and also help to reduce gender inequality among Nigerian entrepreneurs. However most of the researches have been done regarding the women empowerment, entrepreneurship development and micro Credit programmes in worldwide it is very little bit in Nigeria especially in Sokoto Metropolis. This raises such questions as: do women have access to credit? How much is the cost of the credit? Was there any change in their income and savings level? Did that cover the cost of the credit? It is against this backdrop that this study was designed to determine the impact of microcredit on women entrepreneurship.

1.3 AIMS OF THE STUDY

The major purpose of this study is to assess the impact of microcredit on women entrepreneurs in Nigeria. Other general objectives of the study are:

1. To examine the sources of microcredit to women entrepreneurs in Sokoto Metropolis.

2. To examine the effect of microcredit on income and savings of women entrepreneurs in Sokoto Metropolis.

3. To examine the impact of microcredit on women entrepreneurs in Sokoto Metropolis.

4. To examine the constraint militating against women access to microcredit in Sokoto Metropolis.

5. To examine the relationship between Microcredit and women entrepreneurship development in Nigeria.

6. To suggest ways to curb the challenges facing women entrepreneurs in Nigeria.

1.4 RESEARCH QUESTIONS

1. What are the sources of microcredit to women entrepreneurs in Sokoto Metropolis?

2. What are the effect of microcredit on income and savings of women entrepreneurs in Sokoto Metropolis?

3. What are the impacts of microcredit on women entrepreneurs in Sokoto Metropolis?

4. What are the constraint militating against women access to microcredit in Sokoto Metropolis?

5. What is the relationship between Microcredit and women entrepreneurship development in Nigeria?

6. What are the ways to curb the challenges facing women entrepreneurs in Nigeria?

1.5 RESEARCH HYPOTHESIS

Hypothesis 1

H0: Micro-credit has no significant impact on the self-employment of women entrepreneurs.

H1: Micro-credit has a significant impact on the self-employment of women entrepreneurs.

Hypothesis 2

H0: There is no relationship between Microcredit and women entrepreneurship development in Nigeria.

H1: There is a significant relationship between Microcredit and women entrepreneurship development in Nigeria.

1.6 SIGNIFICANCE OF THE STUDY

This study will have much significant on the government because despite the fact that women are integral part of a nation’s development, the disadvantaged position of women in Nigeria particularly when compared to men and the fact that they are ravaged by poverty, make case for efforts to be geared towards their empowerment. If this is achieved, it can have positive effect on the social, political, economic, and cultural development of Nigeria. In business, women tend to be more involved in establishing and leading small enterprises than in huge conglomerates. They are regarded as more successful entrepreneurs in fields such as fashion design, marketing, communication and media. They are often expected by society and their professional communities to be active in these sectors. Consequently women are making significant contributions to their families and country at large particularly in this era of economic distress. The findings of this study will equally help to alleviate the problem of women entrepreneurship and empowerment. The findings will be of benefit to women entrepreneurs, students and researchers. The study will also expose possible areas of improvement in micro financing activities in Nigeria. This is so because the report of the study will serve as a good reference document to this group of learners when conducting a research on impact of microcredit on women entrepreneurs in Nigeria.

1.7    SCOPE OF THE STUDY 

The study is based on the assessment of the impact of microcredit on women entrepreneurs in Sokoto Metropolis.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Microfinance Bank (MFBs): mean any company licensed to carry on the business of providing microfinance services such as savings, loans, domestic fund transfers and other financial services that economically active poor, micro-enterprises and small and medium enterprises need to conduct or expand their businesses. (Microfinance Banks regulatory and supervisory framework, December, 2010).

Micro- credit: Disbursement of small or soft loans meant for rural development.

Rural Dwellers: Are people residing in a country site or an area where there is less or no governmental infrastructures and facilities such as offices, electric power supply, industries and other basic social amenities.

Microfinance: Is about providing financial service to poor who are traditionally not served by the conventional financial institutions.

Informal financial institutions: They are traditional microfinance institutions that provide access to credits for rural and urban low-income earners. Example, rotating savings and credit association, self help groups, co-operative societies.

Microfinance policy: is a regulatory guideline on micro credits that help to promote monetary stability and sound financial system.

Poor: A poor person shall be defined as one who has magic means of sustenance of livelihood and whose total income during a year is less than the minimum taxable limit set out in the law.