Entrepreneurship Development: The Place of Microcredit Delivery Scheme in Oyo State, Nigeria

Abstract

There is general consensus on the need to expand and strengthen microenterprises in Nigeria due to the potential they offer for social and economic growth and development. The development of this sector is largely hindered by its limited access to formal credit which has been a persistent criticism of the financial system around the world. This study examines the effectiveness of loan delivery by microfinance banks (MFBs) and cooperative thrift and credit societies (CTCSs) on the development of microenterprises in Oyo state. Survey design was adopted for the study which used five MFBs and five CTCSs from Oyo state to assess the relationship between their financial services and creation of microenterprises. Only 200 respondents (i.e. 100 clients of MFBs and 100 members of CTCSs) were randomly selected from the total population of 360 microentrepreneurs that initially identified through a preliminary survey. Two different sets of questionnaires were used to source information for the study; the first set solicited information from the micro entrepreneurs and the second set from the managers of the MFBs and CTCSs. The data collected were analyzed using descriptive statistics including percentage distributions, tables and charts. The result of the study showed that microcredit has a positive impact on the performance of microenterprise businesses and there is no significant difference between microentrepreneurs who use MFBs and CTCSs in terms of loans and advances. The paper recommended that microfinance institutions should design specific and adaptable packages for microentrepreneurs involved in microbusiness creation and also encourage solidarity groups’ lending.

Keywords: Microcredit, Entrepreneurship development, Microenterprises, Microfinance banks, Cooperative Societies and Group Lending