The Role of Microfinance Banks on Employment Generation in the Grassroots: Evidence from Karu Local Government Area of Nasarawa State, Nigeria

Abstract

This study investigated the role of Microfinance Banks on employment generation in Karu Local Government Area (L.G.A) of Nasarawa State, Nigeria. The aim is to ascertain the extent to which microfinance banks have discharged their responsibilities of transforming the rural areas and making financial services accessible to a large segment of the potentially productive Nigerian population which otherwise would have little or no access  to financial services. The study adopted a survey research design. The instrument for data collection was a structured questionnaire. One Hundred and Twenty customers of MFBs and two MFBs were randomly and purposively selected for the study. A total of 120 copies of the questionnaires were administered out of which 100 copies were properly completed and retrieved while 20 copies were not retrieved. Descriptive statistics was employed to analyze data for the study; the tools are simple percentage and frequency distribution. The study showed among others that creation of jobs was the greatest effect of financial intermediation of MFBs in the Grassroots. However, it also showed that lack of entrepreneurial skills was the major problem confronting the MFBs in the area financial intermediation for employment generation in the grassroots. The study therefore recommends among others that The Central Bank of Nigeria should evolve a credit policy that ensures that a certain percentage of the loan portfolio of the MFBs go for the transformation of the grassroots. Also, government should through the CBN, regulate, monitor the activities of MFBs, and redress the constraints affecting them in the area of financial intermediation for employment generation through favourable credit policy which can lead to entrepreneurial development in the rural areas. The CBN should ensure that loans advanced by MFBs to the grassroots are serviced at a single digit interest rate in order not to deter people with genuine business ideas.