Assessment of Rural Sustainable Development by Microfinance Banks in Nigeria Assessment of Rural Sustainable Development by Microfinance Banks in Nigeria By Onafowokan OLUYOMBO PhD Student Department of Accounting and Finance Faculty of Business and Law De Montfort University. Leicester, Uk. May 21, 2010

Research Objectives To assess the effect of microfinance banks on rural development in Nigeria from 1992 to 2006 To analyse how loans and advances by microfinance banks penetrate different segmented areas of the rural economy In terms of ……

Research Objectives (cont..) Manufacturing and food processing Agriculture and forestry Manufacturing and others Real estates and construction Mining and quarrying Transport and commerce

Research Questions i. Does microfinance banks contribute to the growth of economic sustainable development of rural areas ii. Does microfinance banks credit to rural people proportionate to the deposit mobilised from them

Research Methodology Secondary data from Central Bank of Nigeria (CBN) Limited to approved microfinance banks rendering their annual report to the CBN Annual reports and statement of accounts of microfinance banks

Data Analysis Quantitative Data Only SPSS Statistical Package Version 14.0 Pie chart Trend analysis Tables Graphs

Research Findings

Research Findings (cont…) Figure 2. Total Sectoral Loan Disbursement ( )

Research Findings (cont…) Figure 3. Sectoral Loan Disbursement ( )

Research Findings (cont…) Summary of Microfinance Banks Loan Allocation (1992 – 2006) o Mining and Quarrying – 2% o Real Estate and Construction – 4% o Manufacturing and Food Processing – 5% o Agriculture and Forestry – 9% o Manufacturing and Others – 13% o Transport and Commerce – 28% o Others – 39%

Research Findings (cont…) Sharp rise in deposit from 2002 to 2006 without a corresponding increase in loan and advances to rural people Loan and advances to productive sector for 15 years was 29%. It shows a neglect of economic sustainability of the rural areas Microfinance Banks have not really improved nor developed the economy of the rural people because 39.6 percent of loans given by the microfinance banks went for other areas that do not directly or indirectly affect the socio economic well being of the rural people and do not contribute to their developmental status.

Conclusion The results revealed a major downward trend in the value of credits to rural people compared to the deposits mobilized from them. It appears that there is a net outflow of finance from the rural poor jeopardizing the sustainable development of the rural areas.

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