Effect of Microfinance institutions on development of small scale businesses in Nigeria

The study examined the im[plications of micro finance institutions (MFIs) policies on development of small scall business in Nigeria. Nine (9) Microfinance Institutions and 155 of their clients were surveyed in 2009 and 2010. It was obsered that between 2005 and 2010, there was a significant gorwth in the numbers of savings and loans made by the micro finance institutions, an indication that there is a rising increase in deed for MFIs services. We used the Ordinary Least Square to regress the relationship between capital formation (dependent variable) and other independent variables such as patronage of MFIs, profitability level and employee size. The results showed postitive relationship between the dependent and independent variables. The study that that macroeconomic policy as well as monetary policy shold be designed in such a way that will encourage survival of microfinance instutions and attracts low income-informal sector which will in turn lead to increase in productivity and employment generation. Key Words: Microfinance, capital formation, small and medium scale enterprise, econmic growth and development, profitabilit