MICROFINANCING, POVERTY ALLEVIATION AND NIGERIA'S ECONOMIC GROWTH: THE NEXUS

This study investigated the nexus between microfinancing, poverty alleviation and Nigeria’s economic growth from the period of 1992 to 2018. Specifically, it seeks to probe the actual effect of microfinance bank loans on economic growth and employment creation in Nigeria. Augmented Dickey-Fuller (ADF) test, ARDL bounds cointegration test, and the short-run diagnostics and stability for ARDL Model were employed in the analysis. The research findings admitted that, microfinance banks’ operations do not significantly contribution to poverty alleviation in Nigeria. Also, it established that microfinance banks’ loan advances do not significantly affect growth of GDP in Nigeria. Again, microfinance banks’ loans advances have significantly negative contribute to employment opportunities in Nigeria. The implication of the first finding is that, may be attributed to difficulties enshrined in operating environment which make the realization of their objectives cumbersome. Regarding the second findings, the implication indicates that when loans elongated by the microfinance banks to that of business sector and it is not protracted, this will not procreate a corresponding elevate in the economic growth of Nigeria. Also, another implication is that the businesses were not generating enough profit to cover sufficiently the running cost and profit. Therefore, the borrowers will remain in the cycles of borrowing and repaying for years and years. Finally, the significant effect of microfinance banks’ loan advances on creation of employment opportunities on the third finding, the implication is that by granting credit, Microfinance banks enable their clients expand their productivity. This expansion will exact the existing manpower. Additional hands will naturally be engaged to cope with the new level of production. Based on the research findings of this study, for effective loan and advances, microfinance institutions should channel very high proportion of their credits to the productive and real sectors of the economy for valuable impact of their operations on Nigeria’s economic growth. However, Microfinance Banks (MFBs) should therefore, be front-liners of ethical and professional conduct by ensuring that fluffy loans are given to plausible and desirable entrepreneurs. Furthermore, there is should be deliberate policy by the government encouraging the operation of microfinance banks in rural areas and occasionally in semi-urban areas. This will increase savings mobilization of the banks, thereby creating more employment opportunities. JEL: N10; O10; O12; O4