Demand and utilization of Micro loan among Micro Entrepreneurs in Nigeria

Micro loan could be used by micro enterprises for productive purposes such as investments, seeds or additional working capital. The study presents empirical findings on the impact of Microfinance (MF) on the welfare and poverty alleviation in Southwest Nigeria. In an attempt to answer the research question for this study, data from field survey conducted among the microfinance banks and their customers in Lagos and Ogun States, was used to analyze the impact of loan received on earnings using the Ordinary Least Squares (OLS) econometric technique. Also, a linear Probability model was specified and estimated to measure the log of odds of obtaining loans from the microfinance banks by the customers. In addition, an analysis of determinants of earnings was done using the Mincer (1973) model. The study found that loan demand is interest rate insensitive but sensitive to availability. It was also established that microfinance programmes have impacted the businesses and lives of the beneficiaries in several positive ways, particularly in their economic circumstances and access to essential life-enhancing facilities and services. The study therefore recommended that MFIs’ clients should improve on their level of education, the MFIs should seek long term capital from the Pensions and Insurance Companies so that they can grant larger volume of loan and to greater number of people and the government should tackle the problems of infrastructural development and maintenance