Title page




Table of content



CHAPTER ONE: Introduction

  • Background of the study
  • Statement of the Research Problem
  • Objective of the study
  • Research Question
  • Research Hypothesis
  • Significance of the study
  • Delimination of the study
  • Definitions of Terms

CHAPTER TWO: Literature Review

  • Rural Poverty a challenge to the provision of financial services
  • The Role of microfinance in fighting Rural poverty.
  • Lending to the poor and the challenges to overcome
  • Earlier credit market interventions by government subsides
  • The microfinance Revolution
  • Overview of the Economics of lending to the very poor by joint liability
  • The impact of microfinance an Household income
  • What determines the loan size that a Household desires to take


  • Research Design
  • Population of the Study
  • Sample and Sampling Techniques
  • Research Instrument
  • Validity of the Research Instrument
  • Administration of Research Instrument
  • Procedure for data and Analysis

CHAPTER FOUR: Results And Discussion

  • Introduction
  • Presentation of Results
  • Discussion of Findings

CHAPTER FIVE: Summary, Conclusion and Recommendation

  • Summary
  • Conclusion
  • Recommendations
  • Implication of the study





This study investigates the impact of microfinance on poverty reduction in Ondo State. Questionnaire were used in drawing out from the responses of the targeted population. And the population of the study consists of men and women between the age of 20-45years and also young men and women because of their educational background and exposure. The study eventually sampled (50) fifty households from five (5) streets in Ijare, Ondo State as sample and sampling techniques statistical method and research data were analysed by the application simple percentage and frequently counts. This study recommended that if microfinance is chosen as an intervention policy for poverty reduction there is need to set clear objective for the indication of economic empowerment for the people.




1.1     Background of the Study

The word microfinance is being used very often in development vocabulary Although the word is literary comprised of two words: micro and finance which literally mean small credit the concept of microfinance goes beyond the provision of small credit to the poor. Christen (1997) defines microfinance as “the means of providing a varitly of financial services to the poor based on market driven and commercial approaches”.

This definition encompasses provision of other financial services like savings. Moneytransfers, payments, remittances and insurance, among others. However many microfinance practices today still focus on micro-credit providing the poor with small credit with the hope of improving their labour productivity and thereby leads to increment in household incomes.

Joint liability lending (JLL) which is the man that is targeted to the very poor in society who can not even borrow individually but must borrow within a group of other borrowers. Participants of joint liability lending must organize themselves in groups, and act as security for each others loans. In reality, the group not the individual is responsible for loan repayment to the microfinance institution. The groups use peer pressure and peer monitoring to ensure that loans acquired by members are repaid.

This study is mainly focused on participation and access to loans by the poor through joint liability lending microfinance programs. The main interest of the study was to understand how members organized themselves into borrowing groups and how these groups operated as institutions facilitating household access to credit. It was also the interest of this study to understand how households used then credit and to measure the impact of that credit on households’ income.


1.2     Statement of the Research Problem

The effects of the poverty among rural dwellers in the socio-economic development of Nigeria can not be over emphasized. Unfortunately, rural areas in Nigeria have been neglected for longtime. The government attension is consentrated at urban countries. Rural areas are neglected in terms of social infrastructural facilities.

As a result of the rural neglect, unavailability of banking facilities and poor system of farming being practiced in the area, among other factors, the rural dweller’s income is relatively low. Investment in the rural area in the country is very difficult because saving from the low income is not possible. The dwellers are mostly illiterates.

What is the way out of poverty in the rural areas in Nigeria? Can microfinancing improve the income condition among the rural dwellers? How can we motivate rural banking in Nigeria?

Unfortunately, there are very few studies on poverty and income growth relationship in Nigeria. The study will therefore bridge the existing gap by examining the impact of microfinance on rural poor households’ income and poverty trend in the country.


1.3     Objective of the Study

The general objective of the study is to analyze the impact of microfinance on households’ income and household future vulnerability to poverty. However, other specific objectives are to :

  1. Analyse the socio economic attributes of households that participate in the joint lending microfinance programs.
  2. Examine the determining factors of the households’ decisions for the loan sizes acquire.
  3. Investigate if participation in microfinance programs significantly reduce household vulnerability to poverty.
    • Research Questions

The following research questions are formulated by the researcher on the impact of microfinance on households’ and vulnerability to poverty

What is the impact of socio economic attributes of households participation in the joint liability lending microfinance programs?

What are the factors that determine households’ decisions for the loan sizes they acquire?

Does participation in microfinance programs significantly reduce households’ vulnerability to poverty?

1.5     Research Hypothesis

There is no significant impact between microfinance and households’ income in rural areas.

1.6     Significance of the Study

This study is of great value in the following senses credit from microfinance programs will helps people in rural area to be self employed and there by reduce poverty and enhance economic growth.

The study shall guide our policy makers to know that access to microfinance programs contributes to poverty reduction in the life of rural people, especially for female participants and for the overall poverty reduction at village level.

The study shall also encourage banking habit in rural areas this shall promotes saving and capital for investment in the rural community

Furthermore, the study shall educate the microfinancing firms that households below the poverty line tend to use the loans for consumption purpose to a greater extent than households above the poverty line. This will guide such firms in loan disbursement to rural applicants.

The study shall serve as reading materials to students, resource materials to teachers and a base for further research work to future researchers.


1.7     Delimination of the Study

Due to the restricted time and expenses and other activities involved, this study is limited to investigate the impact of microfinance on rural households’ income and vulnerability to poverty in Ijare in Ifedore Local Government of Ondo State.


  • Definitions of Terms

Vulnerability: It is known as expected poverty or the probability that a household falls into poverty in the future.

Microfinance: It means small credit, it is also the way of providing a variety of financial services to the poor, based on market driven and commercial approaches

Household: A house and its occupants regarded as a unit

JLL: Joint liability lending

Rural; Relating to or characteristics of the country side rather than the town

Income; Money received especially on a regular basis, for work done or from an investment.

Poverty; the state of being extremely poor, the state of being insufficient in amount.

Banking; the business conducted or services offered a bank.      



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