Abstract

Poverty is a large and growing problem in Nigeria resulting in an immense amount of unavoidable suffering. Part of the panacea for the situation includes the policy on the establishment of micro finance banks. This paper aims at investigating the effectiveness of these banks at improving the status of their customers. The rural community was purposively selected because of the presence of three microfinance banks in the area. A total of 80 questionnaires were administered using systematic random sampling technique. The data were analyzed using descriptive statistics, delay time index and the multinomial logistic regression. The results show that the respondents were mainly within the active working age and that different factors constrain men and women’s access to loans. Delayed loan disbursement and high interest rates are the constraints common to both male and females in accessing loans. Further tests with the delay time index revealed that 75% of the respondents experienced delays. The poverty index showed that more male respondents were in the core and moderately poor groups. The multinomial logistic regression showed that the period of loan repayment and marital status are two factors that keep respondents below the computed poverty line. It is therefore recommended that microfinance operators go beyond financial services to include business management and social development in the array of programs/services targeted at the poor.

Key words: Nigeria, poverty, microfinance, men, women.