The Impact of Microfinance on Economic Growth in Nigeria

Abstract

This paper examines the impact of microfinance on economic growth in Nigeria. Emphasis is made on the primary role of microfinance institutions in Nigeria which is poverty reduction and small scale enterprise financing. Assets, Deposit Liabilities, Loans & advances microfinance banks were used proxy the activities of microfinance institutions in Nigeria while Gross Domestic Product was used as a proxy for economic growth. Using secondary data and applying ordinary least square of multiple regressions, it was revealed from the findings that Asset base and deposit liability has an insignificant impact on economic growth while Loan and Advances to the public has a significant impact on economic growth in Nigeria. However, the overall significance of the model shows that the activities of the microfinance banks cannot be overemphasized in the pursuance of a sustained economic growth in Nigeria. It is therefore recommended that the government should create an enabling environment capable of supporting the microfinance banks in microcredit delivery.