CHAPTER ONE

INTRODUCTION

1.1        BACKGROUND OF THE STUDY

The history of development and what currently obtains globally sasses that it was is and will be difficult to divorce credit from business. Everyone will need credit in one form of the other someday.

In relation to economic development of Delta State, businesses both new and established will require it. Delta State government often resort to credit from local banks or foreign banks much of the credit which are properly channeled into profitable business or investment to increase the production of goods which will be sold partly at home and partly at the international market.

Since no nation is entirely independent credit takes many forms; it could be a loan (cash) given by a creditor to enable another implement a business initiative. It could also be given inform of asset or raw materials, such assets which are acquired for business purposes and which is valuable and useful to sustain growth of the society; Ughelli; as a case study which have Micro-Finance Banks like Wetland Micro-Finance Banks Plc in Ughelli.

Assets such as land (free holder lease hold), factory building, ware house, plant and machinery motor vehicle, furniture and fittings etc. and also as raw materials which when transformed into finished goods can be distributed as goods and services; such as the supply of raw materials to factories which are raw cottons, raw sugar. Raw wool which when acquired and transformed into finished products would increase production and also the profitability of small; and medium scale enterprises.

Without much credit new businesses in Ughelli cannot take off entrepreneurs, innovators with their ideas may die or remain with their ideas in exposed and unrealized. Thereby creating a setback or a vacuum in areas or segment of economy where such ideas would be relevant and needed for economic development.

The Delta State Governor Dr. Emmanuel Uduaghan has imitated the 3rd inversely of the Micro credit scheme that will positively touch the lives of those at the grassroots as well as the urban poor this micro credit scheme with one of the most honest, transparent, caring and facilitating programmes to boost the status of the beneficiaries to a higher level of production, through the medium credit facility, the micro finance banks which will provide funds and loans to investors and small scale producers to engage in productions and employ other deltas and unemployed citizens thereby reducing the rate of unemployment in the society, reduced crime rate in delta state.

Since companies would go the capital market to source for funds to invest in production, the delta state micro credit scheme headed by Dr. Anthonia Ashiedu has been financially aggrandized by the state government and other agencies like (Nor fund) national economic reconstruction funds, (seeds) state economic empowerment and development strategies and  partnering with the various Micro- Finance banks and inject much funds into the scheme to enable then empowered beneficiaries to produce more goods and services to meet the needs of the state; and generate more income in the state. The micro credit scheme will impact lives of the citizens, raise their standard of living, bring about meaningful development of the economy and all the sectors of the state, and society.

1.2        STATEMENT OF THE PROBLEMS

It is worthy to note that banks as well as micro credit agencies have come to the realization that proper micro credit management and findings from both delta state government and other financial institutions within or outside the state would be essential and adequate for the state would be essential and adequate for the economy development of Delta State.

However the statement of the problem is therefore to look at the in adequacies and the inefficiency of the Delta State Micro credit schemes in rural and urban areas; using Ughelli as a case study. The challenges faced by micro credit schemes in actualizing development programmes I the state.

1.3        PURPOSE OF THE STUDY

The primary goals of this study are to investigate the effects of micro credit on the Delta State economy to identify the usefulness of micro credit to the economy development Delta State.

Therefore the outline goals and objectives below are related to the purpose of this study.

1.   To encourage the spirit of entrepreneurship and zeal for self independency amongst its rural and urban dwellers.

2.   To revigorate the micro credit scheme, its level of operations and transform the standard of living of Delta State citizens to a higher level.

3.   Increase the rate of production of goods and services it will make access to credit available and sufficient for production.

1.4        RESEARCH QUESTIONS

The researcher in the course of carrying out this study has derived some questions that will be examined and enable us to profer alternative and suitable answers to the existing problem. The questions are outlined below.

1.   Does a well planed and implemented micro credit program entrance and increase productivity.

2.   Does creditor loan given by micro credit agencies and financial institutions adequate enough to meet financial requirement of entrepreneurs in Ughelli?

3.   Are all micro credit funds channeled to the productive areas or sectors of the economy?

1.5        SIGNIFICANCE OF THE STUDY

The significance of the study are as follows.

1.   Encourage innovations and create partnership between entrepreneurs and credit agencies

2.   Promote public awareness and understanding of micro credit, and their agencies and polices.

3.   Easy access and availability of funds in the economy.

4.   It will create a micro credit culture for supporting small business to grow also to be established in Delta State.

1.6        SCOPE OR DELIMITATION OF THE STUDY 

The scope of the study is limited to the identification of the best ways to increase micro credit in Delta State economy the study is to include the Delta State micro credit scheme, micro credit agencies/banks and other financial institutions in the state; their roles and relevance to the economy of Delta State, using Ughelli as a case study.

1.7        STUDY CONSTRAINTS AND LIMITATIONS

The following are some of the constraints are limitations faced by the researcher in carrying out the study. 

1.   The researcher had to combine the study with academic work which posed as a distraction.

2.   Financial constraint also contributed a problem encountered in the process of writing this project.

3.   The period for the research study is very limited.

4.   The researcher encountered a problem of inadequate information form micro credit banks e.t.c.

1.8        CO-OPERATE PROFILE

Ughelli North Local Government Area is one of the 25 Local Government Areas in Delta State with Ughelli as its headquarters.

It has seven major clans namely; Ughelli, Orogun, Agbarha, Agharho, Uwheru, Evwreni and Ogor. It is also the seat of the Ovie of Ughelli his Royal Majesty, King Wilson Oharisi III.

Ughelli is one of the oil producing areas of the state with at list 45 oil wells, a land area of 1440 square kilometers; it has an estimate population of 321,028 at the 2006 census, postal code is 333. It came into existence following the split of the defunct Ughelli Local Government Areas.

The current transition chairman of Ughelli North Local Government is Chief Omoyibo.

Ughelli North Locla Government Secretariat is situated at Oteri Road beside Government College, Ughelli.

1.9        OPERATIONAL DEFINITION OF TERMS

1.   Loan: Money that an organization such as a bank lends and somebody borrows. It is also the money bank, business creditors’ gives to individuals and businesses to finance their expenditure at a low interest rate.

2.   Productivity: The rate at which a worker a company or a country produces goods and the amount produced, compared with how much time, work and money is needed to produce them.

3.   Business: The activities of making, buying, selling or supplying goods and services for money.

4.   Assets: These are things of value, especially property, that a person or company owns which can be used or sold to pay debts.

5.   Development: this is the gradual growth of some things so that it becomes more advanced stronger e.t.c. it is also the process of producing or creating something new or more advanced.

6.   Entrepreneurs: Are person who make money by starting or running businesses especially when this involves taking financial risks. 

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