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The purpose of this study was to ascertain the effects of microfinance on the development of entrepreneurship in Akwa Ibom State.  A stratified random sampling technique was used, where the population was stratified into senatorial district and 25 (twenty five) respondents randomly selected from each of the strata to make a total of 75 respondents out of which 64 respondents returned their completed questionnaire.  The questionnaire which was structured to elicit unbiased responses and oral interview were used to obtain the necessary information needed for this research work. The educational qualification of respondents ranged from First School Leaving Certificate (26.69 percent) to the first degree and its equivalent (14.06 percent).  The study also showed that there were more males (60.94 percent) entrepreneurs than females (39.06).  the Chi-square tests were used for data analysis.  And the result of the test of hypothesis showed that microfinance does not have any effect on entrepreneurship development in Akwa Ibom State. Also that funds made available to Akwa Ibom Entrepreneurs through microfinance sources were not adequate.  Recommendations were made, one of which was that, interest paid on loan should be reduce to a barest minimum such that it attracts entrepreneurs to borrow adequate funds the microfinance banks. 



There suppose to be a synergy between microfinance and the entrepreneurs, therefore the objective of this research is to find out the bilateral relationship and the significant between them, microfinance are custodians of funds meant to be lent out while the entrepreneurs are the ideas exploiters with innovation and creativity since these two sectors must operate together  to enhance growth in the economy, there must be a prove to show that there is adequate fund allocated to the entrepreneurs hence this study. The growth of an economy will emanate from entrepreneurs who produces goods and services, and employ others  three factors of production to keep up with the earnings from goods and services that will bring about growth in the economy and the gross domestic product (GDP).  


The term entrepreneurial development has been defined in diverse dimensions. (Nwachukura 2001, Mcoliver, 1998). However referring to the productive transformation of an entrepreneur, a single thread runs through all of them: their ability to identify business opportunities, to be able to harness the necessary resources to use opportunities to identify, the ability and willingness to initiate and sustain appropriate actions towards the actualization of business objective. Entrepreneurship development refers to the process of honing entrepreneurial   skills   and knowledge through structural training and institutional building programmes. Entrepreneurial development aim to expand the base of entrepreneurs in other to hasten the pace at which new ventures are created. This accelerates employment generations and economic development focuses on the individual who wishes to start or expand a business. Further, entrepreneurship development concentrates more on growth potentials and innovation.

Oluwagbohunmi (2010) defined ‘Microfinancing’ as the means of providing the economically active poor and low income households with financial services such as credit or loan to expand their small business. Microfinance services also include Micro-leasing, Micro-insurance and payments of transfers.

According to Wikipedia “microfinance” is defined as broad categories of services which include microcredit; micro credit is a provision of credit services to poor clients. Micro credit is one of the aspects of microfinance and the two are often confused. Critics may attack microcredit while referring to it indiscriminately as either ‘microcredit’ or ‘microfinance’. Due to the broad range of microfinance services, it is difficult to assess impact and very few studies have tried to asses its full impact. Proponents often claim that microfinance lifts people out of poverty, but the evidence is mixed. What it does do, however, is to enhance financial inclusion.

Microfinance is a source of financial services for entrepreneurs and small businesses lacking access to banking and related services. The two main mechanisms for the delivery of financial services to such clients are: (1) relationship-based banking for individual entrepreneurs and small businesses; and (2) group-based models, where several entrepreneurs come together to apply for loans and others services as a group. In some regions, for example southern Africa, microfinance is used to describe the supply of financial services to low-income employees, which is closer to the retail finance model prevalent in mainstream banking.

For some, microfinance is a movement whose object is “a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance, and fund transfers. (1) Many of those who promote microfinance generally believe that such access will help people out of poverty, including participants in the micro credit summit campaign. For others, microfinance is a way to promote economic development, employment and growth through the support of micro entrepreneurs and small businesses.

The contributions of these variables bring about significant effect on the economy of Akwa Ibom State.

Finance is a word the business entrepreneurs dreads and cherish at the same time, for he is ever in need of it. Either to start his dream business; for operational purposes; for expansion etc.  And there is no way business enterprises could success without adequate finance.

Given the level of material and human resources of the state, one expected Akwa Ibom State to be one of the most developed states in Nigeria (Umana, 2004 p.88).  Although known to be a Civil Service State, the Akwa Ibom Business environment seemed to have been thriving with activities of business enterprises whose owners are not only from Akwa Ibom State but from other parts of the country as well who had come to tap into the wealth of the state.

The question then arose, “what could be responsible for these up-shoot or development of entrepreneurship in the state”? Is it as a result of established informal sources of microfinance given by the money lenders or as a result of the influx of formal microfinance institutions.  That is, microfinance banks and cooperatives?

The essence of the study is to find out if the development of the entrepreneurship in the state has a direct correlation with micro financing.

A careful study of selected business enterprises in the three senatorial districts of Akwa Ibom State is undertaken to assess this fact. The purpose being that would be entrepreneurs and the government would come to have a clear understanding of the effects of microfinance on entrepreneurship development in Akwa Ibom state.


The importance of finance to an entrepreneur can hardly be overstated.  From the starting of a business enterprise to when it is in operation, even to the time of expansion, an entrepreneur is constantly in need of money.

The Akwa Ibom entrepreneurs are not left out of this. A glance at the Akwa Ibom business environment tends to show that there are a lot of business enterprises in operation and there are microfinance institutions who supply the needed finance sort by these entrepreneurs. The assumption might be that those microfinance institutions have helped in the development of entrepreneurship in the state. How true is this? Does microfinance have an effect on the development of entrepreneurs in Akwa Ibom State?


This study was undertaken to achieve the following objectives;

1.              To ascertain the effects of microfinance on entrepreneurship development in Akwa Ibom State.

2.              To identify microfinance organizations and their contributions to entrepreneurial development in Akwa Ibom State.

3.              To access if the funds made available by microfinance are contributive to entrepreneurial development in Akwa Ibom State.

4.              To identify the problems of microfinance banks to entrepreneurial development of Akwa Ibom State.


We formulated the following research questions

1.                 Does Microfinance affect entrepreneurial development in Akwa Ibom State?

2.                 Are there identified microfinance organizations that contribute to entrepreneurial development of Akwa Ibom STATE?

3.                 Do funds made available by Microfinance banks contribute to entrepreneurial development in Akwa Ibom State?

4.     What are the problems of Microfinance banks to the entrepreneurial development in Akwa Ibom State?


Research hypothesis were formulated in order to achieve the objective of the study.

Ho1`    There is no significant effect of microfinance on the entrepreneurial development of Akwa Ibom State. 

Ho2.  There are no significant identified microfinance organizations that contribute to entrepreneurial development in Akwa Ibom State.

Ho3:  There is no significant effect of funds made available by microfinance bank to the entrepreneurial development in Akwa Ibom State.

Ho4:  There are no significant identified problems of microfinance to entrepreneurial development in Akwa Ibom State.


It is expected that the findings of this study would go a long way to help entrepreneurs operating in Akwa Ibom State and other parts of the country, financial institutions, and Government to fully appreciate the importance and part played by microfinance in the development of entrepreneurship towards the growth and expansion of the economy.  The findings also will provide a highly useful source of reference and information to would be entrepreneurs to know the different source of microfinance which they can avail themselves of.

The study will equally service as a reference material for students and scholars who intend to undertake research in similar and related field of study.


The performances of the entrepreneurs on the growth of the Akwa Ibom state economy were very low; therefore it was justified to examine the causes of such poor performance by the entrepreneurs.

On the other hand it was justified to verify how funds were lent to the entrepreneurs by the microfinance who is the custodian of funds also whether the collateral demanded by the microfinance was too high or out of reach to the borrowers.


This study is centered on the effect  microfinance has on entrepreneurship development in Akwa Ibom State in view to further improve on the development and sustenance of enterprises in Akwa Ibom State.  A number of business enterprises were selected from the three senatorial districts of the state.

The study is in no way attempted to determine what should be the amount of money to be given as loan to entrepreneurs by financiers. Nor was it undertaken to determine the interest rates payable on loan collected by entrepreneurs.

It attempted only to find out and verify if microfinance had an effect on entrepreneurship development in Akwa Ibom State.

Expectedly, the scope of this study is impaired by time factor, financial constraints and the unwillingness of the respondents to respond to provide unbiased answers to the research instruments.


The following terms have been defined to aid a fair grasp of the study:-

Entrepreneur: A person who makes money by starting or running businesses, especially when it involves taking financial risk.

Entrepreneurship: Being an entrepreneur.

Enterprise: A company or business

Correlation: A connection between two things in which one thing changes as the other does.

Senatorial District: An area where a person is elected into the senate of a country.

Microfinance: The provision of financial services provided by formal and semiformal and informal financial institutions to low income clients and self employed.

Capital: A large amount of money that is used to invest in a business or to start a business.

Collateral: Property or something valuable that is promised to give to another person when a loan is given and will be taken if the loan is not repaid.

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