ABSTRACT

Poverty has such an adverse effect that those under it remain trapped in a vicious circle because access to basic necessities of life is lacking or inadequate. The antipoverty programmes of the federal government were targeted at the rural and urban poor with emphasis on women and unemployed youth. The intervention took the form of the provision of basic infrastructures to facilitate rural development as well as provision of credit facilities to improve the lot of the underprivileged by encouraging micro-enterprises in the cities and training programmes for the unemployed youths. This was done because it was realized that Structural Adjustment policies did not achieve steady economic growth and poverty has become more acute as evident among the rural and urban dwellers. The objective of this study was to examine the impact of microfinance banks on poverty alleviation using the Ahmadu Bello University microfinance bank as case study. Both primary and secondary data were collected and used. Also, descriptive statistics were used. The results showed that microfinance banks enhanced rural and urban development; there was improved savings mobilization which improved credit facilities which in turn improved the lot of the rural and urban dwellers by the larger output from micro-enterprises. Data were analyzed by the use of simple percentage and Chi-square statistics. It was found that microfinance banks contributed to poverty reduction. It was concluded that Ahmadu Bello University Microfinance Bank charges high interest rate because of their incapacity to mobilize its funds from the local community but rather borrowing from other banks; thus this has continued to undermine the contribution of microfinance banks to poverty reduction. More study on the design, effects and effectiveness of these antipoverty banks are needed.

1.1 BACKGROUND TO THE STUDY.

Poverty is defined in many ways by a number of rural and urban characteristics. It is strongly  influenced by education, age, the nature of employment and level of income among others. The level of income has been used to construct poverty line. This is the value of income necessary to purchase the minimum standard of nutrition and other necessities of life.  In Nigeria, the poverty line (at 1985 prices) of N395 per person per month and the extreme poverty line of N198 per person per month is used to designate the poor and extremely poor respectively (World Bank Report, 1996). In Nigeria, those without education account for most of the poor. According to the World Bank Report, about 79% of the urban extreme poor and 95% of the rural poor had only primary education or less.

Poverty has such an eroding effect that those under the poverty line remain trapped in a vicious circle of poverty. In such a situation, access to basic necessities of life eludes them and it takes the intervention of the government in most cases for them to be rescued from their plight. In response to their plight and as part of its social responsibility, the government undertakes poverty alleviation programmes targeted at this group. In Nigeria, these poverty  alleviation programmes come in many forms. Some are sectoral in nature, while others are multi-sectoral. In whatever nature or form the programmes are, the primary objective remains the same – how best to reach the poor communities in the society. Government provides funds either through direct statutory budgetary allocations or through sectoral allocations to execute poverty alleviation programmes. The question now is whether these budgetary allocations have been adequate, well managed and have alleviated poverty in Nigeria?

Zaria, one out of the eight local governments along with Sabon Gari, Soba, Makarfi, Kubau, Kudan, Ikara and Lere that constitutes zone one area of Kaduna state with a population 408,198 is the highest followed by Lere Local Government 331,161 and the least is Markarfi with 146,259 people. The Local Government (Zaria has received increased subvention and grants from federation account of almost N1.6billion from June 1999 to May, 2003; N4.2billion in June 2003 to May 2007 and N5.8billion in June 2007 to June 2010. KADSEEDS doc.

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