This work is designed the bureaucratic process involved on the impact of microfinance bank on the economic development of the rural populace “A case study of Agbeni Community Bank Oyo State”. The nature and future prospect on the impact of microfinance bank of economic development is also examined in this research work. This project work is hereby divided into five (5) chapters. Chapter one talks about the introductory aspect of the study, the background of the study, statement of the problem, the purpose of the study, scope, limitation of the significance of study, the research question, research hypothesis, the historical background of the study and definition of terms. Chapter two deals with the literature review. Chapter three discusses the research methodology used, instrumentation and research design, sample and sampling techniques and population size and sample size. Chapter four covers the data collection, data analysis and data interpretation. Chapter five efforts are made to drawn conclusion, recommendations and while references brings and the suggestion for further research work.
The failure of the mainstream banking has led to development of specialized bank such as community banks, people’s bank, and development bank among others. These institutions constitute the new dimension in banking.
Commercial and merchant bank which are reflected here as mainstream banks are important intermediaries of credit for all sectors of the economy. The Irony of the situation is that the banks re not interested in investing in productive sector of the economy rather they are interesting in investment that will bring a quick return banks for urban center,, their intermediating activities led in the marginalization of the rural centers and their populace in terms of development.
As rightly noted by “Ojo” that the role of the financial system in Nigeria leaves much to be desired since term of finance economic development and presenting the country’s industrialization process. The maladapted structure and functioning of banks and other financial institutions have not significantly improved since independence three-decade age. These short stated led to conventional banks as earlier stated led to the development of people oriented banks like community with basic needs of majority as the focus.
With high concentration of mainstream banks in urban centers and a programmed which in 1977 to converse mainstream bank establish by the end of phase 3 June 1993 total deposit increased to 1.3 billion and total stood at #5.1 billion despite these statistics actual impact on peasant agriculture and rural development was negligible as banks complain of lack of infrastructure and security.
Hence, the introduction of community banks as one of the institutions designed to current malfunctioning of the rural banking scheme became.
1.1 BACKGROUND OF THE STUDY
Community banking is a form of specialized unit banking, community bank is a work of directorate of food, roads and rural infrastructure (DERRI). DFRRI as it is now more community known, has three fundamental mandates firstly,
It was organize to mobilize Nigeria rural communities for developmental activities. Secondly, it was to provide these communities with infrastructure facilities notably roads, water and electricity. Thirdly, it was to provide and enhances productivity among the rural populaces as means of rising their capital earning and income. In a bid to execute its third mandate of promoting productive activities among the rural populace DFRRI was faced with the difficulty of resolving the problem of how to ensure easy access to credit for the masses of the rural populace.
It is clear and evident that without the resolution of this problem of credit provision no wide ranging productive development can be expected in the rural areas. Various representative of commercial, merchant and rural development banks as to how to make their credit provision process more appropriate to the circumstances of the majority of our rural populace but these led no where. As a way out of this imbroglio, the idea of a different and revolution any approach to the problem was conceived, articulated presented and to approve by only the government authority in the country namely the central bank of Nigeria and the ‘baby’ child was christened community bank of Nigeria.
The community bank is the child of the 1989 Budget speech of the president Ibrahim Badamaosi Babangida. It was introduced fully in the 1990 National Budget to provide rural populace financial services to any defined local community bank is one of the institution designed o current and functioning at the rural bank scheme.
The objectives of setting up the community bank scheme include;
- Facilitation of productive responses to the identification needs of the community especially in the rural areas.
- Promotion of a national financial system that integrate all factors at various level of government.
Community bank is a development need of the local community. The guiding principles in the establishment of the community bank are self help and community participation. As a result is expected to lead mainstream bank in its locality.
Community banking becomes effective in Nigeria when Professor Akim Mabogunje led National Board for bank was inaugurated on 16th July, 1991. The Board was to licensing and supervision body for the licensing and supervision of community bank in the country. The board has zonal office in Lagos, Kaduna, Enugu and Bauchi and headquarter presently is in Abuja.