Can Microfinance Activities Reduce Poverty in Nigeria? Evidence from Small Business Owners in Ilorin

Ibrahim Agbeyinka

doi:10.53639/ijssr.v7i3.426

Authors

Ibrahim Agbeyinka Walter Sisulu University, South Africa

DOI:

https://doi.org/10.53639/ijssr.v7i3.426

Keywords:

microfinance, poverty reduction, microcredit, financial inclusion, Nigeria

Abstract

Microfinance is increasingly promoted in Nigeria by governments, development agencies, and private investors, yet poverty remains widespread. This raises the question of whether microfinance is primarily a profitable venture, an effective anti-poverty instrument, or both. This study examines whether microfinance activities reduce poverty among small business owners in Ilorin, Kwara State, Nigeria. Using a quantitative, cross-sectional survey design, data were collected through a structured five-point Likert-scale questionnaire from 70 business owners selected by simple random sampling from small and medium-sized enterprises registered with the Small and Medium Enterprises Development Agency of Nigeria. The data were analyzed in SPSS version 22 using descriptive statistics and multiple regression. All four microfinance dimensions microcredit, micro-savings, training and advisory services, and financial inclusion had positive and statistically significant effects on poverty reduction and jointly explained 62.8 percent of its variation, with microcredit having the largest effect (β = 0.499). The study recommends that policymakers and microfinance banks expand accessible and flexible microcredit for individuals and small businesses while strengthening savings products, financial inclusion, and business training.

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