An evaluation of local government involvement in providing microcredit to small businesses in Keffi Local Government Area, Nasarawa State
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Chapter One: Introduction
1.1 Background of the Study
Microcredit has become a vital tool for poverty alleviation and economic empowerment, particularly in developing countries like Nigeria, where small businesses form the backbone of the economy. In Keffi Local Government Area (LGA) of Nasarawa State, microcredit schemes have been used by the local government as a strategy to empower small-scale entrepreneurs and enhance local economic development. The goal of microcredit programs is to provide low-interest loans to small businesses that lack access to traditional banking services. These programs aim to foster entrepreneurship, create employment, and reduce poverty by enabling small business owners to invest in their operations and improve productivity (Yusuf & Salihu, 2024). However, despite the significance of microcredit in promoting economic development, its effectiveness in Keffi LGA remains unclear. Challenges such as limited access to funds, lack of financial literacy, and insufficient monitoring have hindered the full potential of these programs. This study will evaluate the local government’s involvement in providing microcredit to small businesses in Keffi LGA, examining the extent to which these programs have contributed to local economic growth and identifying the barriers that undermine their success (Abdullahi & Ibrahim, 2025).
1.2 Statement of the Problem
Local government involvement in microcredit programs has the potential to significantly impact the growth and sustainability of small businesses in Keffi LGA. However, despite several initiatives, there are persistent challenges related to access, repayment, and overall effectiveness. Many small business owners still face difficulties in obtaining loans due to strict eligibility criteria, lack of proper documentation, and insufficient information on available schemes. Moreover, the absence of effective monitoring and support systems has resulted in low repayment rates and limited expansion of the beneficiaries' businesses. These issues point to gaps in the implementation of microcredit policies that need to be addressed for these programs to be truly impactful. This study seeks to investigate how local government microcredit programs have influenced small businesses in Keffi LGA and the challenges that have impeded their success.
1.3 Objectives of the Study
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To assess the effectiveness of local government microcredit programs in promoting small business development in Keffi LGA.
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To evaluate the challenges faced by small businesses in accessing local government microcredit facilities in Keffi LGA.
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To explore the impact of microcredit on the sustainability and growth of small businesses in Keffi LGA.
1.4 Research Questions
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How effective have local government microcredit programs been in supporting small businesses in Keffi LGA?
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What challenges do small businesses face in accessing microcredit loans from the local government in Keffi LGA?
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What is the impact of microcredit on the growth and sustainability of small businesses in Keffi LGA?
1.5 Research Hypothesis
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Local government microcredit programs have a positive impact on the development and sustainability of small businesses in Keffi LGA.
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Small businesses in Keffi LGA face significant barriers in accessing microcredit loans due to eligibility and procedural challenges.
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There is a significant relationship between the availability of microcredit and the growth of small businesses in Keffi LGA.
1.6 Significance of the Study
This study is significant because it will provide insights into the role of local governments in fostering small business growth through microcredit programs. It will contribute to the understanding of how local governments can enhance the effectiveness of such initiatives and overcome existing challenges to ensure the sustainable development of small businesses. The findings will also help policymakers and financial institutions design better-targeted microcredit programs that address the specific needs of small business owners in Keffi LGA and similar regions.
1.7 Scope and Limitations of the Study
The study will focus on evaluating the local government’s role in providing microcredit to small businesses in Keffi LGA, Nasarawa State. It will assess the impact, challenges, and outcomes of these microcredit schemes. The study will be limited by the availability of data and access to relevant stakeholders in the local government and small business sectors.
1.8 Operational Definition of Terms
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Microcredit: Small loans provided to individuals or groups who do not have access to traditional financial services, intended to promote small-scale entrepreneurship.
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Small Business: A privately owned enterprise with a relatively small market share, usually focused on local trade or service provision.
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Local Government: The government at the lowest level, responsible for providing services and implementing policies for the welfare of its community.
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