An investigation of the effectiveness of indigenous savings schemes in promoting economic growth in Eket Local Government Area, Akwa Ibom State.
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Background of the study
Indigenous savings schemes have long been a cornerstone of community-based financial practices in Eket. These informal financial mechanisms, such as rotating savings and credit associations (ROSCAs), are vital for mobilizing local resources and supporting small-scale economic activities (Udo, 2023). In Eket Local Government Area, where formal banking services are often inaccessible to the majority of the population, indigenous savings schemes provide an alternative avenue for financial inclusion and economic empowerment (Akpan, 2024). They facilitate savings, provide credit, and enable members to invest in small businesses, thereby contributing to local economic growth and poverty alleviation (Ibe, 2023). Despite their popularity and cultural significance, these schemes face challenges such as mismanagement, lack of transparency, and vulnerability to economic shocks (Obasi, 2024). As the economy modernizes, there is a growing need to evaluate the effectiveness of these indigenous systems and explore how they can be integrated with formal financial institutions to maximize their impact (Ekwueme, 2023). This study investigates the contributions and challenges of indigenous savings schemes in promoting sustainable economic growth in Eket, aiming to provide recommendations for strengthening these traditional financial practices.
Statement of the problem
Indigenous savings schemes in Eket, while instrumental in promoting financial inclusion, encounter significant challenges that hinder their overall effectiveness. Issues such as poor record-keeping, lack of regulatory oversight, and susceptibility to mismanagement have raised concerns about their sustainability and capacity to drive long-term economic growth (Okafor, 2023). Additionally, the informal nature of these schemes limits their ability to scale and provide sufficient capital for larger entrepreneurial ventures. This creates a gap between the potential benefits of indigenous savings and the actual economic impact on the community. As a result, there is a need for a comprehensive investigation into the operational challenges of these schemes and the identification of strategies that could enhance their performance and contribution to economic development (Chukwu, 2024).
Objectives of the study:
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To investigate the role of indigenous savings schemes in promoting economic growth in Eket.
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To identify challenges affecting the effectiveness of these savings schemes.
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To recommend strategies for integrating indigenous and formal financial practices.
Research questions:
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How do indigenous savings schemes contribute to economic growth in Eket?
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What are the primary challenges limiting their effectiveness?
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How can these schemes be improved or integrated with formal banking systems?
Research Hypotheses:
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H1: Indigenous savings schemes significantly contribute to economic growth in Eket.
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H2: Mismanagement and lack of transparency negatively affect their performance.
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H3: Integration with formal financial institutions enhances their economic impact.
Significance of the study
This study is significant as it sheds light on the effectiveness of indigenous savings schemes in promoting economic growth in Eket. The findings will benefit local policymakers, community leaders, and financial institutions by providing insights into strengthening traditional financial practices and enhancing their integration with formal systems. Ultimately, the study aims to contribute to poverty alleviation and sustainable economic development in the community (Akanbi, 2023).
Scope and limitations of the study:
The study is limited to investigating the effectiveness of indigenous savings schemes in promoting economic growth within Eket Local Government Area, focusing exclusively on traditional financial practices and their challenges.
Definitions of terms:
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Indigenous Savings Schemes: Informal financial systems used by communities to pool savings and provide credit.
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Economic Growth: An increase in the production of goods and services in a region.
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Eket Local Government Area: An administrative region in Akwa Ibom State known for its active community financial practices.
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