THE IMPACT OF MICROFINANCE INSTITUTIONS ONECONOMIC GROWTH IN NIGERIA

Abstract

The study adopted a descriptive analysis and graphi- cal approach in expressing the readily available data between 1992 and 2017 on how the microfinance institutions affected the following economic indexes used in the study: agriculture and forestry, mining and quarrying, manufacturing and food processing, real estate and construction, transport/commerce and other subsectors of the economy. The purpose of the study was to investigate the unimpressive perfor- mance of microfinance institutions in Nigeria over the past two decades. The result indicated that the loans from microfinance institutions had a positive impact on the selected macroeconomic sector and enhanced sector al productivity of the country as illustrated graphically in the study, and had a positive effect on the gross domestic product of Nigeria. Though, with a significant improvement in the operational modali- ties of the microfinance institutions, there will be an improved output, which will have a multiplier effect on the agriculture and forestry, mining and quarrying, manufacturing and food processing, real estate and construction, transport/commerce and other subsec- tors of economy as alighted in the study. The study, therefore, recommends that interest rates should be reduced on the loans given to the alighted subsectors to enhance economic growth.