The impact of Access to Cowries Microfinance Bank’s (CMB) Loan on the Business Growth of Micro Entrepreneurs in Lagos State, Nigeria

Abstract

This paper examines the impact of Microfinance credit programme on business growth of micro entrepreneurs (MEs) in
Nigeria, using Cowries Microfinance Bank (CMB) as a case study. A total of 550 MEs were selected through a simple random
sampling from the list of CMB’s clients, which consists of both participant (250) and non-participant (300) MEs. This sample was
divided into poor MEs (305) and non-poor MEs (245) based on their poverty status. The profit of the MEs was used as a measure of the business growth of the micro entrepreneures. Data were estimated using Propensity Score Matching (PSM). The results of the Average Treatment effect on the Treated (ATT) obtained from the PSM analysis indicate that the poor participant MEs on the average have a positive and significant impact of participation in the CMB programme on their business growth than the poor non-participant ones. On the other hand, the non-poor participant MEs on the average have a significant but negative impact of participation in the CMB programme on their business growth in contrast to the non-poor non-participant MEs. That is participation in CMB programme has an increasing influence on the business growth of poor participant MEs and a decreasing effect on the business growth of non-poor participant MEs. This study therefore, recommends that CMB should concentrate more on the poor MEs when giving out loans to MEs, as the loan has an increasing and high influence on the business growth of the poor MEs compared to the non-poor MEs. Hence, this indicates that the loan product has the potential to improve the poverty status of the poor participant micro entrepreneurs in Lagos State, Nigeria.