How does micro finance factors affect the performance of female entrepreneurs in Nigeria?
1.1 Abstract
Females play a vital role in the development of their families and communities but certain obstacles such as unemployment, poverty, societal discrimination. low household income especially in developing countries have hindered the effective performance of females role. Arguably, female entrepreneurship could be an effective strategy in reducing poverty reduction in an economy. However, female entrepreneurs in developing countries have little or no access to micro finance factors for their entrepreneurial activities, therefore causing them to have low business performance than their men. Whereas in the informal sector of the economy the rate of the performance of female entrepreneurs is higher than the performance of male entrepreneurs. Micro finance factors could have positive effect on enterprise performance.
Keywords: Micro finance, female entrepreneurs performance, Nigeria.
1.2 Introduction
According to Akanji 2006, even though women play a vital role in the development of their families and communities; women entrepreneurs still have low business performance compared to their male entrepreneurs. Factors that contribute to the low business performance in female entrepreneurs are lack of savings, credit, social capital and education or training, (Shane, 2003). Also according to UNIDO 2001, poor access to technology, market information, finance, poor support services, unfavorable regulatory environment and an unfavourable policy. Female entrepreneurs also face additional obstacles, this is due to discriminatory social, cultural values and traditions. For example, growing up in Nigeria, where there were debates on whether a female education should end up in a kitchen Furthermore, it is rather difficult for female entrepreneurs in developing countries to access credit to continue to start their entrepreneurial activities. (Ibru, 2009; Iganiga, 2008; Iheduru, 2002; Kuzilwa, 2005; Lakwo, 2007; May, 2007; Okpukpara, 2009), even though the participation of female entrepreneur in the informal sector of the economy is higher than the rate of participation of males (Akanji, 2006; Akinyi, 2009). Women in developing countries, lack the ability to save (Akanji, 2006; Mkpado & Arene, 2007; Akanji, 2006). Savings as a micro-finance factor helps individual with few assets to save, that is making weekly savings as well as contributing to group savings. And these are savings are mobilized by the micro-finance institutions for further lending to other customers (Mkpado & Arene, 2007). According to IFC, 2007, female entrepreneurs in developing countries lack training. Also, entrepreneurial process is a crucial source in the development of human capital and it play a vital role that helps in the improvement of attitudes, skills and abilities (Brana, 2008; Cheston & Kuhn, 2002; Shane, 2003). Training is one pf the most important micro-finance factor in female entrepreneurship as it provides the skills and experience needed for female entrepreneurs to run a business (Akanji, 2006, Cheston & Kuhn, 2002; Kuzilwa, 2005). Education is also related to training, and women entrepreneurs in developed countries are better educated than those in developing and under developed countries (Ibru, 2009). According to Akanji, 2006; Cheston & Kuhn, 2002; Kuzilwa, 2005, skills training and tertiary education play a major role in the effective performance of a business and many women lack this. Social capital are important for the start-ups of firms and have been widely measured to have a positive impact on the performance of female entrepreneurship (e.g Brata, 2004; Mkpado & Arene, 2007, Olomola, 2002). There is scarce research that jointly links credit, savings, training and social capital to female entrepreneurship performance especially in developing countries Nigeria included. Female entrepreneurs in developing countries lack savings, credit, training and social capital for entrepreneurial activity and subsequent business performance (Akanji, 2006; Cheston & Kuhn, 2002; Ibru, 2009; Kuzilwa, 2005; Peter, 2001; Olomola, 2002).
Entrepreneurship represents an opportunity for both men and women all over the world. It responds flexibly to change, entry and innovation. And this has still not been realized in an optimal fashion in most developing countries. A large number of women work in the informal sector but their contribution is not included in national accounts (UNIDO, 1995).
According to Ikhide and Alawode, 2001, due to Nigeria’s inability to develop her financial sector this led to banks distress which necessitated the financial sector reforms in 1987, 1991 and 2000 which lead to the licensing of 793 micro-finance banks in 2006. Events like this hinders the economic development and increases level of poverty in a country. The inability for an economy develop its financial sector leads to studies low economic development and high poverty in a country (Chakraborty, 2008; Iganiga, 2008; Stephen & Wilton, 2006; William & Thawatchai, 2008). Micro-finance factors and entrepreneurship performance is important to Nigeria due to her poor economic indices portrayed by low GDP growth rate, high population, high birth rate and low death rate, high poverty and high unemployment (I.L.O, 2009; N.B.S, 2007; C.I.A, 2009). In light of this, the Nigerian government encouraged vulnerable women to form Women Cooperatives Societies, where micro finance factors can be accessed for entrepreneurial activities. These societies help in the improvement of their quality of life and the economies.
Research topic and question
Research topic: Female entrepreneurship and development
Research question: How does micro finance factors affect the performance of female entrepreneurship in Nigeria
1.3 Aims and objective
The main aims and objective of this research is; To determine how the access to finance can impact the performance of female entrepreneurs . This would be derived from the main objective by;
i. Examining the importance of entrepreneurial activities in development of Nigeria
ii. Identifying the problems and challenges faced by the women entrepreneurs in Nigeria when they are granted access to micro finance.
iii. Identifying the relationship between micro finance factors and women entrepreneurs performance
iiii. Creating awareness of the importance of micro finance institutions in the development of female entrepreneurs Nigeria
v. Suggesting ways to enhance the business performance of the women entrepreneurs.
1.4 Literature review
Evidences from literature will show that the provision of adequate credit aids the performance of an entrepreneur(Gatewood et al., 2004; Kuzilwa, 2005; Lakwo, 2007; Martin, 1999; Ojo, 2009; Peter, 2001). The result of credit assistance to female entrepreneurs is seen to be in improved investments, income, employment, output and welfare of the entrepreneurs performance (Kuzilwa, 2005; Lakwo, 2007; Martin, 1999; Peter, 2001). Micro finance factors such as credit had a positive impact on business performance of female entrepreneurs in Kenya for example (Peter, 2001), well being and income of female entrepreneurs in places like Uganda (Lakwo, 2007). And had a huge positive impact in the performance of female entrepreneurs in Nigeria in credit and savings. (Ojo, 2009). Credit and training had positive impact on women entrepreneurs performance in Nigeria and Tanzania (Kuzilwa, 2005). Savings acts as insurance for credit since female entrepreneurs lack physical collateral's (Akanji, 2006; Mkpado & Arene, 2007; Versluysen, 1999). Savings has been found to have positive effect on enterprise productivity in Nigeria (Ojo, 2009). Also, savings, credit and training had a positive impact on female entrepreneurs in Haita, Nigeria Malawi and Kenya in income and well being (UNCDF/UNDP, 2003). It was found out that skill training is essential to provide the necessary entrepreneurial skill for a business (Cunha, 2007; Jill et al, 2007; Robinson & Malach, 2004; Ying, 2008). Futhermore, training had positive impact in Nigeria, Ghana, USA, Tanzania and Canada in the performance of female entrepreneurship (Ibru, 2009; Cheston & Kuhn, 2002; Jill et al., 2007; Kuzilwa, 2005; Reavley & Lituchy, 2008). Women entrepreneurs, especially in developing countries like Nigeria, lack a source of credit and market information (Olomola, 2002)
1.5 Methodology
The aim of this research is to determine the impact micro finance has on female entrepreneurship based on data collected that would be collected from two regions in Nigeria, namely Abuja which is the Federal Capital Territory of Nigeria (FCT) and Lagos the most populated city in Nigeria and the former Federal Capital Territory (FCT). A online questionnaires will be taken and the data will be gathered by taking a survey consisted of 100 female entrepreneurs, fifty from Lagos and fifty from Abuja. The secondary data will be obtained from previous research and journal articles. According to Tuckman,1972, questionnaires are good research methods. They give information about the past, present and also offer the best means of obtaining standardized stimuli. The questions for the online questionnaire will be:
(1) Questions about the entrepreneurs firm: number of employees, type of business, number of female employees, number of women managers,ownership.
(2) Questions about personal details: marital status, educational level, if they have children, age, location and work history.
(3) Questions about the entrepreneurs expectations and career experiences such as : problems, reasons for success or failure, why they were working in business, why they decided to be an entrepreneurship.
(4) Questions that elicits the entrepreneurs opinions: do men and women differ in their management styles, in style of running a business, how they differ, do they have the same opportunities in business, what were the main problems for female entrepreneurs, what challenges have they faced.
Ethical consideration in this research and getting the data is very critical.
1.6 Timetable
1
October – November
Add to abstract and introduction
2
November
Questionnaire and review literature review
3
December – January
Further readings and review methodology
4
February
Search for supporting literature and analyse collected data
5
February – March
Write first draft
6
March – April
Review literature review, check language and referencing
7
April – May
Final proof reading and submission