The impact of microfinance on poverty alleviation in Northwest Nigeria : the moderating effect of entrepreneurial self-efficacy

Nigeria has been among the 25 poorest countries since 2006 with over 70% of her population living in poverty. This resulted in several poverty alleviation efforts including microfinance as an alternative intervention to direct aid from the government, the private sector and NGOs. However, despite massive increase in the number of microfinance banks (MFBs) with expanded branch networks and corresponding rise in customer base, the poverty level in the country is still alarming. This study seeks to empirically contribute to the debate on the role of microfinance on poverty alleviation in Northwest Nigeria with moderating effect of entrepreneurial self-efficacy. Quasi-experimental design was used in this study which employed stratified sampling technique to draw the sample from the selected MFBs. A total of 400 MFBs customers served as the treatment group while 200 unsuccessful loan applicants were used as the control group. Out of 600 administered questionnaires 423 were duly retrieved; giving a return
rate of 71%. Additionally, during data cleaning nine copies of the questionnaire were considered unsuitable and therefore discarded. Consequently, 414 copies (69%) of the questionnaires were used for the analysis. The treatment group has 277 questionnaires while the control group has 137 giving total usable questionnaires of 414. The data was analysed using standard multiple and hierarchical regression. Findings revealed a significant positive association between microfinance and poverty alleviation; and microsavings have more significant effect on poverty alleviation than microcredit and entrepreneurial skills. Further, the results showed that entrepreneurial self-efficacy wielded moderating influence on only microcredit and entrepreneurial skills. It was recommended that MFBs‘ training sessions should focus on moral persuasion that will boost entrepreneurial self-efficacy of clients; and compulsory savings should complement credit disbursement so as to enhance its positive effects on poverty alleviation.