Informal Microfinance and Economic Activities of Rural Dwellers in Kwara South Senatorial District of Nigeria

This study examines the influence of informal microfinance on economic activities of rural dwellers in selected rural areas of Kwara South Senatorial District, Nigeria. It uses a multiple regression analysis on questionnaires administered to members of informal MFIs in the study area.

The paper states that access to informal microfinance helps households achieve consumption smoothing goals, accumulate resources for investment and reduce risks. Study findings indicate that:

• Informal microfinance provides financial services that allow rural dwellers to increase their income and assets, reduce their vulnerability to crises and meet obligations;
• Informal microfinance loans are often too small to help rural dwellers with economic activities;
• Increasing loan size would boost the economic activities of rural dwellers through the introduction of group saving and lending;
• Such a savings product would encourage savings, enabling rural dwellers to take bigger loans.

The paper also recommends that government should improve infrastructural facilities in order to attract people and economic activities into rural areas. This would help improve informal microfinance activities.