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PROJECT TOPIC: INCREASING CAPITAL BASE AND THE PROFITABILITY OF MICRO-FINANCE BANK, CASE STUDY OF UNICAL MICRO FINANCE BANK CALABAR, CROSS RIVER STATE

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1.1       BACKGROUND OF THE STUDY

The extent to which microfinance, entrepreneurship and sustainability are interrelated is dependent on the extent to which microfinance address the economic development process.

            Generally microfinance institution are poised toward supporting SMS (small and medium scale enterprises with a view of reducing poverty alleviation. This however can only be attainable if their capital base is increased and the end result of high profitability is achieved.

            Yunns (2010) posited that “If we are looking for one single action which will enable the poor to overcome their poverty, I would go for credit money is power”. Credit invested in an income generating enterprise as working capital or for productive assets leads to the establishment of a new enterprises or growth of an existing one.

            Onuha Ijoma (2012) suggested that the extent to which microfinance enterprisenurship and sustainability are dependent is becoming increasingly recognized by experts in their respective fields of works; microfinance though not a sufficient condition for economic development remains a necessary pre-requisite for meaningful growth and development”. Microfinance Institute (MFIs) is sub-Saharar  Africa include a broad rang of diverse and geographically dispersed institutions that offer financial services to low income clients: Non – governmental organizations (MGos), Non- bank financial institutions, financial institutions, microfinance bank (MFBs) and an increasing number of deposit money bank (DMSs). Adegbal Kolorin (2010) Kolorin further summits that they microfinance bank also provide other financial services such as loans, savings, micro-insurance, micro-leasing, funds transfer, pension services etc to poor household, their worldwide growth in number has a positive impact by providing the poor with poor microfinance service and has helped create an encouraging socio-economic countries, Adebgay Kolorin (2010).

            Yaya Gambe (2013) posited that the basic operational objectives of microfinance institution (MFIs) revolve around two approaches or paradigms namely the institutionist paradigm and the welfare paradigms, the institutionist paradigm which affirms that microfinance institution should generate enough revenue to meet their operating and financial cost. The welfarist paradigm which includes a focus on poverty alleviation and dept of outreach along with achieving financial sustainability. Brau and Wolter (2014) posited that an efficient micro finance institution management should promote these two objectives.

            Vetriuel and Kumarmangalam (2010) submitted that the fundamental problem is not so much of unafavourable terms of loads as the lack of access of credit itself. The lack of access to credit for the poor is attributable to practical difficulties arising from the discrepancy between the mode of operation followed by financial institutions and the economics characteristics and financing need of low-income household. They (Brau and Woller) that microfinance institution worldwide have shown that micro enterprise loans can be profitable for borrowers and lenders alike making microfinance one of the most effective poverty reducing strategies. Lafourcage et al (2005) reported that microfinance institution in Africa an dynamic and growing.

            In their study, they confirmed that African microfinance institutions


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