Assessing the Role of Microfinance Institutions in Poverty Alleviation Within the Context of Nigeria Economic Landscape

Prof. Joshua Adewale Adejuwon and Abulude Ibukun Adetoun
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Prof. Joshua Adewale Adejuwon: Department of Management and Accounting, Lead City University Ibadan
Abulude Ibukun Adetoun: Department of Management and Accounting, Lead City University Ibadan

International Journal of Research and Innovation in Social Science, 2025, vol. 9, issue 6, 1058-1075

Abstract: Nigeria faces persistent poverty and economic inequality despite its natural resources. Microfinance institutions (MFIs) serve as financial intermediaries to support underserved populations, but their effectiveness in poverty reduction is influenced by regulatory frameworks, socioeconomic conditions, and technological advancements. This study examines the role of regulation, socioeconomic factors, and technology in poverty alleviation in Nigeria. Surveys were conducted across 53 MFIs in Oyo State’s three senatorial districts (Oyo South, Central, and North) using stratified random sampling. Twelve microfinance banks were purposefully selected, and 240 questionnaires were randomly distributed. Data collection involved structured questionnaire with a 4-point Likert scale and was facilitated by six trained research assistants. Instrument validity was confirmed through a pilot study (48 respondents) and Principal Factor Analysis (Varimax Extraction), with all Average Variance Extracted (AVE) values exceeding 0.5. Reliability testing using Cronbach’s alpha verified internal consistency. Factor analysis was validated using the Kaiser-Meyer-Olkin (KMO) test and Bartlett’s Test of Sphericity. Data were analyzed using SPSS 25, applying inferential (regression, correlation) statistics to evaluate the relationship between MFIs and poverty alleviation. The findings reveal that regulatory frameworks significantly influence poverty reduction efforts, as evidenced by the rejection of the null hypothesis (H01) and an R² value of 0.111 (F(1,238) = 29.632, t = 5.443, p = 0.000). This underscores the necessity for well-structured policies to create an enabling environment for MFIs, fostering financial inclusion and economic empowerment. Socioeconomic factors (H02) exhibit a strong collective influence on poverty alleviation, with an R² value of 0.958, confirming their significance (F = 519.861, p

Date: 2025
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