Revolving Loan Scheme (Esusu) and Socio-Economic Development of Rural Areas

Ayodele Thomas D.

International Journal of Empirical Finance, 2014, vol. 3, issue 5, 266-275

Abstract: The study examined the contributions of Revolving Loan Scheme (Esusu)- RLS, to the socio-economic development of the rural economy focusing on some town and villages of Ondo State of Nigeria.Revolving loan scheme as a traditional financial institution, identified as a major thriving force behind the sustenance of the rural sector despite the growing influence of the formal financial institutions through the grassroot banking network, is indeed the basis of the now internationally accepted and practiced micro financing system.Questionnaires were used to collect data from four local government areas of the state taking two local government councils from the North senatorial district and one each from the Central and the South senatorial district. Simple percentages and tables were used to analyse the data and formulated hypotheses were tested using the chi-square (x2) analysis method. It was revealed from the analyzed data that the ‘Esusu’ arrangement has been of immense significance to the socio-economic development of the rural sector despite its acute limitation in terms of inadequate funds and non-official recognition by the government. Its impact resulted from the gaps still created by the operations of the banks in meeting the need of the rural dwellers, especially in the area of funds and employment generation. It was therefore recommended that the monetary authorities should refashion the Nigerian financial system in order to give appropriate recognition to this traditional financial institution instead of devoting all attention to the western banking style of doing things by rule. Activities of this traditional financial institution should be regulated and harmonized to reduce the rate of default and mismanagement by the operators.

Keywords: Esusu -This is an imposed (or the group influenced) savings on a regular basis; Rural Economy – This comprises of villages (whether big or small); hamlets; farm settlements and rural towns where the duellers are predominantly farmers and petty traders. Micro Finance Banks – These are banks licenced to provide short term funds to people especially of low income range and rural duellers and to provide other service like deposit acceptance etc.Cooperative Society – This is an organization com (search for similar items in EconPapers)
Date: 2014
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