INFORMATION DISSEMINATION AND LOAN FACILITY ACCESSMENT BY CLIENTS OF

MICROFINANCE BANKS IN IBADAN METROPOLIS

BY

FESTUS ESTHER CHINASA

MATRIC NO: E043414

SUPERVISOR NAME: DR AWUJOOLA

DEPARTMENT OF LIBRARY ARCHIVAL AND INFORMATION STUDIES (LARIS)

CHAPTER ONE

INTRODUCTION

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 1.1 Background to the study
Kagan (2023) defines microfinance as a financial institution or organization licensed by
the Central Bank of Nigeria (CBN) to carry on the business of providing financial services to
customers. In a clear terms, Asemota (2002) opines that, microfinance banking is about
providing financial services to the economically active poor and low income household which
are traditionally not served by the conventional financial institutions. The author expressed
further that microfinanace banks delivere financial services such as credit savings, micro-
leasing, microinsurance and payment transfers to enable them engage in income generating
activities.
In Kagan (2023) opinion, microfinance banks are known as microcredit because they render
microloans which ranges from #1,000 to #10,000,000 to unemployed or low-income earners
who are trapped in poverty or have limited financial resources as well as those who do not
have enough income to startup a business. Kagan (2023) also affirms that microfinance banks
allow people to take reasonable small business loans. The author points out that the ethical
lending strategy of this type exist all over the world, however, majority of microfinance
operations occur in developing countries like India, Bangladesh,Indonesia, Ecuador,
Afghanistan and Republic of Congo as well as in Nigeria.
The World Bank Document (1993) categorises microfinance banks as those financial
institutions that have contributed in uplifting people and supporting a larger number of
activities such as bank checking, savings account, startup capital, creating opportunity,
facilitating educational programmes among others. With the world bank position, it is
ascertain that microfinance banks relief most poor citizens who are typically looking on their
families, friends,neighbours, even loan sharks who charges exorbitant interest rates for
assistant. The activities of microfinanace banks have given more stability and prosperity to
most families, especially women through financial empowerment. Microfinance banks are
therefore known for rendering Loan services to people.
Nwosu ( 2017) defines loan as sum of money, property or any item with permission and
conditions that it will be returned or repaid over time or at a later date with interest. Online
Business English Dictionary (2023) defines loan as an act or instance means of lending,

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granting something for temporary use. It is a provision of capital usually at interest or without
interest rate.However,there are two major types of loan the secured loan and unsecured
loan.
According to Nwosu (2017), secured loan is a type of loan where the credit officer and the
clients have prior knowledge and agreement of. This means that before the loan is offered,
the client must have provided some forms of network/ collateral to offer the credit officer.
The secured loans include term loan - this is a loan granted by banks and other financial
institutions for a specific amount and on a particular repayment terms. There is also a fixed
or fluctuating interest rate. Another form of secured loan is mortgage loan - This is granted
by banks and other financial institutions for the purchase of real estate like house or property
usually with specified interest rate and repayment period that is clients must be eligible to
assess these loan facility willingly and choose to pay back with terms and conditions guiding
that particular microfinance bank which the client in question is assessing loan product from.
Consequently, unsecured loan is describe as a loan in which the borrower does not pledge
any asset as collateral or guarantee for the loan. (Nwosu, 2017). These unsecured loans
include credit card loan that is an electronic card, usually issued by banks and other financial
institutions which allows the holder to spend an amount above their account balance but up
to an agreed limit. Secondly, personal loan is a loan granted to an individual for household or
other personal use. It is also referred to as consumer loan.
In Grooming Centre Microfinance Institution Financial Report (MFIR) (2014) loan
products are designed in order to service individual or groups better with loan that suits
them. According to the Report, many loan products are itemised accordingly which include;
group loans,individual business loans, agricultural loans, asset loans, festival loans,
solar/energy loans, insurance loans, individual daily loans, small loan, educational loans and
association loans. Other are federal public sector loans, state public sector loans, housing
loans, spring loans, lnternational fertilizer development center (IFDC) loans, small and
medium-size enterprise(SME), corporate/individual loans, green energy corporate loans,
money transfer and savings account. All these are otherwise called loan facilities.

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A loan facility is a type of pre-approved loan which allows the borrower to borrow money on
an ongoing basis over an extended period of time, rather than applying for a new loan each
time the borrower needs more money.There are two types of loan facility namely: short term
loan which is mostly use for working capital requirements of an organisation, including paying
off creditors and bills. While long term loan is used to meet the capital expenditure
requirements of the enterprise generally financed through banks (Chen, 2023).
Chen (2023) states that loan are traditional funds that borrowers could assess upfront,
amortization schedule of payments to return the principle and interest charges back to the
lender. Amortization is the reduction of loan principal over a series of payments or the
distribution of the cost of an intangible asset, such as an intellectual property right, over the
projected useful life of the asset. While loan facility is more flexible, as the agreement allows
a borrower to take on debt only when needed.
Grooming MFIR (2007) further explained that to be eligible for assessing loan from
microfinance, it is adviced that people that will assess loan should have a reasonable small
business at hand before coming for loan, this will enhance re- paying the loan in appropriate
time. Management class however is given to people, this is premised upon knowing the
organisation, understanding their products, time to assess loan, interest rates, numbers of
week or months to pay back and concept of cashflow. Others are having financing
agreements, how savings accounts works/useful, how to budget and how to manage debt.
Once customers are informed, they could register and apply for loans, such customers
must also agreed with terms and conditions guilding the rules of payment of the
microfinance organisation (this is called loan agreement). In most loan arrangement,the
following are included: principal amount to be given,interest rates (that is total package to
payback at the end),Date of repayment (that is the date at which the principle and amount
will be paid back),the amount to be paid at each returns and numbers of weeks or months to
repay. A loan officer or credit officer helps borrowers with loan applications forms, oversees
the lending process and approves loans.
The Microfinance Bank Information Sources (MFB, 2000), asserts that some microfinance
banks offer non-interest loans but share in the profit of the business for which the loan is

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given. Therefore, people eligible to assess loan from such microfinance banks must be of
legal age (18 to 85 years old) which is the active age, they must be mentally fit, be credible,
such must have bank accounts. They should have good credit rating and not indebated by
other financial institutions. In addition such client must meetup customers KYC (Know Your
Clients) requirement and they must have the capacity to repay.
In the analysis of Grooming MFI sources, some documents require for loan application
are: loan application form, Biometrics Verification Number print out, valid means of
identification, copy of recent utility bills and recent passport photographs. Such an individual
must also provide evidence of the business location, bank statements and business records as
well as collateral(s)/guarantor(s) (but not in all cases) for instance, online/ digital banking
platform.
Navy Federal Credit Union (2023) asserts that some critical assessment needed when
considering loan applications are the credit score and history of the client, income and
employment history, debt-to-income ratio, value of collateral/guarantor, size of down
payment, liquid assets and loan term. Though, each lender has its methods for analyzing a
borrower's credit worthiness. Most lenders use the five Cs—character, capacity, capital,
collateral and conditions—when analyzing individual or business credit applications.
Oyebowale (2009) points out some factors that warrant people accessment of loan include:
business support, home renovation, vacation finance, debt consolidation, moving expenses,
car purchasing, education, emergency expenses, engaging and wedding expenses, large
purchases, credit repayment among many others.
It is important to note that, whenever one need debt consolidation to pay off existing
loans such an individual should make a large purchase. This is because obtaining debt makes
it more easier to cover all the expenses which has made up a great relief to the people. A
client could also get a loan to pay for any of his/her personal needs without affecting his/her
budget or even overburdening such individual by accessing a flexible payment plans.
However to achieve getting a reliable microfinance to assess loan, information is highly
needed.

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 Merriam Webster Online Dictionary (2023) defines Information as a representation of
reality. It is used to convey knowledge about the world around us. It can be factual,
subjective or even fictional and can take many different forms depending on its purpose and
audience. Lisedunetwork (2023) views Information as a processed, organised and structured
data. It provides context for data and enables decision making. For instance, a single
customer's sale at a provision store is data – this becomes information when the business is
able to identify the most popular or least popular products. Information is the facts or details
of a subject, that is, knowledge that you get about someone or something. Information is
power and key to any development and progress in any sector therefore it must be
adequately disseminated.
On the other hand dissemination of information refers to the distribution knowledge of
something so that it reaches many people or organisations. Information dissemination is the
process of sharing new or existing information with others. It can be done verbally, through
writing accurate or even via a particular technology. Bhasin (2023) views dissemination of
information as a key component of effective communication, because it ensures that
information reaches its intended audience. The term is commonly used in the context of
news media, but it can also apply to other forms of communication, such as marketing or
advertising.
According to Taylor (2020), information dissemination is a process by which facts are made
available to the general public. It is no longer limited to face-to-face conversation or the
exchange of written correspondence. The advent of technology has played a big role in
changing the way information is disseminated. Bhasin (2023) explains that information
dissemination is an assertive information service which educates and informs targeted
groups of people about issues, possibilities and other problems of their interest. Transmission
of information to target audience a necessitates systematic planning, gathering, organisation
and information storage. Example of means through which information can be disseminated
are: newspapers, television, news programmes, radio and magazine as well as through digital
media, such as the internet, email and social media.(Moscow Declaration on Media and
Information Literacy, 2012).

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No one source of information is perfect, so it is important to deploy multiple sources to get
the most accurate means of disseminating information. Information can also be disseminated
on a more personal level, such as when a friend tells one about a new product that they
tried. (Bhasin, 2023). The microfinance banks staff through their marketing officers,
advertisement and plea that customers should refer another customer can get information
across. The perceived value of information disseminated is how a customer sees the benefits
and value of a product and information medium used, it is how workers or staff of
microfinance institute create awareness and relate with customers effectively.
This value of information dissemination could be anything, such as level of loan facilities
accessed, money saved, better health services enjoyed from the loan or higher social
businesses embarked upon by clients and many other ways to show customers that their
product is better in offering financial services (Oyebowale, 2020). Some customers that have
enjoyed a benefit or another can also go out to inform others about how polite the staff in a
microfinance are, how useful the microfinance products are, how loans are easily given, how
convenient it is in repaying loan accessed back among others. Information can also be
circulated from staff of microfinance to customers through word of mouth, flyers, handbills,
posters, social media among others. Information among clients is mostly done through word
of mouth by friends, relative or neighbours respectively (Bhasin, 2023).
Understanding customer perceived valued information dissemination is important because
microfinanace staff and marketing professionals can use the idea to predict how a consumer
may view a product. When the perceived value of information dissemination medium
increases, the microfinance company can get more customers or sell more units, both of
which result in higher profits. This means that marketing professionals should always try to
increase the perceived value of their goods and services by determining what their customers
value most. To do this, they perform market research such as data collection, trials and
surveys (Career Guide,2022).
Microfinanace banks are established as loan facility provision institution to offer loan to those
low income individual and those who may not have the resources or collateral to access loan
from other commercial banks. Members of the society can access any loan facilities from

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microfinanace banks, those that is most continent for them to return.To access any loan
facility from a microfinanace bank however is determinant on the perceived system of
information system use by microfinanace banks. It is on this back drop that the study will
investigate information dissemination and loan facility accessment by clients of
microfinanace banks in Ibadan Metropolis.
1.2 Statement of the problem
The economical situation in the country and the urgent need to meet some social,
psychological and economical needs of man have warranted the demand to access loan
facilities among citizens in Nigerians. These loans are granted by microfinanace banks
scarttered all around the country. Microfinance banks are financial institutions that offer
financial assistance to clients who many not have access to financial services otherwise
provided by conventional banks. Many of these banks have become a loan sharks that have
inflicted more pain on clients. Most clients do not access loans or do not know where loans
can be accessed. A major problem is lack of information dissemination to clients.
Many Microfinanace banks do not use proper channals to disseminate information on
loan facilities to clients. There are no sensitisation and educational programmes on how to
access loans,manage debt and on benefits to be gained in accessing a loan. Information
dissemination on how to identify and access loans from a reliable microfinanace banks is
scarce which has led many clients and small business owners to become prey to frauds and
unregistered money lenders. It is on this note that the current study investigates information
dissemination and loan facility accessment by clients of Microfinanace banks in Ibadan
metropolis.
1.3 Objective of the study
The main objective of the study is to investigate information dissemination and
loan facility accessment by clients of microfinanace banks in Ibadan Metropolis.
The specifics objective to:
i. determine the loan facility accessible to clients of microfinanace banks in Ibadan
Metropolis;
ii. examine the level of accessibility to loan facility by client of microfinanace

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 banksin Ibadan Metropolis;

iii. assetain the information dissemination medium use by microfinanace banks in

Ibadan Metropolis;

iv. find out the frequency of use of information dissemination medium by

microfinanace banks in Ibadan Metropolis; and
v. determine the relationship between information dissemination and loan facility
accessment by clients in microfinanace banks in Ibadan Metropolis;
1.4 Research question
The following questions will be answered by the study.
1. What is the loan facility accessible to clients of microfinanace banks in Ibadan
Metropolis?
2. What is the level of accessibility to loan facility by client of microfinanace banks
in Ibadan Metropolis?
3. What is the information dissemination medium used by microfinanace banks in
Ibadan Metropolis?
4. What is the frequency of use of information dissemination medium by
microfinanace banks in Ibadan Metropolis?
5. What is the relationship between information dissemination and loan facility
accessment by clients in microfinanace bank in Ibadan Metropolis.
1.5 Scope of the study
The study will investigate information dissemination and loan facility
accessment by clients of Microfinanace banks in Ibadan metropolis. Variable of
information dissemination which is the independent variable will cover types of
medium use in information dissemination and frequency of used. While, the
dependent variable loan facility accessment will cover types of loan facility
accessible to clients of microfinanace banks in Ibadan Metropolis. The population
scope of the study will include clients and staff of three microfinanace
banks in Ibadan Metropolis.Geographical scope of the study is

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 Ibadan Metropolis. Ibadan Metropolis is considered by the
study because Ibadan has enough microfinanace banks that can be studied and a
lot of business associations in different trading activities that prompt clients to
access loans from the microfinanace banks in Ibadan Metropolis.
1.6 significant of the study
The study will be significant to the following stakeholders: clients of microfinanace
banks, staff of microfinanace banks, management of microfinanace banks, financial policy
maker, academics and the society.
The findings of this study would be useful to clients of the microfinanace bank in that it
would help them to know the importance of obtaining a quality and genuine information on
how to access loan from realiable microfinanace banks which render loan facility with a
minimal amount of interest in their locality thereby knowing ways of improving their
businessess when a loan is accessed from any microfinanace bank of their choice to enable
them pay back loan at when due without any stresss or regret.
It would help the staff of microfinanace banks to know the best medium to use in
disseminating informations about loan facilities rander by their financial institutions which
would improve portfolio of each staff and also contribute a lot to the growth of the
organisation. The staff will also know method of information dissemination that would suit
and give them the best results which would actualise the goals and mission of the
organisation.
It would help the management of microfinanace banks to know the benefit of improving
information dissemination in their sector, making them to understand that information is
very vital and a key to any success of a sector.Informations on loan facilities that are available
in their financial institutions need to be aware to the public services. The result of the study
would also bring out the areas that need improvement and make suggestions for improving
on them.
The findings of the study would be useful to financial economic policy maker,

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 this is because Information dissemination can affect the success of policy implementation, as
the implementation performers need to understand the simplicity of the policy and how to
convey it to the target group.
The study would help the society to know the usefulness of information dissemination
which will lead them to the right source where they can access loan facilities in form of banking
service that provide low-income to individuals or groups who have limited financial resources,
to do business with traditional financial institutions. Through this study the society will know
that information dissemination gotten from microfinance ultimately give impoverished people
an opportunity to become self-sufficient and improve their society.
The students would also find it very useful in some research work on project issues by
boosting their knowledge about information dissemination in microfinance banks which
would contribute to alleviate poverty in the society. Those who need referencing materials
on information dissemination and loan facility accessment by clients in microfinanace banks
will find this study useful.
1.7 Operational definitions of terms
The following terms are defined operationaliy as used in the study.
Clients of microfinanace banks. They are people who access loan facility from the
microfinanace banks in Ibadan Metropolis.
Microfinanace banks. These are banks that give loan facility to clients. These banks also
provide loan facilities to low-income individuals or groups who otherwise would not have
access to financial services.
Staff of microfinanace banks. These are workers in microfinanace banks that issue loan
facilities to clients in Ibadan Metropolis.
Information dissemination. This is a method through which microfinanace banks in Ibadan
Metropolis share knowledge of something to clients in Ibadan Metropolis.
Loan facility. This is a type of loan which permit clients of microfinanace banks in Ibadan
Metropolis to borrow money and return back based on an extended period of time rather
than accessing new loan each time the borrower need more money.

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Loan facility accessment. This is a method of obtaining loan from microfinanace banks in
Ibadan Metropolis.

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