Determinants of Microentrepreneurs' Participation in Cowries Microfinance Bank (CMB) Programme in Lagos State, Nigeria

Microfinance banks and microenterprises are important sectors that can enhance development in an economy, especially in developing economies where the level of poverty is often very high. This paper investigates the factors that influence microentrepreneurs' (MEs) participation in microfinance programmes in Lagos State, Nigeria. The study used Cowries Microfinance Bank (CMB) as a case study bank. Socioeconomic characteristics of the MEs which are age, gender, marital status, educational level, business experience of the MEs, household size, membership of a political party and income were used as variables of measurement. Total samples of 550 MEs (participants and non-participants) were selected from the list of CMB's clients, through a simple random sampling technique. The samples were further disaggregated into poor MEs (305) and non-poor MEs (245). These samples were estimated using a Tobit regression. The results of the Tobit regression indicate that the determinants of participation in the CMB programme for the poor MEs are gender, educational level, business experience, membership of a political party, household size, income and marital status of the respondents. The only variable that is not significant for the poor sample is age. On the other hand, for the non-poor MEs, the determinants of participation in CMB programme are age, membership of a political party, education and income of the MEs. Hence, CMB should consider the gender, educational level, business experience, membership of a political party, household size, income and marital status when giving out loans to the poor MEs. While for the non-poor MEs, the bank should consider the age, membership of a political party, education and income of the MEs when giving out loans to them. This will ensure that the loans are appropriately disbursed to those who are more likely to participate in CMB programme, thus making such programmes most likely to be successful in delivering benefits to microentrepreneurs.