The world is a dynamic place whereby nothing remains static and steady. Every phase of development in a country’s economy has its own inherent characteristic and peculiarities as well as problems. One of such phase is the economic development phase. The word economic development refers to a period of growth or changes to maturity in economy. It is a transitional period from dependent to independent nation which is also referred a midway between savagery and civilization.

There are some inherent characteristics, which make this period of national growth prominent among this are both social and economic changes. The number of small and medium scale enterprises increases as well as the level of faming technology. Many of these firms and adopted several strategies for the funding of their various businesses. For any business to sustain its going concern it must make adequate provision for raising cheap capital. The problems facing the economy of Nigeria are multitanous and heterogeneous ranging from personal, social, political, educational and financial problems in the 1940s, the report from many national and local dailies speck of cases of liquidation of business firms which lead to the establishment of many monitoring authorizes such as the central banks, national insurance company the ministering of finance among other to regulate and manage the economy of the nation. 

In other to provide capital to business enterprises, the federal government through the CBN established the commercial bank and the financial institution empowering them participate in direct funding of small and medium scale enterprises (SMES). The commercial bank raised the eye bro high interest rate. 

John (1988) observed that on the part of the banks it was necessary so that the shareholders and depositors funds could be protected on the other hand, some people or businessmen to meet up with the security conditions and be able to pay the accumulated interest businessmen find it difficult to obtain loans from the commercial banks as they only resort to their retained earnings and shareholders’ funds to finance their business which might not be sufficient to cover the daily operational expenses incurred by the firm or corporate body. 

It is therefore on this essence to study the effects of microfinance banks to the national development as it relates to the funding of business enterprises in the nation following of small and medium scale enterprises. Eight (8) microfinance banks were established during the first phase across the six (6) geopolitical zones currently there are over 3000 microfinance bank across the nation.