CHAPTER ONE 1.1 HISTORICAL BACKGROUND

An economy whether developing or developed is out to achieve certain objectives which include growth in the gross domestic product, reduction in the relit of inflation and unemployment, favorable balance of payment, and long term Socio-economic development. The growth of output of any economy depends on Capital accumulation; and capital accumulation requires investment and an equivalent amount of saving to match it. Two of the most important issues in development economics, and tor developing countries, are how to stimulate investment, and how to bring about an increase in the level of saving 10 fund increased investment. To this end. many less developed countries’ government have made it a point of duties to ensure proper mobilization of domestic funds by manipulating both fiscal and monetary policy as a tool to achieve their set objectives For many countries, financial sector and balance of payment liberalizations have broadened access to foreign capital to finance domestic investment. However, many developing economies, in part because of their high level of external indebtedness cannot benefit from foreign sources of capital. For men. domestic savings remains the main source of funds to finance development and to promote economic growth. However, due to low income per head in less developed countries, a perception that poor people are too poor to save has been prevailing for a long time and most financial institutions still do not cater to this type of clients. It is clear that poor