FINANCING SMALL SCALE ENTERPRISES IN NIGERIA ECONOMY

ABSTRACT

This study takes a critical look at the role of microfinance bank in financing of small scale enterprise in Nigeria based on a population of using all microfinance banks in Nigeria. Therefore, this research adopted the descriptive research survey. This study used secondary data and the data analyzed in this study relate to aggregate industry data obtained from central Bank of Nigeria (CBN) statistical bulletin and other publications. The objective of this study is to examine the impact of microfinance bank loans and advances and its contribution to industrial GDP, to evaluate the impact of microfinance bank total assets on industrial sector Gross domestic product (GDP) and to ascertain the impact of microfinance bank deposits on industrial sector Gross domestic product (GDP). Findings from our field study indicated  that microfinance banks total asset (MFBTA) have a positive and statistically significant impact on industrial production (IGDP) which implies that microfinance banks have adequate assets that have positive and significant impact on industrial production, microfinance banks’ loans to SMEs and microfinance banks total assets have negative impact on the industrial sector production. The study recommend among others that microfinance banks are; microfinance Bank directors and regulators are advised to initiate and sustain policy measures to provide substantial financing to small and medium scale enterprises. In particular, efforts should be directed at providing necessary regulatory support to microfinance banks to strengthen them to serve as engines of growth to SMES and that microfinance banks should be reformed to enable them have the financial strength to provide needed funds to SME’s. Thus suggesting that microfinance banks have not played positive and significant role in financing SMEs in Nigeria.                                                                                                   

 

 

TABLE OF CONTENT

Cover Page                                                                                                                  i

Fly Page                                                                                                                      ii

Title Page                                                                                                                    iii

Certification                                                                                                                iv

Declaration                                                                                                                  v                                                                                                                                                               

Dedication                                                                                                                  vi                                                                                                

Acknowledgement                                                                                                      vii                                                                              

Table of Content                                                                                                         viii                                                                                 

Abstracts                                                                                                                     xii                                                                                          

CHAPTER ONE: INTRODUCTION                                                                                                                    

1.1 Background to the Study                                                                                     1                                                                            

1.2 Statement of the problem                                                                                     2                                                              

1.3 Objectives of the study                                                                                         3                                                                    

1.4 Objective of the study                                                                                          4

1.5 Statement of the hypothesis                                                                                 4                                                                         

1.6 Significance of the Study                                                                                     4

1.7 Scope of the study                                                                                                            5                                                                

1.8 The limitation of the Study                                                                                   6 

1.9 Definition of Terms                                                                                              6 

                                                  

CHAPTER TWO: LITERATURE REVIEW

2.0   Introduction                                                                                                        8                                                                  

2.1   Conceptual Framework                                                                                       8       

2.2   Theoretical Framework                                                                                       11 

2.3    Literature on the subject matter                                                                         14

2.3.1 An overview of Small Scale Enterprise                                                             14

2.3.2 Small and Medium Scale Enterprises in Nigeria                                                14

2.3.3  Types of Small Scale Enterprises                                                                      15

2.3.4  Importance of Small Scale enterprises                                                              16

2.3.5 The Challenges and Problems facing Small Scale enterprises                           17

2.3.6 The roles played by the government towards the promotion and development of Small scale enterprises                                                                                             18

2.3.7  Empirical Literature on Microfinance Bank                                                     19

2.3.8  Objectives and Functions of Microfinance Bank                                             20

2.3.9   Micro Credit                                                                                                    21

2.3.10 Microfinance bank loans/advances and the contribution of SMEs to Industrial growth 21

2.3.11 Microfinance Bank deposits and Industrial sector GDP                                 22

2.3.12 The roles of Microfinance Bank in Nigeria                                                      23

2.3.13 Roles of Microfinance Policy                                                                          25

2.3.14 The role of Microfinance Bank in Financing Small Scale enterprises  26

2.3.15 The Problems or Challenges facing microfinance Banks in Nigeria                27

2.3.16  The Present state of Microfinance in Nigeria                                                 31

2.3.17 Characteristics of Small Scale enterprises                                                        31

CHAPTER THREE: RESEARCH METHODOLOGY

3.0 Introduction                                                                                                          33

3.1 Area of study                                                                                                        33 

3.2 Research design                                                                                                    33

3.3 Sources of data                                                                                                     34

3.4 Population and sample of the study                                                                     34 

3.5 Instrumentation                                                                                                     34

3.6 Procedure for data collection and data analysis                                                   35

3.7 The limitation of the study                                                                                   35

CHAPTER FOUR:

Data Presentation, Analysis and discussion of findings

4.0 Introduction                                                                                                          37

4.1 Data presentation and Analysis                                                                            37                                                                                                                                                   

4.2 Findings of the study                                                                                            38                                                                       

4.3 Results and discussion of findings                                                                       44                                                                     

CHAPTER FIVE:

Summary, Conclusions and Recommendation                            

5.0 Summary of findings                                                                                            45                                                                                 

5.1 Conclusion                                                                                                            45                                                                                      

5.2 Implication of policy and recommendation                                                          47                                                                              

5.3 Proposals for further studies                                                                                 47                                                         

      References                                                                                                                        48

      Appendix                                                                                                              51

      Questionnaire