TABLE OF CONTENT

Title page       -           -           -           -           -           -           -           -           -           -           i

Declaration   -           -           -           -           -           -           -           -           -           -           ii

Certification  -           -           -           -           -           -           -           -           -           -           iii

Dedication     -           -           -           -           -           -           -           -           -           -           iv

Acknowledgement               -           -           -           -           -           -           -           -           v

Table of content       -           -           -           -           -           -           -           -           -           vi

Abstract         -           -           -           -           -           -           -           -           -           -           viii

CHAPTER ONE:  INTRODUCTION

1.1 Background to the Study          -           -           -           -           -           -           -           1

1.2 Statement of the Problem         -           -           -           -           -           -           -           3

1.3 Objectives of the Study            -           -           -           -           -           -           -           -           4

1.4 Research Hypotheses    -           -           -           -           -           -           -           -           4

1.5 Research Question of the Study          -           -           -           -           -           -           4

1.6 Scope of the Study        --         -           -           -           -           -           -           -           5

1.7 Significance of the Study         -           -           -           -           -           -           -           5

CHAPTER TWO:  LITERATURE REVIEW

2.1 Introduction        -           -           -           -           -           -           -           -           -           7

2.2 Concepts of SME           -           -           -           -           -           -           -           -           7

2.3 Review of Empirical Studies   -           -           -           -           -           -           -           16

2.4 Theoretical Framework            -           -           -           -           -           -           -           -           20

CHAPTER THREE: RESEARCH METHODOLOGY

3.1 Introduction        -           -           -           -           -           -           -           -           -           23

3.2 Research Design            -           -           -           -           -           -           -           -           -           23

3.3 Population and Sample size     -           -           -           -           -           -           -           24

3.4 Sampling Technique     -           -           -           -           -           -           -           -           24

3.5 Sources of Data  -           -           -           -           -           -           --         -           -           25

3.6 Data Analysis Technique         -           -           -           -           -           -           -           25

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS AND INTERPRETATION

4.1 Introduction-      -           -           -           -           -           -           -           -           -           26

4.2 Data Presentation          -           -           -           -           --         -           -           -           26

4.3 Background of Selected SMEs            -           -           -           -           -           -           -           27

 4.4 Discussion on Findings           -           -           -           -           -           -           -           31

CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS

5.1 Summary -           -           -           -           -           -           -           -           -           -           39

5.2 Conclusions        -           -           -           -           -           -           -           -           -           42

5.3 Recommendations         -           -           -           -           -           -           -           -           43

            References    -           -           -           -           -           -           -           -           -           45

Questionnaire           -           -           -           -           -           -           -           -           47       

 

 

ABSTRACT  

This paper focus on investigating the impact of micro finance on the growth of small and medium scale enterprise in Nigeria covers a period of (2000-2015)  using descriptive statistical techniques (Total score and simple percentages) as well as quantitative techniques in analysing the primary data collected. The quantitative data was analysed using statistical package for social scientist (spss) and Microsoft excel. The result showed that there exists a positive relationship between micro financing on the growth of small and medium scale enterprise in Nigeria. The paper recommends appropriate and wide spread monitory activities should be provided for clients who are granted loans to sustain MFI operation and enhance the growth of small and medium scale enterprises. It also recommends that micro finance institutions research into very profitable business line in order to reduce default rate and finally recommends that micro finance institutions provide business and financial training on regular basis and in most cases tailor made toward the training requirement of the clients.

 

CHAPTER ONE

INTRODUCTION

1.1             Background of the Study

The role of small and medium scale enterprises (SME) cannot be overemphasized. They form the bedrock of the growth of any economy which makes establishment and maintenance imperative. These small and medium enterprise (SME) represent 90% of firms in Nigeria’s industrial sector but they contribute as low as one (1%) to GDP in contrast to countries like Indonesia, Thailand, India and china where small and medium enterprise contribute almost 40% to the GDP. Because of the importance of the small and medium scale enterprises (SME), Nigeria like other countries of the world formulate small and medium enterprise micro financing policies, programmers’ and enterprise development policies like small and medium industries equity investment scheme (SMIES). Nigeria bank for commerce and the recent attempt by the monetary authorities to compel the bank to devote 10% of their profit before tax to small and medium enterprise finance to mention but a few (Aruwa 2004).

From the foregoing, one may wonder why, despite all the effort to improve the performance of small and medium scale enterprises in Nigeria, the sub-sector is not at all doing well especially compare with the same sub-sector (i.e. small and medium scale enterprises) in other countries, where we have seen the contribution of small and medium enterprise in Nigeria is as low as 1% in contrast to almost 40% in some countries as mentioned above. The answer is not certain and there are many reasons for that. For instance, government just make the polices but don’t make sure they are properly implemented, owners and management of small and medium scale enterprises in most cases do not know the available source of finance let alone having access to them. Micro finance indeed has a great impact on the performance of the small and medium scale enterprises. In order to enhance the flow of financial services to the Micro, Small and Medium Enterprises (MSME) subsector, Government has, in the past, initiated a series of programs and policies targeted at the MSMEs. Notable among such programs were establishment of Industrial Development Centers across the country (1960-70), the Small Scale Industries Credit Guarantee Scheme - SSICS (1971) specialized financial schemes through development financial institutions such as the Nigerian Industrial Development Bank (NIDB) 1964, Nigerian Bank for Commerce and Industry (NBCI) 1973, and National Economic Recovery Fund (NERFUND) 1989. All of these institutions merged to form the Bank of Industry (BOI). In 2000, the government also merged the Nigeria Agricultural Cooperative Bank (NACB), the People’s Bank of Nigeria (PBN) and Family Economic Advancement Program (FEAP) to form the Nigerian Agricultural Cooperative and Rural Development Bank Limited (NACRDB). The bank was set up to enhance the provision of finance to the agricultural and rural sector. Government also facilitated and guaranteed external finance by the World Bank (including the SME I and SME II loan scheme) in 1989, and established the National Directorate of Employment (NDE) in 1986.

Despite all these efforts, the contribution of small and medium enterprise to Nigeria Gross Domestic Product (GDP) remains very poor, hence; the need for alternative funding window. In 2005, the Federal Government of Nigeria adopted microfinance as the main financing window for micro, small and medium enterprises in Nigeria. The Microfinance Policy Regulatory and Supervisory Framework (MPRSF) was launched in 2005; the policy among other things, addresses the problem of lack of access to credit by small business operators who do not have access to regular bank credits. It is also meant to strengthen the weak capacity of such entrepreneurs, and raise the capital base of microfinance institutions.  The core objective of the microfinance policy is to make financial services accessible to a large segment of the potentially productive Nigerian population, which have had little or no access to financial services and empower them to contribute to rural transformation.

1.2       Statement of the Problem

Several studies have identified financial constraint as the major obstacle to small and medium scale enterprises development in developing countries including Nigeria. For instance, Adelaja (2003) argued that the access to institutional finance has always constituted a pandemic problem for small and medium enterprise development in Nigeria. Small and medium enterprise

The primary focus of this study emanates from the fact that small scale enterprises owners do not have sufficient finance to carry on their business due to low saving culture of the people in this part of the world. The reason for this fetches; low level of income basically. While it is an established fact that small and medium enterprise face financial challenges, dearth of research work has been conducted to investigate the effect of micro financing on their contributions to economic development.

Therefore, this study seek to evaluate the impact of micro financing on the growth of small and medium scale enterprises (SME) in Nigeria and their contribution to economic growth.

1.3       Objective of the Study

The overall objective of the study is to assess the impact of micro financing on the growth of small and medium scale enterprises in Nigeria.

In view of the above, the study intends to find out the following objective:

1.      Assess the relationship between micro finance Bank loan and small and medium enterprise growth in Nigeria.

2.      To assess if micro finance Banks have significant capacity to influence small and medium enterprise growth in Nigeria.

1.4       Research Hypotheses

This research work is set out to test the following hypothesis

HO: There is no significant relationship between micro finance Bank loan and small and medium enterprise growth in Nigeria.

 HO: Micro finance does not have significant capacity to influence small and medium enterprise growth in Nigeria.

1.5       Research Question of the Study

Having highlighted the above objectives, the following research questions are raised.

1.      Is there any relationship between micro finance Bank loan and small and medium enterprise growth in Nigeria?

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