An appraisal of venture Capital financing on the growth and development of small and medium scale enterprises in Kumbotso Local government area of Kano State.

International Journal of Research and Innovation in Social Science (IJRISS) | Volume IV, Issue XI, November 2020 | ISSN 2454–6186

An appraisal of venture Capital financing on the growth and development of small and medium scale enterprises in Kumbotso Local government area of Kano State.

Ummi Ibrahim Atah & Safiyya Abubakar Abba
Department of Economics,
Saadatu Rimi College of Education Kumbotso, Kano State, Nigeria

1. Abstract
This study aimsto appraise the role of venture capital (VC) financing on the growth and development of small and medium enterprises (SMEs) in Kano State. The SMEs growth and development in Nigeria is crippled due to lack of financing. The survival of SMEs requires not only financing from bank loans but other alternative sources. The advent of venture capital financing in Nigeria served as sustainable financing mechanisms to resuscitate SMEs’ performance.To achieve the research objectives,the study employs quantitative approach by distributing 50 questionnaires to the existing venture capital firms in Kano State. The simple random sampling technique was used to select 5 venture capitalist organizations in Kano State to participate in the study. The 50 questionnaires collected were analysed using descriptive statistics by using percentages and tabulation. Empirical findings demonstrated a substantial growth and development of SMEs through venture capital financing. The study also revealed that the operation of venture capital is successful, profitable and favoured SMEs in Kano State. Thus, entrepreneurs patronize and prefer venture capital financing than traditional banking loans. Therefore, it is recommended that proper policy framework should be developed to increase the number of venture capital firms in Nigeria.More so, awareness creation and provision of adequate fund are highly recommended.
Keywords:Venture capital financing, growth and development, small and medium scale enterprises.

1.0 Introduction
Finance has been identified as one of the most important factors that determines the survival and growth of any economic activities, small and medium enterprises (SMES) inclusive. Access to finance allows SMEs to undertake productive investment, expand business and acquire the latest technology (Bongomin et al., 2017). Poor financial system can seriously undermine the macroeconomic fundamentals of a country, resulting in lower growth and unemployment (Motta & Sharma, 2020). The significance of SMEs can never be over emphasized as it constitutes huge percentage of business in almost every country(Aremu and Adeyemi, 2011). Thus, it contributes immensely to the growth domestic product G.D.P and gross value added (G.V.A)(Achugbu, 2017). In doing so, SMEs provide the needed goods and services, generate wealth byproviding employment opportunities, improving business skills and entrepreneurship as well as standard of living and welfare among the populace across the globe (Asikhia, 2010; Agwu, and Emeti, 2014; Groot, et al., 2019). Moreover, SMEsserve as a stimulant for economic growth and development while they contribute to poverty alleviation (You, Dal Bianco and Amankwah-Amoah, 2020).

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