Assessment of Project Monitoring Activities of Microcredit Agency on SMEs performance

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue VI, June 2021 | ISSN 2454–6186

Assessment of Project Monitoring Activities of Microcredit Agency on SMEs performance

Imisi, Ilesanmi John¹*, Prof. Akinloye Lawal², Dr. Ayedun Taiwo^3
1Department of Project Management, School of Logistics and Innovation Technology, Federal University of Technology, Akure, Ondo State, Nigeria.
²School of Logistics and Innovation Technology, Federal University of Technology, Akure, Ondo State, Nigeria.
³Department of Entrepreneurship, School of Logistics and Innovation Technology, Federal University of Technology, Akure, Ondo State, Nigeria.
*corresponding author

Abstract: Most Governments of developing countries have turned to setting up microcredit programs to give both financial and non-financial support to SMEs. However, weak project monitoring capacity of Microcredits institutions has continued to lead to poor loan utilisation, increases the risk of diversion of loans and ultimately high level of non-performing loans. This study seeks to assess the effect of project monitoring activities of the Ondo State Microcredit Agency on the performance of SMEs in the State. The study adopted Survey Research Design as primary data were used for the purpose of the study. This research work identifies and presents the project monitoring operations of Ondo State Microcredit Agency (OSMA) and their effects on the performance of SMEs. From a total population of 745 beneficiaries, 261 beneficiaries were selected based on Yamane sample size formula and they were retrieved from the list of all the beneficiaries in each SME category obtained from the agency. The research instrument adopted for collecting data from the respondents was a pre-tested and validated questionnaire. Questions were on a 5-point Likert scale, and multiple-choice type questions. Analysis of the results obtained were done using descriptive analysis and Partial Least Square-Structural Equation Modeling(PLS_SEM) was employed to test the hypothesis. The models specified by this study are significant at 5%. The results showed that two (control measure and fund utilisation) sub-constructs of project monitoring were significant while the other two (Business/Site visitation and Loan monitoring) were not statistically significant. The results of regression analysis further revealed that project management activities (β= 0.358, R2 = 0.259, f2 = 0.172, T = 5.942 and P 0.05) is significant to the performance of SMEs in the state, hence the null Hypothesis (H01) which states that there is no significant effect of project monitoring activities of Ondo State Microcredit Agency on the performance of SMEs in the state is rejected. The study concluded that monitoring of the loan beneficiaries ventures along the “control measure” and “fund utilisation” sub-constructs are relevant and significant to SMEs performance and will aid loan repayment. Subsequently, project monitoring activities if well planned and executed will lead to better SMEs performance. Based on this, the study recommends the creation of a robust project\loan monitoring systems as an essential part of the microcredit programme and also the establishment of savings arm of OSMA to help improve regular contacts and interaction between the borrowers and the lender. However, adequate control measure is advised to combat compromise.

Keywords: Project Monitoring, Loan Monitoring, Fund Utilisation, Defaults, Control Measure

INTRODUCTION

Empirically, it has been established that Small and Medium Enterprises (SMEs) play a prominent role in the socio-economic development of many countries. They are the backbone of many economies worldwide that provide income and employment generation (Shafi, Liu and Ren, 2020), wealth and well-being (Vivel-Bua, Lado-Sestayo and Otero-Gonzalez, 2019). Brei, Gadaneczb,

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