International Journal of Research and Innovation in Social Science (IJRISS) |Volume VI, Issue XI, November 2022|ISSN 2454-6186
Micro Credit Availability as A Catalyst for Small and Medium Enterprise Growth in Nigeria
Eke Robert Ike, Phd, Fca, and Idogun Joy
Department of Accounting and Finance School of Management and Social Sciences, Wellspring University Benin City, Nigeria
Abstract: The research study has specifically investigated how micro credit has assisted SMEs in SMEs growth through acquisition of raw materials and improvement in working capital of SMEs.
The study employs the survey method in evaluating the impact of Micro credit availability as a catalyst for small and medium enterprise (SMEs) growth in Nigeria. The population of this study is based on SMEs in Edo State. Edo State was chosen forth is study since it has a large concentration of SMEs. The study adopted survey design and primary sources of data was employed. Questionnaire was designed using linkert scale format. The population of the study is infinite and Cochran formula was adopted to determine the sample size. Sample of 325 questionnaire was distributed out of which 300 returned their questions. The respondents were made of proprietors of manufacturing SMEs who are clients/customers of the Microfinance Banks. Data collected was analyzed using both descriptive and inferential statistics while hypothesis of the study was tested using chi-square distribution. The findings confirmed a significant contribution of micro-credit in assisting SMEs in areas of asset acquisition, acquisition of raw materials and improvement of their working capital. Where as, the study recommended among others that, government should try to provide sufficient infrastructural facilities such as electricity, good road network and training institutions to support SMEs in Nigeria. Government through CBN should also guarantee some of the credits extended to SMEs. This will give more SMEs who cannot meet the collateral requirement of banks to have access to credit as well..
Keywords: Microfinance bank, Microcredits, SMEs, financial intermediation, working capital.
I. INTRODUCTION
In the global economics, small and medium Enterprises (SMEs) are pivotal to poverty alleviation, entrepreneurial development and financial inclusion strategies of governments. Studies also showed that the contributions of SMEs to nation’s economic growth have been universally recognized. In Nigeria, however, the inability of the SMEs to adequately access working capital loans to grow and expand the respective business through the conventional banking/ deposit money banks/commercials bank stimulated the establishment of micro-finance bank to bridge the existing lacuna. Similarly, the inadequacy of SMEs promoters equity contributions and low working capital which constraint productive capacities, have also led to the early demise and high mortality rate of SMEs. This lack of inadequate finance seen as the major cause of the relative absence, of these enterprises in the poor economics. Consequent upon this, the emergence of microfinance bank was to assuage the financial incapability of SMEs and to encourage