MICROFINANCING AND PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES

Adesola OluremiBabalola-Emmanuel

Department of Business Administration and Management

Federal Polytechnic, Bida, Nigeria

E-mail: dessybjay@yahoo.com

ABSTRACT

The importance of small and medium enterprises (SMEs) cannot be over-emphasized. Hence, scholars agreed that SMEs are the largest employers of labour in countries around the globe but SMEs are not immune against challenges.  For instance, the conventional financial institutions have not been able to provide the much-needed financial supports to SMEs due to some constraints on the part of SMEs owners. Hence, the federal government is making efforts to support SMEs through microfinance banks. Therefore, the main objective of this study is to examine the impact of microfinancing on the performance of small and medium enterprises. The participants were drawn from some selected small and medium enterprises operating in Abuja metropolis, with a total population of 150 SMEs owner/managers. Simple random probability sampling technique was adopted. The participants returned 130 questionnaires but 110 questionnaires were valid and used for analysis. The researcher employed the statistical package for social sciences (SPSS) for data analysis. Results show a positive relationship between the activities of microfinance banks and SMEs performance in Nigeria. Similarly, result indicates that small and medium scale enterprises improve the economic development of Nigeria. Therefore, supporting agencies are advised to implement programmes that will boost the operations of small and medium enterprises (SMEs) in Abuja and other parts of Nigeria by involving microfinance banks in the promotion of small and medium enterprises. In conclusion, the more support is available to SMEs, the better the performance of SMEs would become.

Keywords: financial services, finance, entrepreneurship, microfinance, small and medium businesses