IMPACT OF MICROFINANCE CREDIT ON SMALL AND MEDIUM ENTERPRISES (SMEs) PERFORMANCE IN SOUTHWESTERN NIGERIA
Keywords:
Financing, Governance Practice, Microfinance Credit, Small & Medium Scale, PerformanceAbstract
This study examined the impact of microfinance credit on small and medium enterprises (SMEs) in Southwest Nigeria. The specific objectives are to analyse credit facilities offered by MFBs to enhance SMEs' performance in Southwestern Nigeria and investigate the extent of SMEs' accessibility to microfinance credits in the study area. The study utilized a descriptive survey design. Primary data were collected through a questionnaire. A total of 354 participants were selected using a multistage sampling approach. Stratified selection alongside simple random sampling was employed to identify owner-managers from 36 communities in the region. Data were analyzed using simple percentages and frequency. The findings revealed that microfinance banks in Southwest Nigeria offer various credit facilities to small and medium-sized enterprises, including long-term and short-term loans. Specifically, bank overdrafts accounted for 38.1%, term loans constituted 40.7%, and financing for assets/equipment made up 18.1% of the available options. Microfinance institutions (MFIs) with strong governance, transparent and ethical lending practices are more likely to attract investors and funding, leading to improved services and greater expansion efforts. The study concluded that enhanced access to microfinance lending facilities would lead to an increase in performance for small and medium-sized businesses in Southwest Nigeria. The study recommended that MFIs should reduce interest rates to encourage more SME startups and enhance loan utilization capacity
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