The economy of any nation is driven by the level of industrialization, while the level of industrialization is determined by a number of other factors. In a developing economy like Nigeria, Small and Medium scale enterprises play a vital role in economic development. Unfortunately, these categories of industries are bedeviled with many problems ranging from lack of infrastructural facilities, low technological know how, lack of technical skills to financing problems. This research is centered on financing small and medium scale enterprises for economic development. It explored the present pattern of financing, the alternative sources of financing SMEs as well as government effort past and present geared towards improving the financial status of such categories of industries. It also examined the problems faced by SMEs in raising the needed capital. The overall objective of the study is to seek for improved or new methods of financing SMEs for improved performance which will in turn lead to economic growth and development of the nation. To carry out the study; data were collected from both primary and secondary sources. The main data collection instruments were a structured questionnaire and personal interview. The data collected were presented in tables as frequency distribution and analyzed with percentages and frequencies. The sign test and person product moment correlation coefficient were used to test the hypothesis. The end result of the research shows that small and medium scale enterprises were underfinanced and various measures were suggested to improve the funding status including direct government intervention in financing.

The Nigerian Economy has been unstable. It has witnessed a lot of downturn over the years. Since the oil boom of the 80’s, the state of the economy has deteriorated and Nigeria has continued to be ranked among the least developed nation. So many reasons can be adduced for the slow pace of economic growth. Such reasons include; mono-cultural economy, low industrialization, high import dependency and corruption. Various regimes in the past had come up with one initiative or the other in a bid to turnaround the economic fortunes of this country. Also some bodies or agencies have been established to oversee and solve the problem of poverty and promote economic advancement. In this regard, bodies like the National Poverty Alleviation Programme (NAPEP), Family Economic Advancement Programme (FEAP), Small and Medium Scale Enterprises Development Agency (SMEDAN) etc were established.

Past governments have been involved in different development plans all geared towards uplifting the nation’s economy. The government of Gen Sanni Abacha lunched a development plan tagged vision 2010. It was a plan that was drawn to put to achieve certain level of development of Nigerian economy by the year 2010. The government of President Olusegun Obasanjo in effort to turnaround the economy, embarked on so many reforms in different sectors of the economy including; education, energy, solid minerals, works, transport etc. He also established the Due Process Office that brought a lot of positive changes in the contract award process and execution.

The present government of Alhaji Yar’adua has come up with its own agenda popularly known as the seven point agenda. Through the seven point agenda his government intends to focus on key sectors of the economy that will speed up economic development of the nation. He has also launched a development plan titled vision 2020.Through this plan he intends to speed up economic development that will put Nigeria among 20 topmost economies by the year 2020. This he has already started pursuing with greatest emphasis on the power sector.

Despite these laudable programmes and plans, the pace of economic development seems to be at a standstill. In fact with the global financial meltdown leading to world economic recession, the economy seems to be deteriorating further. One problem that has been identified as a clog in the wheel of economic advancement is the neglect of small and medium scale enterprises or what some call micro-entrepreneurs. It has been established in both advanced and emerging economies that the growth of most economies has been anchored on the growth of small and medium scale enterprises Muhammad.Y( 2003)

Countries like Bangladesh, India, Indonesia etc are doing well today because they have gotten it right in developing the middle level manpower that accounts for more than half of the productive sector.

In Nigeria, despite the fact that government has in one way or the other tried to recognize the sector and accord it a sort of priority, there are still many challenges restraining the small and medium scale enterprises from realizing their objectives. Some of the challenges that are teething to small and medium scale enterprises range from lack of infrastructural facilities, low technological advancement in terms of machinery, absence of experts and technical skills to lack of fund and inability to access credit facility from banks.

The most critical among the challenges faced by small and medium scale enterprises is lack of adequate capital and inability to access bank credit. An economy can only grow through support from the financial sector in availing credits to different sectors. One of the agenda of banking reforms or recapitalization was to enable banks support the real sector of the economy by availing credits to firms in these critical sectors. If credit is made available to the formal sector while neglecting the informal sector where the medium and small scale enterprises fall in, there will still be gap in the growth of the economy.

While the large scale enterprises have access to bank credit, the small and medium scale enterprises find it difficult to obtain bank credit. It is in the bid to resolve this problem that the Federal Government in conjunction with Central Bank of Nigeria carried out reforms in the lower side of the finance industry. Among the reforms is liberalizing the licensing of micro-finance banks and conversion of community banks to micro-finance banks.

Micro-finance banks are expected to provide micro-credits to small unstructured businesses, salary earners, artisans, food vendors, small farmers and traders. It is in pursuit of this objective as well as the drive to reduce unemployment that the Central Bank established skill acquisition centers located in three geopolitical zones in the country. The essence of establishing the centers is to empower the youth through relevant skills training and subsequently increase their access to fund (credits) with which to start up business.

The main issue now is whether government has realized or failed to realize its objective of enabling the informal sector of the economy to have easy access to credit and whether or not the sector has contributed meaningfully to the economic development of the nation.

This research will focus on micro-credits and its accessibility by medium and small scale enterprises and individuals entrepreneurs and other modes of financing them.

The research will be tailored to provide answers to the following questions.

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Item Type: Project Material  |  Size: 174 pages  |  Chapters: 1-5
Format: MS Word   Delivery: Within 30Mins.


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