Assessment of the Contribution of Micro Finance Institutions (MFIs) to Sustainable Growth of Small and Medium Scale Enterprises (SMEs) in Nigeria

Abstract

Evolving strategies towards the promotion of entrepreneurship is sine qua non to propelling economic growth and development of a nation. The promulgation of the micro finance policy by the federal government of Nigeria in 2005 has three principal objectives of promoting both entrepreneurship activities in small and medium scale enterprises (SMEs), reducing poverty and enhancing economic growth. This research assesses the contributions of Micro Finance Institutions (MFIs) to the sustainable growth of SMEs. Data is collected from 360 randomly selected SMEs using the questionnaire instrument. The questionnaire was complimented with the interview method of data collection. The data elicited was analyzed using the simple percentage statistic. The analysis revealed that MFIs does and could contribute to the sustainable growth of SMEs in the country. Nevertheless, the study also found among others that MFIs services outreach to SMEs at present is poor. The study recommends periodic review of MFIs activities by the regulatory authority-CBN base on policy objectives/targets. Appropriate modification should be made to address gaps for these institutions to effectively contribute to SMEs activities in the country. It is also suggested that apart from creating greater SMEs out-reach to MFIs services through establishment of rural branches, both government and MFIs through intensified campaigns at the local government and ward levels can increase SMEs access to MFIs services.