FINANCING SMALL SCALE ENTERPRISES IN NIGERIA ECONOMY

 ABSTRACT

This study takes a critical look at the role of microfinance bank in financing of small scale enterprise in Nigeria based on a population of using all microfinance banks in Nigeria. Therefore, this research adopted the descriptive research survey. This study used secondary data and the data analyzed in this study relate to aggregate industry data obtained from central Bank of Nigeria (CBN) statistical bulletin and other publications. The objective of this study is to examine the impact of microfinance bank loans and advances and its contribution to industrial GDP, to evaluate the impact of microfinance bank total assets on industrial sector Gross domestic product (GDP) and to ascertain the impact of microfinance bank deposits on industrial sector Gross domestic product (GDP). Findings from our field study indicated  that microfinance banks total asset (MFBTA) have a positive and statistically significant impact on industrial production (IGDP) which implies that microfinance banks have adequate assets that have positive and significant impact on industrial production, microfinance banks’ loans to SMEs and microfinance banks total assets have negative impact on the industrial sector production. The study recommend among others that microfinance banks are; microfinance Bank directors and regulators are advised to initiate and sustain policy measures to provide substantial financing to small and medium scale enterprises. In particular, efforts should be directed at providing necessary regulatory support to microfinance banks to strengthen them to serve as engines of growth to SMES and that microfinance banks should be reformed to enable them have the financial strength to provide needed funds to SME’s. Thus suggesting that microfinance banks have not played positive and significant role in financing SMEs in Nigeria.