Financing Small and Business Enterprises for Economic Development in Nigeria as a Motivation

The main objectives of this paper were to review the government policies for SMEs in Nigeria. Examine source of finance and incentives for SMEs to present an analysis of Nigerian firms and access to credit for SMEs and finally recommend strategies for the promotion of SMEs in Nigeria. The major conclusions drawn from this paper were available data and records indicate that the performance of SMEs in Nigeria has not justified the establishment of Micro Credit Institutions. Analysis on Nigerian firms shows that about 52% of Micro Firms have access to external finance, while 82% of small and 89% of medium scale firms have access also. While large firms have almost 100% access to external finance. The analysis further revealed that almost 50% of Micro, 39% and 37% of small and medium scale firms sampled report being credit constrained as opposed to 25% of the very large firms. This shows that small and medium scale firms are discriminated against credit market. About 25.2% of the small business and 23.2% of medium scale business sampled complained of high interest charges and claimed that because of this, they could not secure loans. It is recommended that specialised SMEs banking and support programmes need to be set up. The small loan scheme needs to be reviewed and mobile banking services need to be organised to make credit accessible to SMEs. A clear policy commitment needs to be made to improve access to credit to rural areas. Finally, government should create an enabling environment that will discourage corruption and bureaucratic bottlenecks