The Study of the Impact of Microfinance on Small and Medium Scale Enterprises (SMEs) in Sierra Leone : A Case Study of ECOBANK Microfinance Sierra Leone

This research focussed on the effects of Microfinance (MFI) on Small and Medium Scale Enterprises (SMEs) in Sierra Leone. The study examined the detailed profile of SMEs in Sierra Leone, particularly Freetown Municipality, and how these SMEs benefited from the Munafa Fund. The analysis of this research reveals that MFIs through the Munafa Funds have a positive effect on the growth of SMEs. In order to enhance sustained and accelerated growth in the operations of SMEs, credits should be client-oriented and not product-oriented. Extensive monitoring activities should be provided for clients who are granted loans. Data analysis was done using the Mixed Method Approach as the data collected was both quantitative and qualitative in nature. The quantitative data analysis was done by using descriptive statistics and the qualitative data analysis was done using descriptive research method. A sample size of 120 potential respondents was identified using random sampling techniques. However, only 107 respondents consented to take part in the survey which constituted 89.17% of the total respondents. In addition, this research indicates that MFIs have had a positive effect on the growth of SMEs. Some of the critical success factors of MFIs include; greater access to credit, savings enhancement, and provision of business, financial, and managerial training. Although there are tremendous contributions of MFIs to the development of SMEs; however, there are challenges that bedeviled the operations of both SMEs and MFIs. The major challenge faced by SMEs is the difficult process associated with accessing credit of which collateral security and high-interest rate are major setbacks. On the other hand, MFIs face some challenges relating to credit misappropriation and non-disclosure of the relevant facts of the business operations of SMEs. This research work includes key findings, conclusions, and recommendations as related to our research objectives