Funding Arrangements for Small and Medium Scale Enterprises (SMEs) in Nigeria: An Assessment

Abstract

Small and Medium Scale Enterprises have been fully recognized by governments and development experts as the main engine of economic growth and a major factor in promoting development. They not only contribute significantly to improved living standards, employment generation and poverty reduction but also bring about substantial domestic or local capital formation and achievement of high levels of productivity and capability. A major gap in Nigeria’s industrial development process in the past years has been the absence of a strong and virile SME sub-sector. This study seeks to generally appraise and analyze the operating environment and circumstances of Small and Medium Scale Enterprises in Nigeria with a view to actually identifying why SMEs are not playing major roles in the Nigerian economy as in other economies. The random sampling method was employed and responses to the questionnaire were complemented with personal interviews of key operators. Analysis was undertaken using the Statistical Package for Social Sciences (SPSS). Findings revealed that SMEs have performed below expectation in the development of Nigeria economy due to a combination of factors. Thus, the paper recommends that the realization of these require a paradigm shift from paying lip service to a practical radical forward approach to issues and focus on this all-important sector of the economy and realistically addressing the identified problems by the key operators.