1

ENEH, SYLVIA NNENNA

PG/MSc/2010/55146

ACCESSIBILITY OF CREDIT FACILITY

FROM FINANCIAL INSTITUTIONS BY

SMALL AND MEDIUM SCALE

ENTERPRISES: EVIDENCE FROM

NIGERIA

FACULTY OF BUSINESS

ADMINISTRATION

DEPARTMENT OF ACCOUNTANCY

Azuka Ijomah

Digitally Signed by: Content manager’s Name

DN : CN = Webmaster’s name

O= University of Nigeria, Nsukka

OU = Innovation Centre

2

ACCESSIBILITY OF CREDIT FACILITY FROM

FINANCIAL INSTITUTIONS BY SMALL AND MEDIUM

SCALE ENTERPRISES: EVIDENCE FROM NIGERIA

BY

ENEH, SYLVIA NNENNA

PG/MSc/2010/55146

DEPARTMENT OF ACCOUNTANCY

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA,

ENUGU CAMPUS

3

FEBUARY, 2015

ACCESSIBILITY OF CREDIT FACILITY FROM

FINANCIAL INSTITUTIONS BY SMALL AND MEDIUM

SCALE ENTERPRISES: EVIDENCE FROM NIGERIA

BY

ENEH, SYLVIA NNENNA

PG/MSc/2010/55146

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

FOR THE AWARD OF MASTERS DEGREE IN

DEPARTMENT OF ACCOUNTANCY FACULTY OF

BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA, ENUGU CAMPUS

4

SUPERVISOR: PROF. (MRS) UCHE MODUM

FEBRUARY, 2014

DECLARATION

This is to certify that this dissertation by Eneh, Sylvia Nnenna with registration number

PG/Msc/10/55146, submitted to the department of Accountancy, Faculty of Business

Administration, University of Nigeria, Enugu campus (UNEC) is the original and has not

been submitted in full for award of any diploma or degree in this university.

__________________

___________

Eneh, Sylvia Nnenna Date

(Student)

PG/Msc/10/55146

5

APPROVAL PAGE

This is to certify that Eneh, Sylvia Nnenna a post graduate student of the Department of

Accountancy, Faculty of Business Administration, University of Nigeria , Enugu

Campus(UNEC),with registration number PG/Msc/10/55146, has satisfactorily completed

the requirement for the award of the Msc. Degree in Accountancy of Nigeria.

_______________________

_____________

PROF. (MRS) UCHE MODUM

DATE

SUPERVISOR

6

_______________________

______________

DR, (MRS) G.N.OFOEGBU

DATE

HEAD OF DEPARTMENT

DEDICATION

To God the Father, the Son and the Holy Ghost are all honour and

glory.

7

ACKNOWLEDGEMENT

My warm and heartfelt appreciation goes to my supervisor Prof.(Mrs) Uche Modum for

her patience, attention, care and love she showed in the course of this work. In fact, mum

8

you are a rare gem to be found in this present age where almost all persons want to be in

the fast lane, but you gradually drew me to your side where I learnt to do things the right

way and naturally stand out to defend such thing anywhere. The best qualification for you

is nothing but “A REAL MOTHER”. Thanks a million times for making me outstanding

right from the class works, seminar presentations unto this stage. My prayer is that God

will strengthen you with good health and may his mercies abound for you in all things,

I am also grateful to my able, Head of Department and professional colleague Dr. (Mrs)

G.N. Ofoegbu for her encouragement and support. She will always ask how far I was

moving on with this work. Thank you so much ma and May God bless you. Special

appreciation goes to Dr R.O. Ugwoke. I was brave to face this program after a one on one

discussion with you. May God bless you. Prof. (Mrs.) R.G Okafor, Dr.(Mrs.) E.O.Onyeanu

are higly appreciated. All of you are blessed all round. All the elites, senior lecturers and

staff in the Department of Accountancy of this great university, your names are written in

gold and I love you all.

My warm regards goes to my friend for her wonderful encouragement: Dr. (Mrs) Ima

Nnam-(the youngest Doctor and my professional colleague), you made me to understand

that my supervisor is the best thing that has ever happened in my academics when I was

grumbling. Thank you dearly. Others worthy of mention are Mrs. Ngozi Nwekwo who is

my class mate and mentor. I appreciate your care and love. Let God strengthen you in all

your own endeavours. Dr. ( Mrs.) Grace Okafor of the Accountancy Department, NAU

Awka must be remembered at least for your advice and encouragements. Thanks dear.

This list will not be exhaustive if the names of my colleagues at Radio Nigeria Enugu

National Station are not mentioned, because of their immense help and care. They are :

Mrs. Chika Okafor, Mrs. Amaka Onaga, Peace Ijomanta, Mr Chris Okorie, Mrs. Helen

Ochin, Mrs. Vero Nwigwe, Justina Ude. A big thank you to all of you and May the good

Lord bless you all. I will not fail to remember Mr. Ekechukwu Sonie, Mr.Ken Eneh,

Mr.Frank Okoli, Mr.Chris Ukegbu and my Bosses Mr. Oscar Okoroafor and Mr.Alfred

Onyekwere.Thanks to all of you and may God bless you abundantly for your diverse

goodness towards me. My friends are part of this laudable achievement. They are: Mrs Joy

Eze , Nkem Anyaogu, Mrs Adaora Owoh, Mrs Vera Nwankwo and Dr Jekwu Nwabueze.

Thanks for all your encouragements.

A special and warm feeling goes to my sweetheart and ever abiding Darling Mr. Chinedu

Eneh who has been a pivot of my innumerable successes in life. As per this work when I

complain about the slow pace with which it was going, he would take side with Prof. and

tell me that I am lucky to have her as a supervisor. He will usually say that if it were in the

medical field that it will not be easy for me to see her one on one. Naturally, I will feel so

bad that he is supporting someone he had never seen in life but I will eventually reason

alongside his own thought and things started moving quite easier. Thank you so much

dear. My children: Joy. Godleads, Nmesomachukwu and Peace are all wonderful. All your

angelic assistance is highly appreciated. My mum is also appreciated for you are always

there to assist me at all times. For sure mum, I can count on your prayers. Thank you so

9

much and may the good Lord keep you in abundance of his grace. Finally, I thank my

siblings – Mrs Rose Egeson and Engr. Justin for all your care, support, kindness and love.

Eneh,Sylvia Eneh

PG\MSc\10\55146

10

Abstract

This study tries to look at the accessibility of credit facility from financial institutions by

small and Medium Scale Enterprises: Evidence from Nigeria. Small and Medium Scale

Enterprises have been faced with poor funding when developing nations like ours are

considered. This however distorts the outstanding function of SMEs as the engine and

pivot for the economic growth and national development. No wonder Nigeria has

continued to experience high level of emergence of new enterprises that would only exist

for two to three years and fizzle out. This study has a broad objective of determining the

degree of accessibility of credit facility by SMEs from the financial institution in Nigeria

with such variables like government policies, collaterals, tax incentives etc. The study

adopted the analytical survey method to gather information on the variables. The

population was made up of all the financial controllers in the 360 manufacturing

enterprises in the three states under study. We in turn used judgmental sampling technique

to select the financial controllers in these manufacturing enterprises. Data were collected

by means of questionnaires with response option graduated into a five- likert scale

designed to capture information on the variables that affect SMEs. The linear regression

analysis was used to test hypotheses one, three and four. One sampled t-test was used to

test hypothesis two while a multiple regression analysis was used to test the multiple

effects of three independent variables on credit accessibility. The result obtained using the

test statistics shows a positive relationship between government policies, access to credit

as the greatest problems facing SMEs, tax incentives, availability of collaterals as regards

the accessibility of credit facility by SMEs. The research questions proved that

international financial assistance abounds for SMEs. The study also showed that the level

of the operation of SMEs has not improved when compared with other developed nations.

SMEs in Nigeria are faced with numerous challenges and such has affected their

performances. We therefore recommend that attention and support be given to the sub-

sector so as to enhance their performance as the engine of growth and catalyst for socio-

economic transformation in Nigeria. The study has provided opportunities for further

research into other factors that could affect SMEs credit accessibility, in order to ascertain

if such factors actually affect them in equal measures or not.

11

TABLE OF CONTENTS

Title page i

Declaration ii

Approval page iii

Dedication iv

Acknowledgement v

Abstract vi

Table of content vii

List of tables x

List of figures xi

CHAPTER ONE: INTRODUCTION

1.1 Background to the study 1

1.2 Statement of the Problem 3

1.3 Object of the study 5

1.4 Research questions 5

12

1.5 Hypothesis of the study 5

1.6 Scope of the study 6

1.7 Significance of the study 6

1.8 Limitations of the study 6

1.9 Explanation of Acronyms 7

Reference 8

CHAPTER TWO: REVIEW OF RELATED LITERATURES

2.10 Conceptual review 9

2.1.1 Relevance of SMEs in Economic Development 11

2.1.2 Sources of finance for SMEs 13

2.1.3 Venture capital Financing/Business Agents 13

2.1.4 Pension reform Act & SME financing 14

2.1.5 SME Financing issues and the bank 15

2.1.6 The role of Banks in SME development 16

2.1.7 The existence of SME Financing gap 17

2.1.8 Concept and causes of Financing gap 17

2.1.9 Imperatives of Good Banking habits for

13

Successful SMEs operations 18

2.1.9.1 Appraisal of some sources of financing

SME’s in Nigeria 21

2.1.9.2 Current financing initiations and the way

Forward 27

2.1.9.3 Some countries expenses in SME development 30

2.1.9.4 Problems of SME in the development process 32

2.1.9.5 Ten commandment of small Business Finance 33

2.1.9.6 Closing the financing gaps for SMEs in Nigeria 34

2.1.9.7 Prospects of SMEs in Nigeria 35

2.1.9.8 SMEs and the living standard of people 37

2.2 Theoretical Review 38

2.2.1 Agency Theory 38

2.2.2 Signaling Theory 39

2.2.3 The Pecking order frame work/Theory 39

2.2.4 Access to capital theory 40

2.2.5 Equity Theory 40

2.2.6 Entity Theory 40

14

2.3 Empirical review of Related literature 41

2.3.1 The impart of Access to finance on SMEs 43

2.3.2 Constraints to SMEs financing 47

2.3.3 Government and CBN Policy options 48

2.3.4 SMEs and Tax Incentives 49

2.4 Summary 50

References 51

CHAPTER THREE: METHODOLOGY

3.1 Research design 62

3.2 Population of the study 62

3.3 Sampling/sample size 62

3.4 Data Collection instrument 63

3.5 Techniques of data Analysis 63

3.7 Nature and sources of Data 64

3.8 Validity, of the Instrument 64

3.9 Reliability of the instrument 64

15

3.9.1 Description of Research Variables 65

3.9.2 Anticipated Problems/Limitations of the study 67

References 68

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

4.1 Introduction 69

4.2 Hypotheses Testing 84

4.2.1 Hypothesis 1 84

4.2.2 Hypothesis 2 86

4.2.3 Hypothesis 3 77

4.2.4 Hypothesis 4 88

4.2.5 Multiple Regression Analysis result of effect of Government

policy, Tax incentives and Collaterals on Accessibility of credit

facilities by SMEs 90

CHAPTER FIVE: DISCUSSION OF FINDINGS, RECOMMENDATIONS AND

SUMMARY

5.0 Introduction 92

5.1.1 Discussions on findings of hypothesis 1 92

16

5.1.2 Discussions on findings of hypothesis 2 93

5.1.3 Discussions on findings of hypothesis 3 94

5.1.4 Discussions on findings of hypothesis 4 86

5.2 Conclusion 95

5.3 Recommendation 96

5.4 Contribution to knowledge 97

5.5 Further studies 97

Bibliography

Appendix

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

A business whether small or big, simple or complex, private or public is created to either

provide competitive prices make profit, provide social services or add value (Ayozie

,1999). Business in Nigeria has been classified as small, medium and large. However,

(SMEs) Small and Medium Enterprises does not have a one way definition rather, its

definition is best understood from its characteristic features; level of project costs,

turnover, number of employees, ownership composition and capital outlay

(Akinsurile,2006).

The Federal and State Ministries of Industry and Commerce have adopted the criteria of

value of fixed capital to determine what Small and medium scale enterprises (SMEs)

definition would be. The National Council of Industries defined SMEs as those businesses

whose capital base excluding land is not more than N2m only and employee ranges from

17

10 to 300 persons (Akimade,1991). However, this value rose from N60, 000 in 1972,

N159, 000 in 1975, N250, 000 in 1986 before rising to N2m in 1991. On the other hand,

small and Medium Scale Industries development Act 2003 specified that SME employee

rages from 10-199, Assets excluding land and building fall between (5 and 499) million

Naira only.

Small and Medium Scale Enterprises in Nigeria constitutes a greater percentage (75%) of

all the registered companies in Nigeria. They have been in existence for quite a long time

as majority of SMEs’ grew from Cottage Industries. The operations of SMEs’ are found in

all the areas of human endeavours: Manufacturing, Production, information, Services,

Agriculture, Hotel and Restaurants, Financial Intermediation, Real Estate, Education,

Building and Constructions, Mining and Quarrying.

For SMEs’ to operate in these sub-sectors of the economy, they are not left without

controls. Federal government through the apex bank (CBN) monitors the activities of

SMEs to ensure that they work in line with the set standards in other countries. The

government set several agencies like small and medium scale industries equity investment

schemes (SMIEIS),small and medium enterprise development agency(SMEDAN),Nigerian

agricultural cooperative and rural development bank,(NACRDB),Bank of industry(BOI),

Nigerian bank for commerce and industry(NBCI),Nigerian industrial development

bank(NIDB). They are set to moderate, monitor, finance and control SMEs’ to ensure that

they are resurrected to be the major driver of our economic development and growth

(Onugu, 2005).

On the other hand, the Federal government liaises with international agencies and

organizations World Bank, International Finance Corporation (IFC), United Kingdom

Department for International Development (DFID), United Nations Industrial

Development Organizations (UNIDO), and Europeans Investment bank (EIB) .The essence

is not only to invest heavily on SMEs but to make them work vibrantly.

Wide attention and support given SMEs is not far-fetched from the obvious reasons that

they are job and wealth creators. Small and Medium Enterprises (SMEs’) occupy a very

18

vital position in the economy’s various sub-sectors and thus have several significant roles.

SMEs’ have been referred to as the “Engine of Growth” and “Catalysts for Socio-

Economic Transformation of the country. SMEs’ represents a veritable vehicle for the

achievement of National Economic objectives: Employment generation, value added, rural

development acceleration, stimulation of entrepreneurship, vital links between agriculture

and industries, supply parts and components to large scale industries (LSI), contribute to

domestic capital formation (Anyanwu,2001).

(Salam,2012), the Deputy Director Development, Finance Department of CBN in his

workshop paper “Stakeholders responsibility in SMIEIS” opined that despite the

incentives, policies, programmes and support aimed at revamping SMEs’, they have

performed rather below expectations in Nigeria. Different opinion abounds as to why

SMEs have not been able to perform; Some said it was lack of access to credit facilities,

others think otherwise arguing that inappropriate management skills, difficulty in accessing

global market, lack of entrepreneurial skills, poor infrastructures, insecurity challenges etc

are largely responsible.

However, one observes that the bane of SMEs’ in Nigeria is lack of long term finances

bearing in mind that most Nigerian Financial Market have much of short term funds which

may not allow SME to grow and become really successful.

Onugu,(2005) opined that there are challenges and problems which frustrate SMEs’ in

Nigeria. These problems either make them to die within their first two years of existence or

perform below standard even after surviving in their early years. Some of the key ones are

inadequate infrastructural facilities (road, water, electricity) insecurity of lives and

property, inconsistent regulations, fiscal and industrial policies, limited access to market,

multiple taxes and levies, data inadequacies, fragile capital base, and harsh operating

environments. The problems and challenges of SMEs’ in Nigeria are also induced by the

operating environment (Government Policies, Globalization effects, financial institutions,

19

attitude to work, other challenges are driven by inherent characteristics of SMEs’

themselves.

In spite of the above challenges, government can still provide good infrastructure, enabling

environment, legal framework and other incentives that would aid SMEs’ to operate more

efficiently in Nigeria just like other developed countries. This will help SMEs’ to be in the

fore-front of economic growth and development in Nigeria.

1.2 Statement of Problem

SMEs in Nigeria can never be severed from the challenges and key variables that

characterize the nation as a developing one. We know that the nation has been faced with

several challenges like economic and political instability, corruption, insecurity, high rate

of poverty, poor infrastructures. SME by extension as a sub-sector of the economy must

definitely get a fair share of these problems. In addition, to the general challenges (Cole,

2008; Udell,2003;Blum&Laurie,1995; Burch & Claudia,2004; Birly,1996; Bates,2007)

who studied the problems and challenges facing SMEs, found out that one of the greatest

problem facing SMEs was access to credits. Also, (Watson& Kunt, 2002; Vos,Yeh,Carter

& Tagg, 2007; Beck & Kunt,2008; Chittenden & Hall, 1996) in their studies examined the

extent to which limited access to finance has affected the performance and growth of

SMEs. They observed that funding pose serious impediment to growth of SMEs. In the

same vein, (Abereyo & Fayomi,2005; Dagogo & Ollor,2012; Gbandi & Amissah,2012;

Anyawu,2010) have studied the appraisal of some sources of finances available for SMEs,

and observed that most sources of finance attracts huge costs of capital with the exception

of retained earnings that are cost free though may be too meager for the effective growth of

SMEs.

Furthermore, financial institutions are demanding unattainable conditions and terms (high

interest rate) for the granting of loan. They are claiming that SMEs are not presenting

bankable project (good project proposal), inadequate collaterals, lack of trained

personnel’s, lack good accounting system that would give rise to audited annual accounts,

20

coupled with high enterprise mortality. Thus, it would appear that greatest problem facing

SMEs could be lack of accessibility of credit facilities.

Still worrisome is the position of Federal Government in the implementation of SMEs

policies. How far the apex bank has gone in the enforcement and control of the laws that

guide SMEs even after the emphasis on budgetary allocation? How have she ensured that

the 10% profit before tax set aside by the commercial banks is made available to SMEs? It

would appear that the commercial banks even prefer to pay a penalty of 20% to CBN

instead of choosing the option of granting loans to SMEs.

But, despite the general vigorous marketing of these facilities by the financial institutions, SMEs

have little or no access to them. The big question then is “why is it that SMEs are not able to access

these credit facilities from the financial institutions’’?

1.3 Objectives of the Study

The main objective of this study is to determine the degree of accessibility of credit

facilities from financial institution by Small and Medium Scale Enterprises: Evidence from

Nigeria.

While the specific objectives of the study are as follows- To:

i. examine the extent to which government policies favour SMEs in Nigeria.

ii. ascertain whether access to credit facilities represents the greatest problem

facing SMEs.

iii. determine whether tax incentives affect the accessibility of credit facilities

by SMEs.

iv. determine whether having collaterals have effect on the accessibility of

credit facilities by SMEs.

v. ascertain the extent to which SMEs are funded by international agencies: -

World Bank, IFC.

1.4 Research Questions

In the course of this research study the following research questions were raised:-

(i) How far has government policies favoured SMEs in Nigeria?

21

(ii) To what extent is access to credit facilities the greatest problem facing

SMEs?

(iii) Has tax incentives affect the accessibility of credit facilities by SMEs?

(iv) To what extent does having collaterals affected credit facilities accessible

by SMEs?

(v) What is the extent to which SMEs are funded by international agencies?

1.5 Hypotheses of the Study

After a critical evaluation of the objectives the following hypotheses were developed.

i. Government policies do not significantly favour SMEs in Nigeria.

ii. Access to credit facilities is not the greatest problem facing SMEs.

iii. Tax incentives do not have a significant effect on accessibility of credit by

SMEs.

iv. Having collaterals does not significantly affect accessibility of credit by

SMEs.

1.6 Scope of the Study

The researcher used all the registered enterprises under the umbrella of Small and medium

Enterprises Development Agency (SMEDAN). However, for a realistic study to be made,

only the three states of the south-east were chosen, Anambra, Ebonyi and Enugu. The three

states were chosen because of proximity advantage. The population was the senior

accounting officers (managing directors) in the enterprises operating under Manufacturing

Association of Nigeria (MAN) in the three states as at 31st march, 2012. Manufacturing

enterprises was chosen because they have wider need for finance, optimum capacity

utilization and good records that can allow studies to be carried out on them.

1.7 Significance of the Study

To SME Operators:

Operators in the SME Sub-sector would have more insight into the various sources of

credit and tap them to achieve better result. They would be aware that government through

her agencies SMEDAN, BOI, NACRDB can protect them.

To Government

22

In addition to moderating the affairs of financial institutions, government would see the

need to provide enabling environment for SME to thrive so as to actually become the

driver of our economic growth and development.

To Public and Economy

The public will know that SME Sub-sector is a vibrant one which they can gainfully

venture into and thus make the economy of the nation most viable and enviable to foreign

investors.

1.8 Limitations of the Study

Certain limitations were encountered in the course of this study viz:-

i. Limited sample size:

The researcher found it difficult to increase sample size so as to have a

good representation of the entire population but we ensured that this did not

affect our study.

ii Respondents Resistance:

Most people are not willing to respond to oral questions as well as

questionnaires. This is because they feel that instant gain or benefits are not

attached.

iii Coverage:

In studies of this nature, coverage is usually a peculiar constraint. This

would limit the area of coverage but we ensured that they did not frustrate

our efforts.

1.9 Explanation of Acronyms.

SMEs - This means Small and Medium Scale Enterprises.

CBN - Central Bank of Nigeria which is the Apex bank for regulation of

the financial institutions affairs.

BOI - Bank of Industry

NBS - National Bureau of Statistics

NBCI - Nigerian Bank for Commerce and Industry.

NIDB - Nigerian Industrial Development Bank

NACRDB - Nigerian Agricultural, Cooperative and Rural Development Bank.

23

SMIEIS - Small and Medium Industries Equity Investments Schemes.

SMEDAN - Small and Medium Enterprises Development Agency.

Lending Infrastructures – The information environment, legal and judicial setting, tax

incentives etch. Rules and laws set by government.

REFERENCES

Anyanwu, C.M. (2011).“Financing and Promoting SSI, Concepts, Issues and Prospects”

Bullion Publication of CBN. Vol. 25, No. 3.

Allen, N.B. (2004). “Small and Medium Enterprises: Overcoming Growth Constraints”

World Bank Conference Paper Presentation (aberger@frb.gov)

Ayozie, D.O. (1999). “A handbook on Small Scale Business for National Diploma

Students”. Danayo Inc. Coy. Ilaro.

24

Bates, F. (1997). Financing small business creation: The case of Chinese & Korean

immigrant entrepreneurs. Journal of business venture, vol. 12 pp109-124.

Birly, S. (1996).Start up in small business and entrepreneurship, eds, Bums and Dewhust,

Macmilian Press.

Buch, C.M. (2004)..Information versus Regulations:What drives the international

activities of commercial Banks? Journal of money credit and Banking No:51-69.

Blum, L. (1995).Free money for SMEs.4th edition, John Williams & Sons inc.

FBN Plc Bi-annual Review of SME Financing in Nigeria (1993) Vol. 2 No. 4.

Onugu, B.A. (2005). SMEs in Nigeria:”Problems & Prospects” Dissertation paper

presented to St. Clement University Lagos.

Olorunshola, J.A. (2001). “Industrial Financing in Nigeria: Some Institutional

Arrangement” CBN Economic and Financial Review. Vol. 24, No. 4.

Oye, A. (2006). Financial Management, page 578. El-Toda Ventures Ltd, Mushin, Lagos

Olu, A.O.(1999). A paper presented at the First Bank Business and Economic Report

Summit p1-5.

SMEDAN/NBS 2010 National Collaborative Survey

www.cenbank.org/out/publicaton/dfd/2004/smi

CHAPTER TWO

REVIEW OF RELATED LITERATURE

INTRODUCTION

The review of literature is arranged as follows:

2.1 Conceptual review

25

2.2 Theoretical review

2.3 Empirical studies

2.4 Summary

2.1 CONCEPTUAL REVIEW

HISTORICAL DEVELOPMENT OF SMEs IN NIGERIA

Small Scale Industry orientation is part and parcel of Nigeria. Evidence abound in our

respective communities of what success our great grandparents made in their respective

trading concerns; yam barns, iron smelting, farming, cottage industries and the likes. So

the secret behind their success (of a self- reliant strategy) does not lie in any particular

political philosophy, so much as in the people’s attitude to enterprise and in the right to

which the right incentive is enough to make risk worth taking are provided

(Anyawu,2011).

Economic history is well stocked with enough insights into the humble beginning of

present day giant Corporation. Evidence abound that almost all of the multinational giant

corporations were cottage enterprises, growing as their industry grew, and through their

own sheer ability either reproduce existing products more cheaply or improve their quality.

The respective government policies accorded and gave priority to the country’s small

scale enterprise. Abudu (2009),said that they constitutes the fountain head of vitality for

the variation economy and consequently their problems have been viewed as those of the

nation, by virtue of their number, diversity, penetration in all sectors of production and

marketing, contribution to employment and to the prosperity of the particular areas in

which they operate.

In concrete terms, CBN (2010) stressed that small scale industries constitute a greater

percentage of all registered companies in Nigeria, and they have been in existence for quite

a long time, majority of the small scale industries developed from cottage industries and

from small scale to medium and large scale enterprise. Prior to Nigeria’s Independence, the

business climate was almost totally dominated by the Colonial and other European

26

Multinational companies like United African company (UAC), GB Olivant, Uniliver Plc,

Patterson Zechonics, Leventis, etc. These companies primarily engaged in bringing into

Nigeria finished goods from their parent companies overseas. The government in those

days encouraged them to become stronger by giving incentives at favourable terms and tax

concessions (CBN, 2010).

A major/remarkable breakthrough in small scale business came about through the

indigenization Decree 2002 and later in Nigeria Enterprise Promotion Act 2007. These

were genuine attempts by the Federal Government to make sure that Nigerians play an

active and worthwhile role in the development of the economy. In the National

Development Plan, the Federal government gave special attention to the development of

small scale industries particularly in rural areas. This was in recognition of the roles of

small and medium scale industries, as the seedbeds and training grounds for entrepreneurs

(Mungcal, 2011). Nigerians need to take a cue from economic history, which is well

stocked with enough insight into the humble beginnings of the present day giant

conglomerates which started as small scale outfits.

Within this decade, the government policy measures placed emphasis on the technological

development of small scale industries in Nigeria. Various governments embarked on

corrective measures to focus efforts towards the maximum exploitation of natural

resources, and tried to discourage capital intensive mode of production in the light of the

abundant resources available Mungcal et al (2011).

The federal and state governments have both contributed to the growth of small scale

industries in Nigeria especially in the rural areas. In recent time, various fiscal and non-

fiscal incentives have been established for investors and entrepreneurs in the small scale

sectors of the economy. Of special mention was the strategy adopted by the federal

government for the training and motivation of the unemployed graduates, to be gainfully

employed in out of school entrepreneurship development programmes. Thus, on the

27

presentation of viable feasible projects, approved loans are disbursed through pre-selected

commercial banks assisted by the National Directorate of Employment CBN (2010).

To show its seriousness, the federal government through its educational agencies like the

National Board for Technical Education (NBTE), the Nigerian University commission

(NUC), and the National youths Service Corps (NYSC) programme gave directives that

entrepreneurial development courses be incorporated into the curricular of tertiary

institutions and NYSC programme.

2.1.1 Relevance of SMEs in Economic Development

The link between SMEs activity and economic growth and development is important

considering the relative larger share of SMEs sector in most developing countries and

because of substantial international resources that have been channeled into SMEs sub-

sector of these nations (Beck & Kunt, 2003).

One observes that SMEs is the major driver of the economic growth .The SMEs sector is

the backbone of the economy in high income countries, but is less developed in less

income countries OECD (2005). No wonder (Adelaja,2003) opined that SMEs have a lot

of important contributions to make to the economic development of the country. He

further posits that SMEs aid in the provision of employment, innovation, marketing of

goods and services. No wonder youth’s retirees and out of school graduates are now

gainfully employed thereby reducing crime, robbery and white collar jobs.

(Olorunshola,2001) opined that SMI assumed a heightened significance in the

development of literature and became a focal point of discussion at the global level. This in

fact makes the title of this paper, germane at this stage of Nigeria’s development. That is

why it captures the interest of government and other interest groups especially now that the

issue of poverty alleviation is on board.

28

Nigeria, just like most developing economies has always been faced with a choice between

two basic industrialization strategies, viz, large scale and small-scale industrialization. The

large-scale industries approach to development prefers attaining development through the

establishment of heavy industries. Such industries will then give rise to small industries

that will service them. This strategy is therefore designed to produce a backward linking

effect whereby the growth and expansion of a few large-scale industries would generate a

number of small-scale enterprises thereby making the gains of industrial growth to

permeate the rest of the economy. This link would lead to an advanced success in the

economy Onwumere & Ige,(2000).

(Allen, 2004) posits that any strategy of industrial development must consider the goals,

the resources, and the constraints facing an economy. The perception of the economic

planners may lead to differences in the strategies considered appropriate in any given

economy. Indeed radical changes in strategies may be called for over time because of

changes in goals or resource availability.

The superiority of small-scale industrialization strategy in promoting economic growth is

generally acknowledged. As a matter of fact, a positive correlation between the emergence

of an active small-scale industrial sector and the commencement of rapid economic growth

and development can always be established. A practical illustration is the recent

transformation of some South-east Asian economies from rudimentary states to highly

industrialized ones in the second half of the last century. That manifested the dynamic

potentials of small-scale industrialization option for developing economies.

SMEs will play a dominant role in dictating the pace of growth of the Nigerian economy

given an enabling environment. Such industries maintain a very strong and ubiquitous

presence in almost every sector of the economy Uche,( 2008).

29

SME Sub-sector therefore plays key roles towards moving the economy forward in the

following areas: capacity building, employment generation, promoting growth, service to

large scale industries, technology acquisition, even and industrial development and poverty

alleviation (Toyo, 2004; Venkataraman, 2004).

2.1.2 SOURCES OF FINANCE FOR SMEs

Sources of fund for SMEs are many and varied, but what determines the entrepreneurs

choice is dependent upon many factors, availability of credit or its accessibility, cost of

funds, and conditions to be met on one hand, and the stage at which the fund is needed on

the other hand (Adams,2002).

For a business that is starting newly studies has shown that the best type of financing

should be oneself, banking, thrift, asset sales, contributions from friends and neighbours,

non-governmental organizations, investor funding, interest sources (Binley,2006).

However, for an existing business, some of the sources mentioned above could be used in

addition to the following: Commercial and merchant banks, equity financing, debt

financing, venture capital financing (Kesava, 2002; Bates, 2007; Stevev & Jarillo, 2000).

2.1.3 VENTURE CAPITAL AND BUSINESS ANGELS

Venture capital involves the provision of investment finance to private, Small or Medium

Enterprises in the form of equity or quasi-equity instrument not traded on the stock

exchange (Abereijo & Fayomi, 2005). Venture capital is also referred to as risk capital.

Venture capital focuses on high growth business in early stages of development. The

stages of venture capital are basically:

a) Seed capital.

b) Start-up and early stage capital.

30

The venture capitalist may however provide funds for expansion and development, buyout

etc. A study on “the effect of venture capital financing on the economic value added profile

of Nigerian SMEs” (Dagogo & Ollor, 2012), found that venture backed SMEs contributed

more to society in terms of taxes to government, provision for corporate social

responsibility and staff welfare. The SMIEIS which is essentially a pool for venture capital

has not done very well in terms of providing equity funds for the SMEs Terungwa, (2011).

Recently, two new sources of funds have been unlocked for investment in growth business

in Nigeria through private equity and venture capital. They are the pension fund assets and

sovereign wealth fund (SWF) (Gbandi & Amissah, 2012).

2.1.4 PENSION REFORM ACT AND SMEs FINANCING.

The pension reform act of 2004 established the contributory pension Scheme (CPS). The

act has been largely adopted by the Federal government and the private sectors. However,

only 17 out of the 36 state governments have passed bills to adopt and implement the CPS

as at the end of 2004 CBN,( 2010). One of the duties of the National Pension Commission

(Pencom) which is the apex regulator is the establishment of standards, rules and issuance

of guidelines for the management and investment of pension funds under the act.

Under the pension act, the funds may be invested in private equity funds and venture

Capital subject to a maximum of 5% of pension assets. The funds can also be invested in

money market and equities. The pension asset funds were N2.029 trillion as the end of

2010. This means that more than N100 billion can be available for investment in private

equity and venture capital. This amount will grow as pension funds grow by an estimated

20-30 percent per annum in the next few years (James & Achua, 2010). SMEs will benefit

directly from pension funds investment in private equity funds (CBN,2010). But the

31

pertinent remark is that there has not been disbursement to the SMEs sub sector as at the

period of this review.

2.1.5 SME FINANCING ISSUES AND THE BANK

Compared with the position of large enterprises, the provision of finance to SMEs by

lending institutions can be problematic for a number of reasons (Berger and Udell. 2006;

Frank and Goyal, 2003). First, such institutions need to be able to effectively monitor the

performance of the enterprise and ensure that: the enterprise is abiding by the initial terms

of the contract; the enterprise is making satisfactory business progress; the necessary

means are available to ensure that the interests of the lender are being respected.

Such monitoring, however, is difficult due to a lack of transparency in the operation of

SMEs, which are less likely to follow expected norms of corporate governance. This is

compounded by the fact that SMEs experience greater volatility in profitability, growth

and earnings in comparison to larger firms, and their survival rate is much lower (Storey

and Thompson,et al 2005). SMEs also suffer from principal-agent problems, and

asymmetric information, which can lead to investment in more risky projects and present

lenders with the difficulty of distinguishing good loans from bad loans. In these

circumstances banks find it rational to engage in credit rationing (e.g. not extending the

full amount of the credit requested, even when the borrower is willing to pay a higher

interest rate).

In addition, it can be difficult to disentangle the financial position of the owner from that of

the firm. SMEs tend to have a much less developed bank-client relationship, which can be

32

important for successful access to finance. These difficulties can be further compounded in

the cases of start-up and young enterprises, which can have difficulties in providing the

collateral, employment of trained personnel and may be seen as potentially offering high

returns but at high potential risk (Nofsinger and Wang, 2011). The financial system may

not provide range of products and services to meet the needs of SMEs adequately.

However, there may be a ‘pecking order’ in terms of firm lending, with larger firms

favored by lending institutions (Seifert and Gonenc, 2008; Watson and Wilson, 2002).

SME problems in accessing finance are further exacerbated by rigidities in macro level

policy, institutions and the regulatory environment. At the macro-economy level,

government policy may require access to large amounts of finance, crowding out access to

finance for SMEs.

Government policies could also favor implementing industrialization and/or import

substitution development strategies that result in large domestic firms being given

favorable access to finance to the exclusion of other smaller enterprises. The domestic

legal system may not adequately protect lending institutions from delinquent payments and

bankruptcy, nor protect property rights, thus increasing the risk inherent in lending to

SMEs.

2.1.6 THE ROLE OF BANKS IN SME DEVELOPMENT

The statement that SMEs sector is the engine of growth for emerging economies like

Nigeria cannot be more appropriate than now when the fabrics of several sectors in the

country have deteriorated very well due to the financial meltdown (Sanusi,2010).The truth

remains that many institutions including the banks has continued to treat issues relating to

the SMEs with levity. The reason adduced is that the banks feel that the sector is a high

33

risk sector. Banking sector’s lack of commitment to the sub-sector could be drawn from

the revelation in 2008 that Banking sector credit to SMEs in 2010 was less than 4% of its

estimated N7.8trillion claims to the private sector.

However, the essence of the Bankers committee was to boost the credit advancement to

SMEs. That was why they mandated the banks to set aside 10% before profit to SME sub-

sector through the equity investment schemes. The question that is pertinent is to ascertain

how far the banks are willing and involved in the advancement of such funds to SMEs.

The (CBN2010) conclusively compared Nigeria’s SMEs with those of other countries like

India. He posits that Indian SME accounts for 39% of manufacturing output and 233% of

total export thereby registering higher growth rate when compared to the other sectors.

2.1.7 THE EXISTENCE OF SME FINANCING GAP

Some studies found out that SMEs face a deficiency in obtaining the finance that they

require, and that this will act as major inhibitor in terms of their performance; growth,

employment, and productivity (Torre et al 2010). This section discusses the existence of

‘financial gaps’ for SMEs. From a conceptual perspective, it was considered for a long

time that it was not meaningful to talk about a financing gap, except where the authorities

deliberately kept interest rates below the market clearing level. As risks increased financial

lenders would be required to increase interest rates to bring market demand into

equilibrium with market supply.

However, (Stiglitz and Weiss 2001; Gertler and Gilchrist 2004) showed that under certain

conditions financing gaps can exist for all firms, as banks respond in a rational fashion by

34

imposing credit rationing. While the arguments were not specifically targeted at explaining

credit rationing for SMEs, these enterprises possess characteristics that make them more

prone to credit rationing than larger enterprises. This position has been applied more

generally to problems encountered in emerging market and developing economies in

particular.

2.1.8 CONCEPT AND CAUSES OF A FINANCING GAP

The issue of access to finance by firms in general, and the theoretical recognition that

financing gaps can exist for firms, can be traced back to the theory of imperfect

information in capital markets (Stiglitz and Weiss 2001 et al). Banks are likely to adopt

more stringent lending policies favoring those who are able to provide more collateral

assets, or who have a more established credit record. In other words banks adopt credit

rationing measures to minimize problems. The financing gap here could be measured by

the difference between desired access to finance and actual access to finance, and by the

cost and terms of access to finance.

The potential for credit rationing is thought to be greater for small firms. On the demand

side, as argued by (Petersen and Rajan, 2004), the amount of information that banks could

acquire is usually much less in the case of small firms, because banks have little

information about these firms’ managerial capabilities and investment opportunities. The

extent of credit rationing to small firms may also occur simply because they are not usually

well-collateralized (Gertler and Gilchrist,2004). The most recent paper by (Torre et

al.2010) also attributes hindrances to SMEs’ access to finance to ‘‘opaqueness”, meaning

that it is difficult to ascertain if firms have the capacity to pay (have viable projects) and/or

the willingness to pay (due to moral hazard).

35

This opaqueness particularly undermines lending from institutions that engage in more

impersonal or arms-length financing, requiring hard, objective, and transparent information

(Hytinen and Pajarinen, 2008). Thus the problem of a mismatch between the supply of

funds (loans) and the demand for funds (loans) leads to the notion of “financial gaps”.

The gaps exist if particular categories of firms that ought to receive financing are unable to

obtain it, despite a willingness to pay higher interest rates, (indicating market failure)

particularly if such business opportunities are profitable. A mismatch between demand for

finance and supply of finance can arise due to asymmetry in information and consequent

difficulty in distinguishing between good and bad loans, leading to the application of credit

rationing. This is potentially more severe for SMEs than for large enterprises (Berger &

Udell et al 2006).

2.1.9 IMPERATIVES OF GOOD BANKING HABITS FOR SUCCESSFUL SMEs

OPERATIONS

The need for banks to possess outstanding qualities when SMEs operations are concerned

cannot be over-emphasized.(Ogubunka,2003), states that there is no doubt that sustainable

industrial development in an economy is germane to national economic growth and

development. For one thing, industrial development has been credited with creating

productive opportunities for positive economic and social growth and development. This

is why governments all over the world are concerned about the state, stage and level of

industrial development in their countries. They are always interested in measures that

would not only improve but also sustain such developments, especially as the level of

industrial development differs in developed, developing and under-developed nations.

It is the drive to reduce some of such socio-economic problems that efforts, including the

on-going Millennium Development Goals, are being pursued across the globe. Whether

36

such efforts would realistically reduce or eliminate the challenges will depend on a variety

of issues, one of which ought to be the roles to be played by various stakeholders including

SMEs and banks (Seers, 2002).

There is no-gain-saying that banks, because of their distinct and unique place in the

economy as financial intermediaries, are important and necessary agents in the

transformation of national economies to the path of growth and development (Afolabi ,

2004).

Consequently, both SMIs and banks can be seen as critical socio-economic transformers,

especially if there is good synergy between them. This will create and widen the path to

successful industrial operations. (Lamido, 2010).

Whereas, there are evidences to indicate that SMIs and banks have, in Nigeria, been having

operational relationship over the years, the question sometimes asked is whether such

relationship has helped in any meaningful way to bring about sustainable industrial

development within the economy. While there may be varying responses to the question,

suffice it to state that irrespective of where the relationship has led to date, it can

significantly be improved upon, if the country must achieve sustainable industrial

development. This is very important because while banks had often fingered lack of good

banking habits of SMIs as a key reason for banks’ inability to provide assistance to them,

the SMIs on the other hand, had accused banks of insensitivity to their needs and high-

handedness in providing services. Thus, as the country matches forward to becoming one

of the largest 20 economies in the world and the African Financial Centre by the year

2020, it is necessary that banks and SMIs should relate most appropriately to facilitate

successful industrial operations and development. (Zuvekas , 200s9).

.

37

The details of commercial and merchant bank loans are as shown below:

Table 1: Commercial Banks Loan and Advances to Small and Medium

Enterprises (2005-2010) in Nigeria

Year

Total Credit

(1) N’m

SME Credit

(2) N’m

2005 587165.2 53312.6

2006 4489233.6 89747.2

2007 3818835.5 20641.3

2008 7681772.1 89332.2

2009 98754611.9 674511.5

2010 99632186 456233.7

Source: 1. CBN Statistical Bulletin, December 201 2.

Table 2: Share of SME in the Loans/Advances of Commercial and Merchant

Bank (2005 – 2010)

Year

(1) Percentage of Commercial

Bank Loan

(2) % of Merchant Bank

Loan

2005 16.2 10.7

38

2006 10.8 16.4

2007 22.1 18.2

2008 18.8 13.0

2009 23.7 11.2

2010 11.2 14.6

Source: CBN Statistical Bulletin, Various Issues 2012

2.1.9.1 APPRAISAL OF SOME SOURCES OF FINANCING SMEs IN NIGERIA

The availability of the various sources of finance are meaningless without the appropriate

appraisal of some of the sources that are of paramount importance to SMEs. No wonder

government established a coordinating umbrella organization called “Small Scale

Industries Corporation” in 1971 saddled with the responsibility of promoting SMEs. This

is acquired through the establishment of some institutions and programmes to provide

development capital to the SMEs. Notable amongst these institutions and programmes are

as follows:-

Small Scale Industries Credit Scheme (SSICS)

SSICS was as a revolving grant by the federal and state government to assist in meeting

the credit needs of the sub-sector on a more liberal condition than in private lending

institutions such as commercial banks. The problem of financial resources especially at the

state level coupled with rampant mismanagement of meager funds by both the

administrator of the loans as well as the benefiting SMEs killed the scheme.

The First Bank of Nigeria plc bi-annual review December 2003, Federal Government

decided to look for several other available options to bring up SME to at least acceptable

level to enhance economic development and growth employment generation, wealth

39

creation etc. Federal Government extricated itself from the scheme and then launched

another scheme called Nigerian Bank for Commerce and Industry (NBCI).

Nigerian Bank for Commerce and Industry (NBCI)

(Anyanwu, 2011) in his workshop paper titled “The Role of CBN in SME Financing”

appraised SME financing thus: NBCI was set up to provide financial services to the

indigenous business community, particularly SMEs. NBCI was operated as the apex

financial body for SME and also administered the SMEs World Bank loan scheme, World

Bank (2000). It approved a total of 797 projects with a credit value amounting to N965.5

million between 2001 and 2004. They disbursed N141.82m between 2006 and 2008. The

bank also financed a total of 126 projects under the World Bank loan scheme, some of

which were cancelled due to the failure of project sponsors to contribute their counter-part

funding. The NBCI suffered from operational problems, culminating in a state of

insolvency though, it is now part of the newly established Bank of Industry (Oputa,2011).

Central Bank of Nigeria (CBN)

(Olorunshola, 2001) agreed that CBN is the apex regulator of the financial institutions.

“The CBN has since 1990 been instrumental to the promotion and development of

enterprise particularly in the SME sub-sector. The CBN credit guidelines requires that

commercial and merchant banks allocate a minimum stipulated credit to sectors classified

as preferred including SME CBN stipulated differential interest rates for sect oral credit

allocations with varying moratorium on the repayment of loans and advances. For

instance, since 1990s CBN directed that at least 10% of the loans advanced to indigenous

borrowers should be allocated to SMEs (CBN, 2012).

However, given the cumbersome administration of such loans, banks preferred to pay

prescribed penalties rather than channel credit to the SMEs. The failure of banks to meet

the prescribed credit allocation led the CBN to mandate such defaulting banks as from

1987, to make such lending shortfalls available to it for onward transfer to the relevant

40

sub-sector. The worrisome aspect of this is that banks are still not comfortable to make

credits accessible to SMEs and this has led to serious setbacks for SMEs to date.

STATE GOVERNMENTS

(Udechukwu, 2003) opined that state governments are not left out in the move to make

SMEs work. State government through their ministry of commerce and industries also

promote the development of SMEs. In this regard, some state governments promote the

SMEs through State-owned finance and investment companies which provide technical

and financial assistance to SMEs. However, owing to numerous constraints, some were

less active than others. The state government has ventured into many schemes and

programmes to strengthen and control SMEs through: centre for management development

(CMD), SSICS, NERFUND, SMIEIS etc.

Major Government Policy that affect SME most Favourably

Policy

Most Favourable Policy

Number Percentage

Environment Sanitary 1,307 20.2

Road Maintenance 1,366 21.1

Importation of raw materials 341 5.3

Job creation 189 2.9

Taxation 308 4.8

Exchange Rate 167 2.6

Intervention Fund 296 4.6

Power Supply 461 7.1

Political Stability 726 11.2

Banking Reform 282 4.4

41

Source: SMEDAN/NBS(2012)

Major Government Policy that affect SME most unfavourably

Policy Most unfavourable Policy

Number Percentage

Power Supply 2,161 18.50

Taxes 3,922 33.58

Demolition 429 3.67

Traffic Control 218 3.67

Environmental Sanitation 154 1.32

Infrastructure/Social Amenities 922 7.89

Importation of Fuel 892 7.64

Trade Permit 407 3.48

Withdrawal of Subsides 858 7.35

Fertilizer Production 175 2.7

No Response 853 13.2

Total 6,471 100.0

42

Introduction of Sharia 282 2.42

Poverty Alleviation 213 1.83

Custom Duties 90 0.71

Banning of importation of goods 160 1.37

Interest rate 599 5.13

Pension 194 1.66

Embargo on Loan Facilities 178 1.52

Total 11,679 100.00

Source: SMEDAN/NBS (2012)

GEOGRAPHICAL DISTIBUTION OF THE 80 PROJECTS FINANCED SO FAR

IN NIGERIA IN 2011.

STATE NO OF PROJECT % OF THE TOTAL

Lagos 60 7.50

Abuja 1 1.25

Anambra 1 1.25

Enugu 1 1.25

Kaduna 1 1.25

Ondo 1 1.25

Plateau 1 1.25

Akwa Ibom 2 2.50

Rivers 2 2.50

43

Ogun 3 3.75

Oyo 3 3.75

Delta 4 5.00

Total 80 100

Source: Federal Office of Statistics

NATIONAL ECONOMIC RECONSTRUCTION FUND (NERFUND)

(Olorunshola,2011) agreed that the main focus of is the provision of soft medium to long

term funds for wholly Nigerian owned SMEs in the manufacturing, agro-allied, mining &

quarrying and equipment leasing. It provides enterprises as SMEs with fixed assets plus

cost of new investment (land excluded, not exceeding N36m and sourcing not less than

60% of their raw materials locally in the case of manufacturing projects.

NERFUND interest rates are slightly lower than market rate CBN (2012). Furthermore,

the rates payable by the participating banks (Pbs) are limited to 1% above NERFUNDs’

cost of borrowing. Pbs are allowed a spread of not more than 4% over their cost of fund.

For all types of facility, and irrespective of the ability of the beneficiary to pay maturing

obligations, it is required that a Pbs repays NERFUND, failing which the CBN will

automatically debit the bank’s account with such an amount.

Small and Medium Enterprise Development Agency of

Nigeria (SMEDAN)

SMEDAN has continued search for solutions towards a vibrant and virile small and

medium enterprises sector, and to entrench the sector into the main stream of the Nigerian

economy. The Agency is a “one stop shop” for nursing and nurturing SMEs in Nigeria.

Consequently, SMEDAN has since inception been in the forefront of developing and

promoting SMEs and entrepreneurs in Nigeria. Some of the functions of the Agency are as

follows:

1. Initiating and articulating policy ideas for SMEs growth and development.

2. Stimulating, monitoring and coordinating the development of the SMEs sector;

44

3. Promoting and facilitating development programmes, instruments and support

services to accelerate the development and modernization of SMEs;

4. Serving as a vanguard for rural industrialization, poverty reduction, and job

creation and thus facilitating enhanced sustainable livelihoods;

5. Linking SMEs to internal and external sources of finance, appropriate

technology, technical skills as well as to large enterprises;

6. Monitoring implementation of government directives, incentives and facilities

for SMEs development;

7. Recommending to government required amendments to business regulation

frameworks for ease of enterprise development.

8. Mobilizing internal and external resources, including technical assistance, for

the development of SMEs.

However the roles of the agency are enhancing SMEs access to finance, sustainable

national development and rural enterprise development. They have impacted on many

businesses like: Cane weaving in Lagos, Fish and irrigation farmers Alao in Borno State,

Cassava Cluster in Taraba State, Ginger in Kwoi Local Government in Kaduna State, Shea

butter cluster in Agbaeku eji, Black soap cluster in Osun State, Aba leather cluster in Abia

State,Women Mat Weavers in Ekiti State, and Abakaliki rice cluster in Ebonyi State.

Community Bank (CB)

The programme for the establishment of Community banks was announced in the 1990

Federal Government Budget. This category of banks is expected to carry out banking

businesses but at purely local community level. Their role is to provide effective financial

services for the rural area as well as micro-enterprises in the urban centres. Towards the

end of that year, government established the Community bank Implementation Committee

(CBIC) with responsibility; among others, for appraising application and issuing

provisional licenses to incorporated Community banks. Formal licenses were ultimately

issued by the Federal Ministry of finance, upon application presented to it by the CBIC

45

through the Central Bank of Nigeria. The bulk of community bank clients fall under the

SMEs’. Unfortunately, the banks are not wide spread enough to make the desired impact

on SMEs’ access to credit.

2.1.9.2 Current Financing Initiatives and the Way Forward

In order to make the SME more vibrant, the Central Bank of Nigeria has evolved new

initiatives, which are geared towards improving accessibility of credit to the SMEs through

the following:

The Small and Medium Industries Equity Investment Scheme (SMIEIS)

Bothered by the persistent decline in the performance of the industrial sector and with the

realization of the fact that the small and medium scale industries hold the key to the revival

of the manufacturing sector and the economy in general, the Central bank of Nigeria

successfully persuaded the Bankers’ Committee in 2010 to agree that each bank should set

aside 10 percent of its annual pretax profit for equity investment in small and medium

scale enterprises. To ensure the effectiveness of the programme, banks are expected to

identify, guide and nurture enterprises to be financed under the scheme. The activities

targeted under the scheme include agro-allied, information technology,

telecommunications, manufacturing, educational establishments, services, tourism and

leisure, solid minerals and construction. With the introduction of the scheme, it is expected

that improved funding of the SMEs will facilitate the achievement of higher economic

growth. As at August 2000, the sum of N11.572 billion had been set aside by 77 banks.

Out of this amount, N1.692 billion had been invested in the small and medium scale

enterprises. Federal government through CBN ensured that even in 2013, banks set aside

N420bn each to some states in the federation with the intent to pedal SMEs to the forefront

in enhancing national development Waziri, (2013).

Nigerian Agricultural, Cooperative and Rural Development Bank (NACRDB)

The Nigerian Agricultural Cooperative and rural Development Bank Limited is an

amalgam of the former Peoples bank of Nigeria, Nigerian Agricultural and Cooperative

46

bank and the Family Economic Advancement Programme (FEAP). It was set up in

October 2000, primarily to finance agriculture as well as small and medium enterprises.

The NACRDB is structured to accept deposits and offer loans/advances in which the

interest rates are graduated according to the purpose for the loan to Nigerians and their

business. The bank also offers a number of financial products including target savings;

start-up as well as small holder loan schemes.

Refinancing and Rediscounting Facility (RRF)

With effect from January 2002, the CBN introduced the Refinancing Facility at

concessionary interest rate to support medium to long term bank lending to the productive

sectors of the economy in as much as SMEs are not usually part of it. This facility was

instituted to provide liquidity to banks in support of their financing of real sector activities.

This was in recognition of the fact that aggregate credit by deposit money mainly to

general commerce and trade. Furthermore, there is need to encourage medium to long

term lending to the productive sectors of the economy, if the production base of the

economy is to be expanded and diversified. The RRF is designed to provide temporary

relief to banks, which face liquidity problems as a result of having committed their

resources to long term financing to the specified productive sectors. The sectors include

agricultural production, semi manufacturing and manufacturing, solid minerals and

information technology. Under the facility, banks shall have access up to 60% of the

qualifying loans. Qualifying loans must have been held for not less than one year.

International Financial Assistance

Government has continued to approach international financial agencies to source need

foreign capital for the SMEs. Such agencies includes World bank and its affiliates and the

African Development Bank (ADB). The Federal Government often guarantees and agrees

to monitor or co-finance the SMEs receiving such external financial support. For instance,

in 2012, the ADP granted an export stimulation loan of US344m for SMEs in Nigeria. The

47

loan is repayable in 20 years with a concessionary interest rate of 5.2% World Bank

Economic Summit (2013).

SMEs Financing By International Development Agencies

Members of the World Bank group, the International Finance Corporation, (IFC) have

made significant contributions towards SME financing in Nigeria. In 2010, the IFC more

than doubled its exposure to Nigerians’ banking sector, investing almost $400 million of

equity and loan financing in First bank of Nigeria (FBN), First city monument bank

(FCMB) and GT bank (Omorogbe,2011). The purpose of the new investment and advisory

services of IFC was to help banks reach segments of the economy that needed better

funding such as infrastructure and the SMEs (Onyeyinka, 2010). Specifically, FCMB

received $70 million in November 2010 to help it increase financing of SMEs. The

corporation is also working with the Department for International Development (DFID) to

expand its funding and advisory role programs to Nigerian banks that have incorporated

non-financial services to SMEs. In the words of IFC’S country Manager for Nigeria,

Adegbie-Quaynor

“Non-financial services such as management and advisory

support help SMEs acquire the skills they need to grow.

IFC is working with Banks in Africa to help them deliver

non-financial services, which in turn allows the banks to

build a more loyal and diverse portfolio of small and

medium Businesses” (Oladunjoye, 2012).

The African development bank (AFDB) is another international agency that plays a role in

financing of SMEs not only in Nigeria, but in many other countries in Africa. The AFDB

has approved a total of 700million worth of loan programs for Small and Medium sized

Enterprises in Nigeria. (Mungcal, 2011). Another institution used by the AFDB in its effort

to improve funding for SMEs is the African guarantee fund (AGF) (Sogunle, 2011).

48

2.1.9.3 Some Countries Experiences in SMEs Development

United State of America (USA)

In the United States of America, issues pertaining to small business financing are handled

by a government agency – Small Business Administration (SBA), which is responsible for

creating and servicing a strong partnership with the private sector for economic

development through small businesses. The agency oversees and actually administers

funds according to needs to small businesses. It creates awareness about funds available,

the categories of business that can get them and the pre-requisites to obtain them. (Buch &

Claudia, 2003). The American Small Business Administration (SBA) has several aims

viz:- Increasing opportunity for Small Business success, transforming itself into a 21st

century leading edge institution, helping businesses recover from disaster, Serving as a

voice for American Small businesses etc.

In the word of its Administrator Aaida Alvarez, the SBA is “streamlined programmes to

help today’s small business…succeed into the next millennium.”

In this regard, it provides customer-oriented, full-service programmes, and accurately

timely information to the entrepreneurial community. Besides providing the actual fund,

the SBA is involved in providing a number of facilitations to small businesses including

loan guarantees, certificate of competence, prime contracting, and breakout procurement,

research and development and business information service (Cole, 2008).

It is however pertinent to note that SBA channels all its assistance to SMEs through

appropriate institutions e.g. commercial lending institutions. This type of coordination and

effective administration of SME operation is yet to be witnessed in Nigeria. In fact, over

the years, the lack of proper coordination of SMEs in Nigeria has led to multi-prolonged

implementation of funding and other development schemes (Ihyembe, 2009).

49

The Philippines

In the 1960s, the Central bank of Philippines established an Agricultural Guarantee Loan

Fund (AGLF) which was placed as special deposits in various rural banks. These deposit

served a twin purpose: as sources of loan able funds and as a channel for providing partial

guarantee for loans granted by the rural banks. Later the AGLF was replaced by the

Agricultural Guarantee Fund (AGF) under which the level of guarantee was raised to 70%

of all losses incurred by rural banks in respect of loans granted. In order to streamline the

administration of the different guarantee funds, a single Trust Fund, administered by the

Land Bank of Philippine was introduced to guarantee up to 85% of credit granted

specifically for the production of rice, sorghum and soya beans (Deyoneg, Robert, Hunter

(2012); Udell , 2004).

India

In order to facilitate the flow of financial assistant to small scale farmers and enterprises,

India established an Agricultural Development Bank and an Industrial Development bank,

in the early 1950s and 1960s, as apex organizations to refinance credit supplied by other

financial institutions for both agricultural and industrial projects (Udell,2004).

Empirical evidence show that in India substantial credits have been granted by nationalized

commercial banks under the refinancing and guarantee scheme to agricultural and small-

scale industries. The guarantees improved access of small businesses to credit, thereby

ensuring widespread adoption at improved technologies such as small scale irrigation

schemes and high yielding varieties of seeds among peasant farmers. Worid Bank, (2005)

shows that the major strength of the Indian Credit System, however, is the overwhelming

presence of government subsidy programmes. The high probability of debt forgiveness for

political consideration has heightened the risks of loan delinquency and frequent resort to

redemption of the guaranteed loans.

50

As a result of willingness on the part of banks to channel enough credit to SMI, the

government of Mexico in 1959 created a Trust Fund in the banks of Mexico to rediscount

and guarantee industrial/agricultural loans. After many years, government re-decided to

re-organize the rural credit system. This was done by creating a central agricultural bank

called “Banc National de Credit Rural (BANCURAL) who has the onerous task of

financing agricultural/industrial sectors.

2.1.9.4 Problems of SME in the Development Process

(Onwumere, 2000), in the CIBN Journal explained that several problems are inherent in

the SMEs growth and development: Inadequacy of finance and infrastructural facilities,

low entrepreneurial skills, multiplicity of taxes, restricted market access and poor

implementation of policies.

51

Rank of Problems Militating Against SMEs Development in Nigeria

Services Rank

1 2 3 4 5 6 7 8

Lack of access to finance 13,273 2,200 1,168 607 406 228 168 19

Lack of space 1,112 4,312 2,116 1,664 1,553 1,733 2,512 132

Weak Infrastructure 2,619 5,435 4,493 1,851 1,487 830 586 66

Lack of

entrepreneurship/vocation

al training

1,178 2,801 2,832 3,908 2,163 2,245 909 46

Obsolete equipment 884 1,526 2,005 2,403 4,061 2,597 1,640 54

Lack of access to research

and development

875 1,392 2,329 2,892 2,646 3,302 1,903 113

Inconsistent policies 1,903 1,975 2,710 2,092 1,690 1,722 3,606 222

Transportation 501 619 357 222 230 166 392 1,270

Lack of government

support

237 363 193 149 151 186 104 142

Inadequate power supply 291 327 129 188 235 244 38 47

Excess Tax 230 376 102 153 324 223 35 59

High Interest rates 282 333 151 313 245 76 43 40

Subsides 186 334 130 282 248 158 48 42

Illiteracy 171 413 153 148 223 163 76 33

None 300 334 184 173 253 72 46 35

Source: National Bureau of Statistics 2012

2.1.9.5 The Ten Commandments of Small Business Finance

i. Thou shall set financial goals

ii. Thou shall prepare personal financial statements

52

iii Thou shall prepare business financial statement

iv Thou shall support projections of future cash flows with sound logic

v. Thou shall decide upon a target capital structure

vi. Thou shall anticipate a realistic cost of capital.

vii. Thou shall recognize all current source of financing

viii. Thou shall consider alternative sources of financing

ix. Thou shall recognize exposure to business risk

x. Thou shall ensure that the financing plan fits with the overall business plans.

(From the GHANAIAN BANKER, 3rd Quarter, July – September 1997 Vol. 33)

2.1.9.6 Closing the Financing Gap for SMEs in Nigeria

From the Editorial Desk of the Nigerian banker (2000), posits that perhaps no other

development strategy has enjoyed as much prominence in Nigeria’s development plans as

the Small and Medium Scale Enterprises (SMEs) development strategy. Because

government has identified this sub-sector as a veritable engine of growth, it has

continuously put in place policies and incentive packages that will promote this segment of

the economy. However, the efforts in this direction have not paid off. But that does not

mean that we shall give up since that will imply accepting failure. The government should

not give up, but continue to come up with favourable policies and incentive packages as

well as establish an enabling environment to foster the growth of SMEs.

A major constraint identified in this segment of the economy is the financing gap and that

informed the establishment of a number of Development finance Institutions (DFIs) such

as the Nigerian Industrial Development bank (NIDB), Nigerian bank for Commerce and

Industry (NBCI) and Nigerian Agricultural and Cooperative bank (NACB) between 1960

and 1980 to bridge the funding gap. This was followed by the establishment of such

specialized instructions as the Peoples bank and community Banks to provide funding for

the sub-sector.

53

Other financing schemes designed to facilitate credit delivery to SMEs include the World

Bank Assisted Small and medium Scale Enterprises (SMEs) Apex Unit Loan Scheme; the

Export Stimulation Loan Scheme (ESL); and the Rediscounting and Refinancing Facility

(RRF) etc.

All these made minimal impacts on the economic development process of Nigeria. The

SMEs sub-sector has continued to be regarded as a high risk sub-sector. Conventional

banks thus tread cautiously when it involves credit extension to this sub-sector. A major

pitfall here has been the level of discipline of the beneficiaries of these credit facilities as

some of them see these loans as their own share of the “national cake’. This therefore

leads to mismanagement of such credit facilities. Another pitfall is the inadequacy of the

operating milieu which can now be described as hostile. The current environment cannot,

by any freak of circumstances, meaningfully support the growth of any small business

enterprise. Considering the epileptic power supply, the unreliable telecommunication

facilities, poor state of roads and even the poor attitude to work of the populace which

leaves much to be desired, closing the funding gap for SMEs in Nigeria today sounds like

an after dinner joke as there are several subsisting inhibiting factors which need to be

addressed (Salami,2012).

Obviously, a success-oriented bridging of the financing gap should start with the

rehabilitation of the dilapidated infrastructural facilities and a comprehensive mass

mobilization of the workforce improved attitude to work. The Japanese achieved

monumental success in SMEs largely through functional infrastructural environment,

personal discipline and an unqualified commitment to duty of average Japanese. The story

in Korea, Malaysia, Indonesia and India are not any different. Nigeria can replicate the

Japanese feat here if she can religiously follow their footsteps. The Nigerian banks’

initiative of setting aside ten percent of their pre-tax profit for equity participation in small-

scale industries is a very welcome development, but the pitfalls must be addressed first.

There is just no alternative (Soludo, 2010).

54

2.1.9.7 Prospects of SMEs in Nigeria

Enabling Environment

The physical and policy environment must be made conducive to the success of SMIs to

encourage the banks to set aside money and invest. The state of infrastructural facilities

must be upgraded. Since the cost incidence of compensatory investments for

infrastructural deficiencies is heavier on SMIs than large industries, SMIs can scarcely be

efficient and competitive within the context of globalization without substantial

improvements in the supply of public utilities. One of the ways to address the issue could

be the establishment of well-equipped industrial estates for SMIs by all tiers of

Government (Onwumere, 2003).

The macroeconomic environment must be stable and investment-friendly. Adverse

movements in the critical variables affecting industrial operations and viability, such as

interest, inflation and exchange rates, must be alleviated. Moreover, the tax incentives

extended by Government to back up the scheme must be promptly put in place including

the 100.0 per cent investment allowance for the banks’ contribution to the scheme

reduction of SMEs corporate tax to 10.0 per cent, and five years tax holiday scheme.

Close Monitoring of SMEs

The scheme should be closely supervised by CBN and the bankers’ Committee to ensure

three things:-

That banks make appropriate contributions to the scheme;

That the amount set aside is invested rather than keeping the bulk of it idle, and

That there is strict compliance by banks with the revised guidelines in the

implementation of the scheme.

The recent move by CBN to penalize banks that failed to invest the funds set aside would

enhance the effectiveness of the scheme (CBN, 2012). The directive to pass any amount

not invested within the specified period to the Bank of Industry should be strictly enforced,

(Oputa, 2012).

55

Other prospects which can explore by the SMEs sector are as follows: adequate

counterpart funding through equity investments by banks, Loan Component within

Scheme, Capacity Building for SMEs, and Commitment by SMEs Promoters,

Competitiveness of SMEs, and Wider Admission of SMIs into the Stock Exchange etch.

2.1.9.8 SMEs and the Living Standard of People

When Small and medium scale industries are cited in rural areas, they help to improve

rural infrastructure and the living standard of the people. They help to attract electricity,

roads and telecommunications facilities to the host communities and also create linkage

businesses that can improve the earning power of rural dwellers. This influences on the

quality of life of rural dwellers. SMEs is a sector that in most countries around the world

accounts for the majority of private sector employment and Gross Domestic Product

(GDP). In fact, many countries use this sector to help their economies recover from the

global economic slowdown (Voghel, 2011).

From the above, it has been observed that small and medium scale enterprises are the

fulcrum of the growth and development of any economy. No wonder, developed nations

like Japan, Mexico, USA and Russia have high percentages of the dominance of the sub-

sector in their economies. Not only that they have their governments support to ensure that

SME would work.

Other developing countries like ours still have to work hard to achieve the best from SMEs

in the economy. Such achievements are not limited to capacity building, developed

infrastructure, even development, industrial development, employment generation, poverty

56

alleviation etc. All these would be achieved because Nigeria is a country that has resilient

people hat believe that “I can do it” attitude. (Soludo, 2009), acclaimed that Nigerians are

people that believe to work for themselves and these qualities of ours would catapult the

nation to the next level as one of the developed nations of the world.

2.2 Theoretical Review

There have been various ideas on financial management decisions which generated some

theories that are used in explaining the (ownership, equity, finance, credit, financing gap

(Stiglitz & Weiss 2001; Thompson et al, 2005).

However, available theories in literatures have shown that most of them affect SMEs in

the developed countries where they operate well within the capital and money markets.

Nevertheless, theories identified in the literature and used for this study are: the Agency

theory, Pecking order framework or theory, signaling theory, Access to Capital theory,

Equity theory and entity/ proprietary theory- hence, are explained as follows:

2.2.1 Agency Theory

This deals with the people who own a business organization or enterprise and all others

who have interest in it, e.g. managers, banks, creditor, family members and employees.

The agency theory postulates that day to day running of a business enterprise is carried out

by managers as agents who have been engaged by the owners of the business as principals

57

or share holders. The theory is of the view about the principle of “two sided transactions”

which holds that any financial transaction involves two parties but with different

expectations. The problem of agency theory is:

Information Asymmetry-This is a situation in which agents have information on the

financial situations that is also known to the principals Emery et al (2001). For instance,

this theory emphasized that in planning communication with shareholders, companies

should consider never to give misleading information to stockholders about the

corporations operations or financial conditions.

Emanating from the risk faced in agency theory, researches on small business financial

management observed that the agency relationship between owners and managers could be

absent, because the owners are also managers, and that the predominantly natures of SMEs

make the usual solution to agency problem such as monitoring and bonding costly thereby

increasing the cost of transactions between stakeholders (Emery et al 2001).

Nevertheless, the theory provides useful information/knowledge into many matters as it

concerns SMEs financial management and shows considerable avenues as to how SMEs

credit or funds should be managed and strategies that could help sustain SMEs growth.

2.2.2 Signaling Theory

This rest on the transfer and interpretation of information at hand about a business

enterprise to the capital market and the impounding of information resulting to the

perception into the terms on which finance is made available to the enterprises. In order

words, flow of funds between an enterprise and the capital market largely depends on the

flow of information between them (Emery, 2001).

(Kaesey,1992) writes that the ability of SMEs to signal their values to potential investors,

only the signal of the disclosure of earnings forecast were found to be positively and

significantly related to enterprise values.

2.2.3 The Pecking Order Framework Theory (POF)

58

This is another theory which could be considered in relation to SMEs financial

management. It is a finance theory which suggests that management prefers to finance

first from retained earnings, then from debts or borrowed funds; followed by hybrid forms

of finance such as convertible loans and lastly using externally issued equity. (Norton,

1991) found out that 70% of SMEs seemed to make financial management decisions

within this pecking order.

(Holmes,1992) posits that POF is consistent with SMEs financing because they are owner-

managed and would never want to dilute this ownership. He further nudged to conclude

that businesses usually prefer to plough back retained profit since they want to maintain

the control of assets and business operations.

2.2.4 Access to Capital Theory

(Bolton, 2001) reiterated that SMEs several issues underlining the concept of finance gap.

This theory has two components: Knowledge gap which is restricted due to lack of

awareness of appropriate source of finance, its merits and demerits; Supply gap which is

the unavailability of funds or high cost of funds/debts to SMEs. Though, unlike large

enterprises, SMEs are hit harder by taxation, face higher investigation and scarcely satisfy

loan requirements. (Bolton et al, 2001) also observed that SMEs has limited access to

capital and money market and therefore suffer from chronic capitalization problems. As a

result, they are unlikely to have a positive recourse to expensive funds and this act as a

brake on their economic developments.

59

2.2.5 Equity Theory

This is also known as owner’s equity, capital or net worth theory. (Costand ,2000) suggest

that lager firms would use greater level of debt financing in their business operations than

SMEs. This means that SMEs rely heavily on owner equity financing than larger firms.

However, (Mcmahon,2003) observed that SMEs have two problems when it comes to

equity finding viz: SMEs do not usually have the option of issuing additional equity to the

public. Owner managers are strongly averse to any dilution of their ownership, interest and

control. This way, they are unlike the managers of large firms who usually have only a

limited degree of control and limited (if any) ownership interest, and are therefore prepared

to recognize a broader range of funding options.

2.2.6 Entity Theory/Proprietary Theory

The theory views a business on the assumption that the economic activities of a

business are distinct from those of its owners. The theory maintains the view that a

business has a separate accountability of its own. The theory considers liabilities as

equities with different rights and legal standing in the business. Under this theory, assets,

obligations, revenues and expenses and other financial aspects are the owners. That is, the

company has an identity distinct from its owners or managers. The firm or business is

viewed as an economic and legal unit.

2.3 Empirical Studies

Much of the literature on the accessibility of credit facilities to SMEs has mainly been

normative and prescriptive (Mccann and Mclindoe-Calder 2012;Campello et al,2010;

Berman and Hericourt,2010; Bertay ,2012;Barth et al;2001; Capiro and Martinez Peria

2002; Mian 2003).

60

In the recent past empirical studies have been carried out to investigate the extent to which

SMEs access credit from the financial institutions. An empirical study in Ireland (Bertay et

al, 2012) studied how government can provide funds to SMEs other than through the

financial institutions. They found out that government provides SMEs financing either

direct or through partnership with private sources.

While most of the empirical studies have examined the importance of credit facilities to a

growing firm (Cole, 2008; Udell, 2004; Blum and Laurie, 1995; Burch and Claudia,2004;

Birly,1996; Bates,2007).They found that availability of finance is of paramount importance

to SMEs. Others have studied the extent of growth achieved by these firms in the long run

(Beck, Kunt and Marksimovic, 2005; Berger and Udell ,1998; Hall 1992 ;Chittenden and

Hutchinson ,1996 ; OECD 2006a). They came up with the result that the growth of SMEs

is most rapid in developed countries when compared with developing nations like ours.

They attributed the causes to enabling environments, government supports etc. Some also

have studied the alternative sources of fund for SMEs (Auboin, 2009; Bricogne et al 2009;

Das et al 2007). They found that numerous sources of finance exists for SMEs ranging

from bank and non bank sources. Very few have considered the availability and

accessibility of credit facilities to SMEs.

According to (Caprio and Peria, 2002), the government of Irish launched action policies

for her SMEs. Some of the plans are “to investigate the potential for alternative funding

mechanism including peer to peer lending, supply chain finance and crowd funding. The

study observed that Irish SMEs grew drastically with these alternative sources of finance.

In other studies Sule, (1986) ;OECD 2006a) ,they studied how the use of collateral can

enhance access to credit for small businesses through the financial institutions. They

observed that collateral availability can help SMEs in accessing loan from financial

institutions. Other empirical studies showed that all policies adhere to the principle of

additionality that is; the credit extended would not have been allocated in the absence of

61

policies backed by government (Clor and Manova, 2013). These policies must have been

structured in such a way so as to ensure that lending decisions are made free of political or

bureaucratic influence that would lead to sub-optimality credit allocation (Amiti and

Wenstein, 2011; Capro and Peria 2002; Beck,Demirguc-Kunt and Peria, 2007). If

government through CBN makes conditions on usage of a certain asset (SME loans) more

favourable, this can encourage bank lending to this sector (Nwankwo, 1998; Ogubunka,

1999; Mccann, 2009).

According to (Honoghan, 2010), the policy options open to government and CBN in an

attempt to improve credit accessed by SMEs are numerous. Other scholars surveyed

several options including direct lending to SMEs, loan guarantees, provision of low-cost

funding, retail bond market and guarantees on exporting activities (Mach & Wolken,

2011). They observed that these options could alleviate SMEs financing needs especially

in developing nations.

Others like (Bricogne, Fontagne, Campello & Havey, 2010), studied the rate of growth of

SMEs when there is availability of credit facilities from the financial institutions. They

found out that there was a steady decline in SMEs growth with this source of finance.

However, other options like provision of low cost funding financial institutions and the

development of non bank alternatives such as peer to peer lending, retail bond markets and

export financing exists. Potential options for further government policies includes support

for export financing sources like peer to peer, (Gaulier, Taglioni and Vicard, 2009).

2.3.1 The Impact of Access to Finance on SMEs.

Access to finance is necessary to create an economic environment that enables firm to

grow and prosper. SMEs in developing countries, however, face significant barriers to

finance. Financial constraints are higher in developing countries in general, but SMEs are

particularly constrained by gaps in the financial system such as high collateral requirement

62

and lack of experience within financial intermediaries’ .Increased access to finance for

SMEs can improve economic conditions in developing countries by fostering innovation,

macro-economic resilience and GDP growth.

Access to finance is one of the driving factors of an enabling environment. For instance,

World Bank and IFC,(2011) ranks economies according to their ease of doing business in

this framework , the ability to get credit is an important condition .Global Entrepreneurial

Monitor (GEM) (2010) reported that finance for SMEs is one of the key topmost factors

for stimulating and supporting them. Adequate funding has been seen as a serious

impediment to SMEs financing and growth ( Beck & Kunt,2008;Chitteden & Hall,1996;

Watson & Wilson,2002, Vos,Yeh,Carter &Tagg,2007). While other studies went further to

stress that cost of these funds are high for SMEs to bear and this endangers the growth of

SMEs (Harvie,2002;OECD,2006a;Harvie & Lee,2005)

According to (Beck,2011), “The Investment Climate Survey of World Bank reported that

access to finance not only improves firm’s performance and growth but also, promotes

innovation and entrepreneurial activity.

Klapper ,Leora ,Luc-Leaven and Rajan (2006),also studied the same thing with Beck et

al,(2011). They found out that access to finance for SMEs would aid in exploiting growth

and investment opportunities. Beck, Thorsten and Kunt (2008) still stressed that aggregate

economic performance will be improved by increasing the access to credit facilities. When

asked to name the severe obstacle in SMEs development and growth, World Bank listed

financial constraints as second to nothing (World Bank survey,(2008). (Gbandi, 2012)

studied the ease to which SMEs access credits from financial institutions using 30 banks

across Nigeria. He found out that the greatest challenge facing SMEs in Nigeria is finance.

Other empirical evidences showed that epileptic finance is a great problem facing SMEs

(Fatai, 2009). Also, Duflo and Banerjee (2011) in their studies have argued that production

technologies follow a step-function and that credit must be needed for SMEs to make the

jump to the next level that is move from manual to automatic production.

63

IFC Report shows that 39% of small scale and 37% of medium scale firms in Nigeria are

financially constrained. Also, in a study by Harvie, (2001) and Harvie & Lea, (2005), they

observed that access to finance even in Asian economies are critical. Stiglitz & Weiss,

(2001) opined that lending institutions take SMEs to be high risk business to lend to. Amir-

sufi, (2005) also confirmed that banks do not give out loans to SMEs because they feel that

SMEs do not have bankable projects. This scenario was justified by Baker & Wurgler,

(2002). Ham & Melink, (1987) also found out that banks restricted access to finance for

SMEs due to the fact that they are high risk business. They found out that credit

advancement to SMEs is limited.

(Abejerijo &Fayomi, 2005; Dagogo & Ollor, 2012) studied the effect of venture capital on

SMEs. They found out that SMEs do not thrive well when they use venture capital

financing. Reason being that such source of finance is usually for groups of wealthy

investors and large conglomerates. Also, (Gbandi & Amissah, 2012) stressed that SMEs do

not use venture capital as most operators are buoyant enough to embark on high risk

businesses. This was opined after they studied the effect of venture capital and P2P on

SMEs.

Accessibility of funds by large conglomerates and firms are easier when compared to

SMEs (Berger & Udell, 2006; Frank & Goyal 2003). This in turn brings a low survival rate

for SMEs Storey& Thompson et al (1995). The existence of financing gap abounds for

SMEs Toree et al (2010). Also (Stiglitz & Weiss 2001; Gertler & Gilchrist 2004) showed

that under certain condition funding gap can exist for firms as banks respond in a rational

fashion by imposing credits rationing. They found out that credit rationing exists for SMEs

more than large conglomerates and enterprises. This notion was supported by (Peterson &

Raja 2004; Berger & Udell et al 2006).

64

Another study proved that banks line of credit is used for financing larger firms than SMEs

due to availability of collaterals (Sufi, 2005; Hardlock, 2004; Charlse & James 2002; Ham,

John& Melink, 1997; Maksimovik et al 1990).

Sufi,(2005) in his study observed that banks line of credit provides a unique source of

financial flexibility.He found out that this line of credit are mostly used by large firms or

conglomerates (Hardlock,2004; Charlse and James,2002; Ham, John and Melink

1997;Maksimovic, 1990). Another study also showed that other sources of financing are

accessed by small businesses than the banks line of credit (Boot, Amoud, Thakor and

Udell 1987; Cantillo Miguel and Wright, 2000; Leary Mark and Robert; 2005).

Chor & Manova (2011), in their study presented the statistics of how SMEs are financed

through various sources of finance. They stated that export financing did not fit in as a

major source of financing for SMEs due to high financial risk involvement. (Mccan,2009;

Lawless et al 2012) still went ahead to prove that export financing can aid in alleviating the

financial needs of large corporations and would not fit in as an outstanding source of

finance for SMEs.

In a study by Gbandi and Amissah (2012), they opined that SMEs in Nigeria account for

over 90% of Nigerian business. In the same vein Policy insight No.7 of the African

economic outlook 2004/2005 states that Nigerian SMEs account for some 95% of formal

manufacturing activity and 70% of industrial jobs. In spite of this dominance of the

Nigerian economy by the SMEs, their contribution to the GDP is only about 1%.

However, access to finance by the SMEs is very critical to the success of the SMEs.

(Luper, 2002) in his empirical evidence shows that finance contributes about 75% to the

success of the SMEs. To alleviate the problem of funding, the Federal government and

65

CBN have over the years established many credit institutions with the objectives of

improving access to finance to SMEs. These initiatives appear not to have paid off as the

SMEs still contribute well below 5% to the GDP (Soludo, 2010).

In other economies in USA, Europe and UK, the contribution to the GDP is well over 40%

SMEDAN,(2011). The Federal government and her agencies should in addition to setting

up these credit institutions put in place policy targeted towards improving business

conditions and the business environment.

The informal finance sector (IFS) provides more than 70% of the funds to the SMEs. What

this means is that operators of the SMEs have easy access to funds from the Informal

Finance Sector. The Federal government has incorporated good policies through CBN so

as to improve and encourage SMEs access to finance through bank and other special

programs. They liaise with all these international agencies (IFC, DFID and World Bank) to

ensure that SMEs thrive well and be in the fore front of strive for national growth and

development (Anyawu, 2001).

Commercial banks, Microfinance banks, International development agencies, the CBN and

some of its agencies are some of the institutions in the formal finance sector that have

played very prominent roles in the financing of SMEs in Nigeria. Commercial banks

remain the biggest source of finance for SMEs across the globe. However many

commercial banks are reluctant in financing SMEs because of perceived risks and

uncertainties that are inherent with SMEs.

(Abereijo &Fayomi,2005)in their study on certain variables that affect the growth of SMEs

observed that in Nigeria the difficult economic environment, absence of the appropriate

managerial skills and lack of access to modern technology by the SMEs have all

66

contributed to the commercial banks reluctance to finance the sub-sector. The result of this

reluctance is the steady decline in financing of SMEs in the country over the years. The

CBN (2012) statistics reported that commercial banks advances to SMEs have been on the

decline over the years. Commercial bank loans to SMEs as a percentage of total credits

decreased from 48.79% in 1992 to 0.15% in 2010.

2.3.2 Constraints to SME Financing in Nigeria

Gbadi & Amissah et al (2012) in their study to find out the extent to which SMEs access

finance from the banks found out that banks by their nature and position in the economy

remain the known formal source of finance for enterprises. A 2001 World Bank survey on

Nigeria showed that although 85% of the firms had relationship with banks, most of them

had no access to their credit (Terungwa 2011). Lack of adequate financing for the SMEs is

traceable to among other reasons the reluctance of banks to extend credits to them for the

following reasons; inadequate collateral by SMEs operators, weak demand for the products

of SMEs as a result of the quality, lack of patronage from locally produced goods, poor

management practices by SMEs operators and undercapitalization .

(Dagogo, 2012; Dagogo & Ollor, 2012) posits that venture capital and equity are another

sources of financing for SMEs. They found out that some of the challenges facing SMEs in

the area of venture Capital financing includes;

- institutionalizing tax benefit for equity investment to attract foreign investors.

67

- providing risk guarantees to create strategic venture capital industries that improve self-

reliance and curb import quotas.

-enhancing venture capital capacity to stimulate and promote the industrial expansion.

- focusing equity investment on SMEs that optimize resource utilization and assist local

raw material development.

- Promoting innovative business ideas, processes and techniques that boost both

productivity and profitability.

2.3.3 Government and CBN Policy Options

Government can provide funding to the SMEs either through the direct provision of funds

through a state bank, or through the provision of funds which are leveraged by private

sector investors. Both forms of intervention are common across developed countries

Soludo (2010). Beck & Kunt et al (2008) studied how government policies can affect

SMEs. They found out that direct government lending to the SMEs sector exists on a small

scale through micro financing.

Also other studies (Barth et al 2001; Caprio & Peria, 2002; Beck et al 2007; Mian, 2003)

preyed into the effect of government lending on the growth of SMEs. They found out that

the limitation to government lending (through the Micro finance banks) are the

unwillingness to repay by operators in the SME Sector thereby dwindling the allocated

fund meant for lending. An empirical finding from (Bertay et al 2012) opined that

Government provision of SME financing, either direct or through partnership with private

sources, can act as a counter-cyclical substitute for bank financing in times of financial

distress.

68

Further, government involvement allows policy makers the opportunity to set strategic

objectives and to target segments of the economy which are most likely to be

disproportionately affected by a tightening of bank lendings (Holten and McCann ,2012).

The provision of credit to SMEs, an issue of perennial policy interest, takes on increased

importance in the life of this enterprises, Campello et al, 2010;Berman and

Hericourt,2010;Mach &Wolken,2011) . A study by Mccan & Candlier et al (2012) x-rayed

and found out that SMEs generally face more difficulty accessing credit than larger firms

due to their opacity (i.e. lack of an agency credit rating, or unavailability of relevant

financial information), their reliance on local markets, a narrower range or lower volume

of tangible collateral, and more uncertainty regarding future cash flows for younger firms.

For these reasons, governments and other policy makers, even in “normal” times, have

sought to alleviate SMEs credit constraints (McCann & Calder, 2012).

(OECD,2013a) report proved that much justification for such interventions, having shown

that firms faced by credit constraints are more likely to exit the market, to shed

employment, to spend less on technology, to invest less in new capital and in marketing,

and less likely to enter export or import markets (OECD,2013a). The same report opined

that even in “normal” economic climates, SMEs start-ups are more likely to experience

credit rationing due to their under-collateralization, shorter credit history, lack of an agency

credit rating and paucity of verifiable financial information with which banks can make

credit allocation decisions.

(Soludo, 2010) stated that government can provide funding to the SMEs either through the

direct provision of funds through a state bank, or through the provision of funds which are

leveraged by private sector investors. Both forms of intervention are common across

developing countries.

69

2.3.4 SMEs and Tax Incentives

With SMEs becoming important in helping to drive the economy, it is essential that

government seek how to extend tax reliefs to the subsector Carpentier and Suret, (2005).

According to (Cressy, 2012), he investigated on the possibility of using the contributory

pension fund scheme as a source of funding for SMEs. They found out that if government

could make the interest rate for SMEs as low as 2% -3%, the operators would have good

grounds for accessing the fund. Also, they observed that the enterprises that would venture

in the procurement of equipment or machinery could be granted Annual allowances to the

tune of 20% yearly.

(Hobon,2011) showed that the UK economy was recovered by small manufacturers who

were struggling to generate enough fund to expand their business or capitalize on new

opportunities with the reduction of small business tax from 23% to 11%. (Teo-luck,2011),

the Singapore minister of Trade declared in his budget that necessary steps were set to

upgrade SMEs via tax incentives through Productivity and Innovation Credit scheme.

Also, Hobon et al (2011), opined that the UK tax reliefs were extended to the SME sector

through Individual Savings Account (ISAs), Venture Capital Trust (VCT), Enterprise

investment Scheme (EIS), (Bear, 2012), argued that UK needs to move the SMEs funding

by thinking about the tax incentives for the different form of finance so that it could be

available and accessible to the operators. He reiterated that this measure would save UKs

4.8m SMEs up to £12m yearly by allowing them to raise more equity finance than credits

from banks.

70

2.4 Summary

The review of related literatures on the accessibility of credit facility from financial

institutions by Small and Medium scale Enterprises showed that various studies have been

carried out on the subject.

However, most of the available literatures discovered and dwelt extensively on the

challenges and otherwise of the Small and Medium Enterprises (manufacturing sector) in

developed world (in different sectors like Mining, Agriculture construction, and fishery

etc.), with little or no reference to the situation in developing countries like Nigeria. It

therefore became imperative for this study to explore and x-ray the challenges and

otherwise of the Small and Medium Scale Enterprises (manufacturing sector) in Nigeria

which will ultimately add to the body of knowledge as it affects accessibility of credit

facility from financial institutions.

71

REFERENCES

Abdullahi, T. (2003). “Establishing a business in Nigeria. 4th edition.

Abereijo, I.O and Fayomi, A.O.(2005).Innovative approach to SME financing in Nigeria:

a review of SMIEIS. Journal of Social Science 11(3) 219-227.

Abudu, M.I. (2009). “Analysis of Intersectional Linkages between Agriculture and

Industry in Nigeria. CBN Research Department Paper No. 23

Achua, J.K. (2008). Corporate social responsibility in the Nigerian banking system:

society and business review 3(1) 21.

Adams, D. W. (2002). “Taking a fresh look at informal finances” in Adams D. w. & D.A.

Fitchet (eds), Informal Finance in low income countries. Boulder: Westview Press,

pp. 5-23

Ade, T. Ojo (2009). “The role of Policy in Management of SMEs’ in Nigeria”, Lagos.

Punmark Nig Ltd.

Adebusuyi, B.S. (2007). “Performance Evaluation of SMEs in Nigeria” CBN Bullion

Vol.21 no.4.

Adelaja, B.O. (2003). “Financing SME under SMIEIS. Paper presentation from Union

bank of Nigeria Plc.

Aderson, D. (2002).“Some Industry in |Developing Countries: Some Issues”. Staff

Working papers No. 518, The World Bank, Washington D.C. USA.

Aderson, D. (2002), “Some Industry in |Developing Countries: Some Issues”. Staff

Working papers No. 518, The World Bank, Washington D.C. USA.

72

Afolabi, J.A. (2004). “Challenges of Private Sector had Growth in Nigeria”. A Seminar

presentation the 13th Annual Conference of the Regional Research Unit CBN.

Afolabi, J.A. (2004). “Challenges of Private Sector Led Growth in Nigeria”. A Seminar

presentation on 13th Annual conference of CBN Research Unit.

Ajagu, A. (2005). “”. Business day, Businessday Media Ltd, Lagos.

Ajagu, A. (2005). SMIs do not enjoy any form of incentives. Business day, Businessday

Media Ltd, Lagos

Amiti, M., & Weinstein, D. E. (2011.Exports and financial shocks. The Quarterly Journal

of Economics, 126(4), 1841-1877.

Ang, J. S. (2002). “On the Theory of Finance for Privately held Firms”, The Journal of

small Business Finance, 1(3), pp.185-203.

Anyanwu, C.M. (2001). “Financing and Promoting SSI, concept issues and prospects.

CBN Bullion Publication. Vol. 25, No 3, Pp. 12-15.

Anyanwu, C.M. (2003). “The Role of CBN in SME Financing”. Paper presentation from R

& D. CBN, Lagos.

Auboin, M. (2009). Restoring Trade Finance: What the G20 Can Do, in The Collapse of

Global Trade, Murky Protectionism, and The Crises: Recommendations for the

G20, Ed. Richard Baldwin and Simon Event (London: Centre for Economic Policy

Research, 2009),

Ayozie, D.O. (1999). “A handbook on SME for National Diploma students”, Danayo Inc.

coy Ilaro.

Barth J.R., G. Caprio JR., & R. Levine (2001). Banking systems around the globe: Do

regulations and ownership affect performance and stability?, in F.S. Mishkin

(ED.), Prudential supervision: What works And what doesn’t, University of

Chicago Press, Chicago, IL, 31-96.

73

Bas, M. & A. Berthou, (2012). “The Decision to Import Capital Goods in India: Firms’

Financial Factors Matter.” World Bank Economic Review, World Bank Group,

vol.26 (3), pages 486-513.

Bates, T. (2007). “Financing Small Business Creation: The Case of Chinese and Korean

immigrants entrepreneurs”. Journal of Business Venturing. 12, pp. 109 – 124.

Beck, T., A. Demirguc-Kunt, and M. S. Martinez Peria, (2007). Reaching out: Access to

and use of banking services Across countries, Journal of Financial Economics 85,

234-266.

Beck, T., and Dermiguc-Kunt, A. (2006). “Small and Medium –size Enterprise: Access to

finance as a growth constraint”, Journal of Banking & Finance, 30(11), pp. 2931-

2943.

Beck, T., Demirguc-kunt, A. and Maksimovic, V. (2005). “Financial and Legal

Constraints to Growth: Does Firm Size Matter? The Journal of Finance, 60(1), pp.

137-177

Beck, T., Demirguc-Kunt, A. and Maksimovic, V. (2008). “Financial Patterns around the

world: are Small Firms Different”, Journal of Financial Economics, 89(3), pp.

467-487.

Beck, Thorsten, Asli Demirgue-Kunt and Vojislav Maksimovic (2004). “Bank Competition

and Access to Finance: International evidence” Journal of money, Credit and

Banking 36:627-648.

Berger, A. N. and Udell, G.F. (2008). “The Economis of Small Business Finance: the

Roles of Private Equity and Debt Markets in the Financial Growth Cycle, Journal

of Banking & Finance, 22, pp.613-673.

Berger, A.N. and Udell, G.F. (2006). “A More Complete Conceptual Framework for SME

Finance”, Journal of Banking & Finance, 30(11), pp. 2945-2966.

74

Berman, N. and J. Hericourt (2010). Financial factors and the margins of trade: Evidence

from cross-country firm-level data, Journal of Development Economics, 93(2),

206-217.

Bertay, A.C,A. Demirguc-Kunt, and H. Huizinga (2012). Bank Ownership and Credit

over the Business Cycle: Is lending by State Banks Less Pro-cyclical?, CEPR

Discussion Paper no. 9034.

Birley, S. (2006). “Start up in Small business & Entrepreneurship, eds Burns P &

Dewhurst, J. Macmillan.

Blum, Laurie (1995). “Free Money – for SME 4th edition, John William and Sons Inc.

Breedon, T. (2012). Boosting finance options for business, Report of industry-led working

group on alternative debt markets, UK Department of Business, innovation .and

Skills.

Bricogne, J.C., Fontagne, L, Gaulier, G, Taglioni, D. and Vicard, V. (2009). WorldBank

Economic review, vol .36(3) pp514-523.

Buch, Claudia M. (2004). “Information versus Regulation: What drives the International

activities of commercial banks?” Journal of money Credit and Banking No. 35:

851-69

Campello, M., Graham, J.R. and Campbell R. Harvey (2010). The real effects of financial

Constrains: Evidence from a financial crisis, Journal of financial Economics,97(3),

470-487.

Cassar, G. and Holmes, S. (2003). “Capital Structure and Finance of SMEs: Australian

Evidence”, Accounting & Finance, 43(2), pp. 123-147.

CBN (2011) SMEs in Nigeria. Retrieved on 11/1/11 from http://www.cenbank.org

CBN (2011). Development finance. Retrieved on the 11th of January, 2011 from

http://www.cenbank.org

CBN (2012). Development finance. Retrieved-

http://www.cenBank.org/devfin/acgst.asp.

75

Central Bank of Nigeria (2000).“The Changing Structure of the Nigerian Economy and

implication for Development. Realm communication Ltd, Lagos.

Chittenden, F., HALL, G. Hutchinson, P. (2006). “Small Firm Growth, Access to Capital

markets and Financial Structure: Review of Issues and an Empirical

Investigation”, Small Business Economics, 8, pp.59-67.

Cole, R.A. (2008). “The importance of the relationships to the availability of credit,

Journal of Banking and Finance.vol. 22 pp 959 – 77.

De la Torree, A., Soledad, M., Peria, M. and Schmukler, S.L. (2010). “Bank involvement

with SMEs: Beyond Relationship Lending”, Journal of Banking & Finance, 34(9),

pp.2280-2293

Deyoung, Robert William c. Hunter and Gregory F. Udell (2004). The Past Present and

Probable Future for community Banks” Journal of Financial Services Research.

Djankov, S., McLiesh, C. and A. Shieifer (2007). “Private credit in 129 countries,”

Journal of Financial Economics, Elseviier vol.84(2), pages 299-329, May.

European Commission (2013). Long-term financing of the European economy, Green

Paper COM/2013/0150/final

Fatai, A. (2009). Small and Medium scale enterprises in Nigeria: the Problems and

prospects. Retrieved on the 22/1/12 http://www.thecjc.com/Journal/index.php/econ.

Fatai, A. (2009).SMEs in Nigeria: the problem and prospects. Retrieved on the 15/3/12

http://www.thecjc.com/journal/index.php/econ.

Federal Ministry of Finance and Economic Development (2008). The National Economic

Reconstruction Fund, Information Bulletin and Operational Guidelines, January

(2008).

Federal Office of Statistics (FOS) Publication (1999-2012).

Federal Office of Statistics: (1997). Facts and Figures about Nigeria. Pp. 14-27.

76

Firth, M., Lin, C., Liu, P. and Wong, S.M.L. (2009). “Inside the Black Box: Bank Credit

Allocation in China’s Private Sector”, Journal of Banking & Finance, 33(6),

pp.1144-1155.

Frank, M.Z and Goyal, V.K. (2003).“Testing the Pecking Order Theory of Capital

Structure”, Journal of Financial Economics, 67(2), pp.217-248.

FSS 2020. SME Sector report (2007). Retrieved on the 15th of March, 2012 from

http://npc.gov.ng.

Gertler, M. and Gilchrist, S.(2004). “Monetary Policy, Business Cycles, and the Behavior

of Small Manufacturing Firms”, Quarterly Journal of Economics, CIX, PP.309-

340.

Haddad, M., Harrison, A. and C. Hausman (2011). “Decompoing the Great Trade

Collapse: Products, Prices, and Quantities In the 2008-2009 Crisis, “NBER

Working Paper 16253

Hall, C. (1995). APEC AND SME policy: suggestions for an action plan (available at)

http://www.arts.monash.edu.au/ausapec/smepolic.html)

Hall, C. (1999). Using the International Entrepreneurial Engine to Restart Asian Growth,

in leo Paul Dana (ed) International Entrepreneurship, an Anthology, NTU

Entrepreneurship Development Centre Journal, Singapore.

Hall, C. (2002). Profile of SMESs and SME Issues in East Asia, in C. Harvie and B.C. Lee

(eds), Chapter2, pp.21-49, The Role of Small and Medium Enterprises in National

Economies in East Asia, Edward Elger, Cheltenham, UK, Chapter 2, pp.21-49.

77

Harvie and B.C. Lee (eds.), Sustaining Growth and Performance in East Asia: the role of

small and medium sized enterprises, studies of small and Medium sized Enterprises

in East Asia Volume III, Chapter 1, pp.3-27, Edward Elgar, Cheltenham, UK..

Harvie, C. (2002) The Asian Financial and Economic Crisis and Its Impact on Regional

SMEs in C.

Harvie and B.C. (2005). Introduction: the role of small and Medium Enterprises in

National Economies in East Asia, Edward Elgar, Cheltenham, UK. Chapter 2,

pp.10-42.

Harvie, C. and Lee, B.C. (2002). (eds) The role of small and medium-sized enterprises in

National Economies in East Asia, Edward Elgar, Cheltenham, UK.

Harvie, C. and Lee, B.C. (2005). “Introduction: the role of small and medium-sized

enterprises in achieving and sustaining growth and performance (with B.C. Lee),

in C.

Holton, S. and F. McCann (2012). Irish SME Credit supply and demand: comparisons

across surveys and countries. Central Bank of Ireland Economic Letter 2012 No.

8.

Holton, S., Lawless, M and F. McCann (2013). SME financing conditions in Europe:

Credit crunch or fundamentals? National Institute Economic Review 225, pp R52-

R67

Honohan, P. (2010). Partial credit Guarantees: principles and practice, Journal of

Financial Stability 6, pp 1-9

78

Hyytinen, A. and Pajarinen, M. (2008). “Opacity of Young Business: Evidence from Rating

Disagreements”, Journal of Banking and Finance, 32, pp.1234-1241.

ICAN, (2006). “Sourcing Finance for start up and existing business in Nigeria: Prospects

and challenges”.Students journal April/June Vol. 10, No. 2.

ICAN,(2007).Money for small businesses financing. Students’ Journal (2007)

October/Dec. Vol. 2, No. 4, PP. 12-14.

ICAN (2008).“Importance of SME stressed”. Students’ Journal October/Dec. Vol. 12, No.

4.

Ihyembe, R.H. (2000). “Equity Participation in small Scale Enterprises: Issues and

Prospects”. Conference paper, September, Abuja.

Ihyembe, R.H. (2009). “The problems of SMEs’ and the Development of Capital Market in

Nigeria. FICAN Seminar.

ILO (2002). Women and Men in the Informal Economy: a Statistical Picture, Geneva, ILO.

Imaga, E. U.L. and Ewurum, (1998). U.J. F. (ed) “Business Management Topics”. Oketek

Publishers Enugu. Pp. 238-242.

Industry Canada (2002). Small and Medium-sized Enterprise Financing in Canada,

Ottawa, Industry Canada.

Izedonmi, F. (2006). “Sourcing Finance for start-up and existing businesses in Nigeria.

ICAN Students Journal, April/June edition. Vol. 10, No. 2. Pp. 16-19.

James. S.L. (2011). Developing private equity and venture Capital: this day live. Retrieved

on the 30th of August from http://www.thisdaylive.com Kauffman, C.(2004).

Financing SMEs in Africa. Retrieve the 30th of Augus from

www.oecd.org/dev/54908457.pdf.

79

Jones, T. d., Mcevoy & G. Barrett (1994). “ Raising Capital for the ethnic minority Small

Firm” in a Hughes and D.J. Storey (eds) Financing small Firms. London

Roufledge.

Kesavan, R. (2002). “Small Business & Entrepreneurship Development: The US

Experience. Gregory W. Ulferts DBA.

Keys, B.J., Mukherjee, T., Seru, A., and V.Vig.(2010). Did Securitization Lead to Lax

Screening? Evidence from Subprime Loans .The Quarterly Journal of Economics

(2010) 125 (1): 307- 362.

Kindleberger, C. and Henrick, B. (2004). “Economic Development”. Singapore McGraw

Hill.

Lawless, M., McCann, F. and C. O’Tool (2013). “The importance of banks in SME

Funding”, mimeo, Central Bank of Ireland, Economic and Social Research

Institute.

Lawless, M., McCann, F. and T. Mcindoe Caldera (2012).”SMEs in Ireland: Stylised Facts

from the real economy and credit market,” Quarterly Bulletin Articles,

Central Bank of Ireland, pages 99-123, April.

Luper, I. (2011). Does bank size matter to SMEs financing in Nigeria? International

Journal of Business and management tomorrow 2(3) 2-5.

Main, A., (2003). Foreign, private domestic, and government banks: New evidence from

emerging markets, mimeo, University of Chicago

McCann, F. & T. Mcindoe-Calder (2012). Bank competition through the credit cycle:

Implications for SME financing. Central Bank of Ireland Economic Letter 2012

No. 4.

McCann, F. (2009). Importing, Exporting and Productivity in Irish manufacturing, UCD

centre for economic research working paper 2009,p 9-22

Mordi, F. (2005). “Manufacturers, CBN diagnoses on causes of SMIS stunted Growth”.

Financial Standards. Millennium Harvest Ltd, Lagos.

Mungcal, I. (2011). AFDB approves finance for Nigeria SMEs. The Development

newswire. Retrieved from http://www.devex.com

Myrdal, G. (2006). “Economic Theory and Underdeveloped Region”. London Macmillan.

80

Ngoc, T.B.L. and Nguhen, T.V. (2009). “The Impact of Networking on Bank Financing:

The Case of small and Medium-Sized Enterprises in Vietnam”, Entrepreneurship

Theory and Practice, 33(4), pp.867-887.

Nigerian Economic Summit Group (1999). 6th Nigerian Economic Summit. Spectrum

Books Ltd, Ibadan.

Nnanna, G. (2005).“SMEDAN explains un-development of SME sub-sector”. Small

Business Journal. Business day Media Ltd, Lagos.

Nofsinger, J.R. and Wang, W.(2011). Determinants of Start-up Firm External Financing

Worldwide”, Journal of Banking & Finance, in press, Corrected Proof, Available

online 28 January 2011.

Nwankwo, O.O. (2008). “Strategies for Private Sector financing in Africa” Journal of

banking and finance Vol. 3, No 2 July/Dec. pp. 25-37.

OECD (2006a). The SME Financing Gap, (Theory and Evidence), Vol. I, Paris, OECD.

OECD (2006b). The SME Financing Gap, Vol.II, Proceeding of the Brasilia Conference,

March, Paris, OECD.

OECD(2006c). Financing SME and Entrepreneurs, Policy Brief, Paris, OECD.

Ogubunka, U.M. (2003). “Walking ahead of bank distress: a practical guide”, Rhema

enterprises, Lagos

Okafor, F.O. (1999). “Micro Credit: An Instrument for Economic Growth and Balanced

Development. October Lecture (1999).

Okwara, L. (2003).The role of SMIEIS in SMEs funding, An Industry Journal.

Olorunshola, J.A. (2001). “Industrial Financing in Nigeria: some Institutional

Arrangements” CBN Economic and Financial Review Vol. 24, No. 4

81

Onwumere, J.U.J. & C.S. Ige (2000). “Economic Development: Meaning, Measurement

and relevance”.

Organisation for Economic Cooperation and Development (2013a),Credit mediation for

SMEs and Entrepreneurs: An OECD Scorecard.

Organisation for Economic cooperation and Development (2013b), Credit mediation for

SMEs and Entrepreneur.

Osa-Afiana, L. (2003). “ Critical Success factors in the implementation of SMIEIS

Seminar paper from BOI

Oshagbemi, F.A. (2002) .“Small business management in Nigeria”. London: Longman.

Owuala, S. I. (1999. “Entrepreneurship in Small Business firms”. G. Mag Investment Ltd,

Ikeja, Lagos.

Peek, Joe and Eric S. Rosegreen (2005). “Bank regulation and Credit Ginch. Journal of

Banking and finance. Vol. 19, pp. 67-92

Petersen, M.A. and Rajan, R.G. (2004). “The Benefits of lender Relationships: Evidence

from Small Business Data”, Journal of Finance, 49(1), pp.3-37.

Salami, A.T. (2003). “Guideline and Stakeholders Responsibility” in SMIEIS: A Seminar

paper presentation from the development Department Finance. CBN.

Saunders, A. (2000).“Financial Institution Management, Boston: Irwin McGraw Hill.

Schneider, F. (2002). Size and Measurement of the Informal Economy in 110 countries

Around the World, World Bank, Mimeo, July.

Seers, D. (2002). “What are we trying to measure? Journal of Development Studies 8(3)

April 21-36.

Seifert, B. and Gonenc, H. (2008). “The International Evidence on the Pecking Order

Hypothesis”, Journal of Multinational Financial Management, 18(3), pp.244-260.

SMEDAN/NBS 2010 National Collaborative Survey.

82

Stevenson, H.H. and Jarillo J.C. (2000). “A paradigm of entrepreneurship:

Entrepreneurial Management” Strategy Management Journal. Vol. II, pp. 17 – 27.

Stiglitn, J.E. And A. Weiss(2001). “Credit Rationing in Markets with Imperfect

Information.” American Economic Review, 71(3), pp.393-410.

Storey, D.J. and Thompson, J. (1995). “The Financing of New and Small Enterprises in

OCED Countries, Paris, OECD.

Sule E. I.K. (1986). “SMI in Nigeria: concepts Appraisal of Government Policies and

suggested Solutions to identified problems “CBN Economic and Financial Review.

Vol. 14, No. 2.

Terungwa, A. (2011). An empirical evaluation of SMIEIS in Nigeria. Journal of

Accounting and taxation 3(5) 79 -90.

Thanh. V.T., Narjoko, D. and Oum, S. (Eds.) (2009). Integrating Small and Medium

Enterprises (SMEs) into the More Integrated East Asia, ERIA Research Project No.

8, Jakarta. Available at http://www.eria.org/research/y2009-no8.html

CIBN,(2001). Code of Ethics and Professionalism in the Banking and finance Industry,

The in house Journal of CIBN vol.6 (3) p 16-21.Lagos.

The Daily Sun Newspaper (2010). “The role of Banking in SME development”. February

23,vol 6(4) p. 47.

The Guardian Newspaper (2010). “Nigeria at 50: Special Report on Achievement of

SMEDAN. Friday October 1, pp. 98-99.

The Nigerian Accountant (2001). “IFAC. Increases support for small & Medium Scale

Practices. April/June, vol. 44, No. 2, pp. 36-38.

The Nigerian Bankers (2000).The role of Banks In SME s financing. “CBN in-house

Journal” July/Dec. edition.

83

Toyo, E. (1994). “Partial prescription for economic self-Reliance. (A Critique)” in Ukwu

U.I. (ed) “The spirit of self reliance: Enugu Institute for Development Studies.

Udechukwu, F.N. (2003). “Survey of SMI and their potentials in Nigeria. Seminar

paper presented on SMIEIS, CBN Training Centre, Lagos.

Udechukwu, F.N. (2003). Small & medium Scale Equity Investment Schemes (SMIEIS):

Seminar presentation from R & D., CBN No. 4 (6).

Udell G.F. (2004). “Asset Based finance, New York: The commercial Finance Association.

Uduebo, M.A. (1985). “The role of Monetary and Fiscal Policies in Industrial and

Agricultural Development in Nigeria” CBN Economic and Financial Review. Vol.

23, No. 1.

United Nations UNCITRAL Website: www.uncitral.org.

Usman, I. (2007). “Problems of SME In Nigeria And Solutions”. FBN Plc Economic bi-

annual Review vol.3(1).

Venkatarman, S. (2004). “Financing SSI: Problems and Prospects”. Ibadan: Oxford

University Press.

Vos, E., Yeh, A.J.Y., Carter, S. and Tagg, S. (2007). “The Happy Story of Small Business

Financing”, Journal of Banking & Finance, 31, pp.2648-2672.

Watson, T. and Wilson, N. (2002). “Small and Medium Size Enterprise Financing: a Note

on Some of the Empirical Implications of a Pecking Order”, Journal of Business

Finance & Accounting, 29(3) & (4) .

World Bank (1995). “Private Sector Development in Low Income Countries” Washington

D.C. USA.

World Bank (2002). Lithuania, Insolvency and Credit Right System, 2/2/02.

Worldbank Development Report 1992 – 2000.

Zuveskas, C. (1979).“Economic Development: An Introduction London. Macmillian

Press Ltd.

.

84

85

CHAPTER THREE

METHODOLOGY

INTRODUCTION

This chapter deals with the research design, the population and sample of the study; it

describes briefly the research variables, the sources of data and the reliability and validity

of instrument. It also showed the method of data analysis and model specification.

3.1 Research Design.

The research design for this study is analytical survey. This method does not aim at

manipulating or controlling any variables under investigation, rather the main pre-

disposition is to observe occurrences at a point (Cross-sectional). The method has the

advantage of accommodating many variables as the researcher desires in addition to its

cost effectiveness.

3.2 Population of the Study

The total number of Registered SMEs in Nigeria (who are also MAN members and

registered under CAC as an enterprise) is 44,182 (SMEDAN/NBS, 2012). We narrowed

down to 1,526 SMEs from the 3 states in the South Eastern part of Nigeria: Anambra,

Ebonyi and Enugu. A further restricted selection of 360 manufacturing enterprises was

made because they have more prominent activities, optimum capacity utilization and wider

need for finance. In addition to this, they have records that would allow a study to be

carried on them.

3.3 Sampling Techniques / Sample Size

86

The entire 360 manufacturing enterprises were equally used as samples for the study. Due

to the nature of the study, 360 managing directors in the manufacturing enterprises were

also chosen. They were chosen because they are expected to be in a position to give

accurate information about the business credit portfolio/management.

3.4 Data Collection Instrument

Data collection was done by means of questionnaires constructed by the researcher. They

were drawn strictly based on an extensive literature search on the topic. The questions and

the demographic settings will be divided into sectors A to F:

Section A addresses the demographic settings.

Section B dwelt more on the effects of government policies on SMEs.

Section C posed questions on whether access to finance is the greatest problem

facing SMEs.

Section D addresses the effect of tax incentives on accessibility of credit by SMEs.

Section E addresses whether collaterals have any effect on credit facilities

advanced to SMEs.

Section F highlights questions on whether government has link as regards the

sourcing of finances internationally on behalf of SMEs.

Section G addresses questions on the procedures and protocols observable by

SMEs during

Loan assessment.

The questions formulated by the researcher are closed ended to enable the respondent

choose from the available options by ticking the option that best described his/her

disposition about the matter in question.

87

3.5 Techniques of Data Analysis

Data obtained was subjected to descriptive analyses which include frequency, percentages,

means and standard deviations to answer the research questions. Inferential statistics which

includes one samples t-test and linear regression analysis were used to test the hypotheses.

All tests were considered significant at p-value less than 0.05 level of significance. Results

were presented in tables and charts. All tests were done using the statistical packages for

social sciences (SPSS) version 18.

3.6 Area of the Study

All the SMEs in the three states of the South-east Nigeria (Anambra, Ebonyi and Enugu

States) were selected by the researcher. The researcher observed that the locations of most

of the enterprises within these states were far away from habitable areas in the cities where

there are vast areas of land. The reason is just to ensure that health hazards from pollution

are drastically reduced. Hence some of the Industrial areas are located in Emene, Gariki,

Akwuke in Enugu State; Nnewi and Onitsha in Anambra; Ezza and Amaogborida in

Ebonyi State. In addition to the above, the researcher deemed it necessary to study this

area because what is obtainable in the manufacturing sector in these states would likely be

obtainable in other States of the Federation.

3.7 Nature and Sources of Data

88

The researcher employed the use of both the primary and secondary sources of data.

Copies of questionnaires were distributed to respondents so as to elicit responses.

However, only SME operators would be personally interviewed by the researcher.

3.8 Validity of the Instrument

To validate the test instrument, the researcher gave them to senior lecturers in the

department of Accountancy, University of Nigeria, Enugu Campus (UNEC) for

constructive criticisms. The corrections and additions made by them improved its validity.

3.9 Reliability of the Instrument

In this study, a pilot survey was carried out to ensure the reliability of the instrument used

for the study. This was achieved through the distribution of 30 questionnaires to

respondents from another area distinct from our area of study.

Here, a measure of reliability called Cronbach’s alpha was employed.

The formula is as follows:

= K (Cov/Var)

1- (k-1)(Cov/Var)

Where

K = number of items on the survey.

Cov = Average inter item covariance.

89

Var = Average item variance.

I = Constant.

A Cronbach’s alpha value ( ∞ ) of greater 0.760 indicated very strong reliability.

Scale: ALL VARIABLES

Case Processing Summary

N %

Cases

Valid 30 100.0

Excludeda 0 .0

Total 30 100.0

a. Listwise deletion based on all variables in

the procedure.

Reliability Statistics

Cronbach's

Alpha

N of Items

.760 49

90

3.9.1 Description of Research Variables

Model specification:

Linear regression model; Y = BO + B1X1 + ei

Multiple regression model; Y = BO +B1X1 + B2X2 +B3X3 + … + ei

Dependent variable = SMEs credit accessibility (Y).

Independent variables =Government policies, Tax incentives and Collaterals (X1, X2, X3).

The linear regression model:

Hypothesis 1

Y = Bo + B1 X1, + ei

Where; Y = dependent variable (SMEs credit accessibility)

B0 = Constant

B1 = Regression coefficient

X1 = Government policies (independent variables) and ei = error term

Hypothesis 2

Y = Bo + B2 X2 + ei

91

Where; Y = Dependent variable (SMEs credit accessibility),

B0 = Constant

B2 = Regression coefficient

X2 = Tax incentives, and ei = error term.

Hypothesis 3

Y = B0 + B3 X3 + ei

Where; Y = Dependent variable (SMEs credit accessibility)

B0 = Constant

B3= Regression coefficient

X3 = Collaterals

ei = error term

Multiple regression model

Y = B0 + B1X1 + B2X2 + B3X3 + ei

Where; Y =Dependent variable (SMEs credit accessibility)

X1 = Government policies

X2 = Tax incentives

X3 = collaterals

92

B0,B1,B2 ,B3 = regression parameters

ei = error term.

3.9.2 Problems and Limitations of the Study

The conduct of research in a developing country like Nigeria is imbued with many

problems. However, the following problems would be anticipated:

i. Unwillingness in filling and returning questionnaires by respondents.

ii. Limited financial resources.

iii. Limited use of varied analytical techniques due to size of sample.

93

REFERENCES

Iketaku R.I,(2013). Introduction to Research.Fidgina Global books,Enugu, Nigeria

Ogolo M.B. (2007). Students Guide to Writing Research & Project proposals. City-Creek.

Onwumere J.U.J. (2009). Business & Econometric research Methods. Vougasen Ltd,

Enugu

Osuala E.C. (1993). Introduction to Research methodology. Africana Publishers Ltd,

Onitsha, Nigeria. Publishers, Port-Harcourt, Rivers State.

SMEDAN/NBS National Collaborative Survey 2010.

.MAN (AGM Brochure 2012).

94

95

CHAPTER FOUR

DATA ANALYSIS AND PRESENTATION

4.1 Introduction

This chapter analyses and presents the descriptive statistics of the dependent and

independent variables. Descriptive statistics which includes the means, standard

deviations, frequency and percentages are used to analyze the responses. The responses are

first presented in tables and then descriptive statistics which include the mean, frequency

and percentages used for the analysis. The questions are consequently analyzed one by one

for a better understanding of the topic “Accessibility of credit facility from financial

institutions by Small and Medium Scale Enterprises (SMEs): Evidence from Nigeria.”

The variables for the study comprised of: SMEs credit accessibility, government policies,

tax incentives and collaterals. Also, the sample for analysis comprised of 360

manufacturing enterprise which are registered members of MAN and CAC. The choice of

this sub-sector is because they have wider need for finance, optimum capacity utilization

and wider need for finance due to the nature of the business. Among these enterprises, 360

questionnaires were shared. A total of 354 were returned and are properly/completely

filled, while the balance of six (6) were not returned.

96

4.1.2 DEMOGRAPHY OF RESPONDENTS

Frequency Percent

Sex

Male 240 67.8

Female 114 32.2

Job Status

Junior staff 18 5.1

Senior 265 74.9

Management staff 71 20.1

Academic/professional qualification

WASC 9 2.5

HND 80 22.6

Bachelors Degree 149 42.1

MBA 106 29.9

MSC 7 2.0

Others 3 0.8

Registered SME’s member under

CAC 55 15.5

97

MAN 96 27.1

CAC and MAN 203 57.3

Age

25-35 years 35 9.9

36-45 years 113 31.9

46-55 years 178 50.3

Above 55 years 28 7.9

Report:

The demography report of the respondents shows that the staff are made up of mostly

males 240(67.8%) and females numbering 114(32.2%). The classification of the job status

is as follows: junior staff 18(5.4%), senior staff 265(74.9), and management

71(20.1%).The academic qualifications of the respondents are WASC- 9(2.5%), HND-

80(22.6%), Bachelors’ Degree- 149(42.1%), MBA-106(29.9%), MSC.- 7(2.0%), Others-

3(0.8%). The respondents that are under CAC are 55(15.5%), MAN- 96(27.1%), while the

combination of those that registered with both CAC/MAN are 203(57.3%). The majority

of the respondents are in the age bracket of 46-55 years 178 (50.3%), followed by 36-45

years 113(31.9%), and 25 -35 years 35(9.9%), lastly above 55years- 28(7.9%).

98

Table 4.1.3 To what extent has government policies favoured SMEs in Nigeria?

S/n

Items Strongly

disagree

n (%)

Disagree

n (%)

Neutral

n (%)

Agree

n (%)

Strongly

Agree

n (%)

Mean ± SD

99

1 There are general government

policies that affect SMEs in

Nigeria.

3 (0.8) 0 (0.0) 4 (1.1) 106 (29.9) 241 (68.1) 4.64 ± 0.60

2 There is a dedicated ministry of

SME that facilitates SMEs

operations

2 (0.6) 0 (0.0) 6 (1.7) 157 (44.4) 189 (53.4) 4.50 ± 0.59

3 There is an agency (SMEDAN)that

was set to oversee the operations of

SMEs

3 (0.8) 0 (0.0) 6 (1.7) 150 (42.4) 195(55.1) 4.51 ± 0.62

4 Government set SMIEIS fund to

enable all operations of SMEs to be

workable in terms of financing

1 (0.3) 1 (0.3) 14 (4.0) 160 (45.2) 178 (50.3) 4.45 ± 0.62

5 The establishment of bank of

industry (BOI) has helped in the

funding of SMEs in Nigeria

1 (0.3) 1 (0.3) 5 (1.4) 137 (38.7) 210 (59.3) 4.57 ± 0.57

6 Government subsidizes capital for

SME operations through its

transfer agencies and banks (BOI)

6 (1.7) 5 (1.4) 3 (0.8) 260 (73.4) 80 (22.6) 4.14 ± 0.65

7 The beneficiaries of SMIEIS fund

is rated highly in terms of

repayment

158 (44.6) 105 (29.7) 17 (4.8) 52 (14.7) 22 (6.2) 2.08 ± 1.28

8 Government through CBN has in

the recent past disbursed funds to

SMEs.

9 (2.5) 12 (3.4) 20 (5.6) 216 (61.0) 97 (2.4) 4.07 ± 0.83

Grand Mean 4.12

Analysis

Table 4.1.3 presents a descriptive statistics of the responses to question on the extent to which

government policies has favoured SMEs in Nigeria. The result from the descriptive analysis shows

that: that there are government policies that affect SMEs in Nigeria. This is evidenced from the

frequency and percentages (strongly agree (68.1%) and agree (29.9%) with a mean of 4.64 (more

than the 3.00). Considering whether there is a dedicated ministry that facilitates SMEs operations,

the frequency and percentage showed a positive response of (strongly agree (53.4%) and agree

(44.4%) with a mean of 4.50 (greater than 3.00). The report shows that there is an agency

(SMEDAN) that has been set to oversee the operations of SMEs. This is indicated by the 55.1%

for strongly agree and 42.4% for agree with a mean greater than 3.00 (4.51).

100

The result also indicated that all the operations of SMEs are made workable by SMIEIS set by

government. Interestingly, 50.3% and 45.2% were obtained for strongly agree and agree

respectively with a mean of 4.45 (more than 3.00). The result obtained from the analysis showed

that BOI has helped in the funding of SMEs in Nigeria (strongly agree (59.3%), agree (38.7%)

with a mean of 4.57 greater than 3.00.

From the result obtained, (22.6% for strongly agree and 73.4% for agree with a mean of 4.14

which is more than 3.00), it has been indicated that government subsidizes capital for the SMEs

operations through agencies like BOI. The result from item 7 indicated that the beneficiaries of

SMIEIS funds are not forth coming in repayments. This is shown by the percentage-; 44.6% for

strongly disagree and 29.7% for disagree with a mean of less than 3.00(2.08).

Item 8 confirmed that government has in the recent past disbursed funds to SMEs. This is

indicated by 61.0% (strongly agree) and 24.5% (agree) with a mean of 4.07 which is greater than

3.00.

Consequently, the overall result in this table shows that government policies favoured SMEs to a

great extent. This is provable from the grand mean of 4.12 which is more than 3.00.

101

Table 4.1.4 To what extent is access to credit facilities the greatest problem facing

SMEs.

Analysis

Table 4.1.4 presents the descriptive statistics of the responses to the extent access to credit

facilities the greatest problem facing SMEs. It started by proving that the only source of

S/n Items Strongly

disagree

n (%)

Disagree

n (%)

Neutral

n (%)

Agree

n (%)

Strongly

agree

n (%)

Mean ± SD

1 The only sources of fund for SMEs

are commercial/merchant banks

183 (51.7) 5 (1.4) 70 (19.8) 60 (16.9) 36 (10.2) 2.32 ± 1.49

2 The greatest problem facing SMEs

is accessibility to credit facilities

7(2.0) 1(0.3) 23 (6.5) 164 (46.3) 159 (44.9) 4.32 ± 0.78

3 There are other sources of fund for

SMEs which are cheaper. e.g the

SMIEIS, NERFUND e.t.c.

7 (2.0) 20 (5.6) 6 (1.7) 230 (65.0) 91 (25.7) 4.07 ± 0.82

4 The first four greatest problems

facing SMEs in the order of

magnitude are: Access to

credit/fund, mgt. structure, lack of

infrastructures, and environmental

related problems.

5 (1.4) 7 (2.0) 6 (1.7) 184 (52.0) 152 (42.9) 4.33 ± 0.74

5 The greatest problem facing SMEs

is management structure

108 (30.5) 195(55.1) 3(0.8) 42(11.9) 6(1.7) 1.99 ± 0.97

6 The greatest problem facing SMEs

is lack of infrastructures

170(48.0) 133(37.6) 9(2.5) 33(9.3) 9(2.5) 1.81 ± 1.04

7 The greatest problem facing SMEs

are: access to finance and

management

110(31.1) 123(34.7) 23(6.5) 66(18.6) 32(9.0) 2.40 ± 1.33

8 The greatest problem facing SMEs

are finance, management problem

and lack of infrastructures e.g roads,

electricity.

36(10.2) 150 (42.4) 13 (3.7) 120 (33.9) 35 (9.9) 2.91 ± 1.25

Grand Mean 3.02

102

finance for SMEs is not the commercial bank. This is supported by 51.7% (strongly

disagree) and 1.4% (disagree) with a mean of less than 3.00 (2.32).It went further to show

that the greatest problem facing SMEs is accessibility to credit facilities, which is provable

by 44.9% and 46.3% for strongly agree and agree respectively with a mean that is greater

than 3.00 (4.32). Again in the result, there are other sources (SMIEIS, NERFUND e.t.c.) of

funding for SMEs which are cheaper than commercial banks. This is shown in the result

were 25.7% and 65.0% were obtained for strongly agree and agree respectively with a

mean value of 4.07 more than 3.00.

The result also showed that if some problems of SMEs are arranged in this order: access to

credit, management structure, lack of infrastructures and environmental related problems,

it showed that the first one ranks as the one that has a higher magnitude and weight. This is

shown from the responses (42.9% for strongly agree and 52.0% for agree with a mean

value of greater than 3.00 (4.33).

To prove that the above scenario is the truth, the result obtained showed that management

structure is not the greatest problem facing SMEs (30.5% for strongly disagree and 55.1%

for disagree with a mean value less than 3.00(1.99). In the same vein, the result was

negative with a mean value of 1.81 which is less than 3.00 when considering the result

obtained from item 6 ( 48.0% for strongly disagree and 37.6% for disagree) which did not

consider infrastructure as the greatest problem facing SMEs. Item 7 confirmed that access

to finance and management problems are not the greatest facing SMEs; it was observed

that the mean value is below 3.00 (2.40) with the following percentages-; 31.1% for

strongly disagree and 34.7% for disagree. In the same vein, a mean value of less than 3.00

was obtained for item 8 (2.91) when the descriptive analysis was done. Thus, strongly

disagree was10.2% and disagree had 42.4% and this showed that the greatest problem

facing SMEs are not access to finance, management problems and lack of infrastructures

combined.

103

However, the grand mean (3.02) confirmed the statement that access to finance is the

greatest problem facing SMEs.

Table 4.1.5 To what extent do tax incentives affect the accessibility of credit facilities

by SMEs?

S/n Strongly

disagree

n (%)

Disagree

n (%)

Neutral

n (%)

Agree

n (%)

Strongly

agree

n (%)

Mean ± SD

1 Tax incentives enhance SMEs

growth and survival

8 (2.3) 0 (0.0) 16 (4.5) 295 (83.3) 35 (9.9) 4.01 ± 0.48

2 SMEs do not make use of the

available tax incentives to their

utmost advantage

1 (0.3) 7 (2.0) 8 (2.3) 229 (64.7) 106 (30.8) 4.24 ± 0.62

3 SMEs do not employ

experts/trained personnel so as

to explore the available tax

advantages

2 (0.6) 0 (0.0) 9 (2.5) 271 (76.6) 72 (20.3) 4.17 ± 0.47

4 Tax reliefs (tax holiday,

minimum company tax, self

assessment provisions) are

sources of encouragement from

government to SMEs

1 (0.3) 0 (0.0) 4 (1.1) 289 (81.6) 60 (16.9) 4.15 ± 0.41

5 SMEs do not access loan from

financial institutions due to lack

of adequate collaterals

5 (1.4) 6 (1.7) 6 (1.7) 231 (65.3) 106 (29.9) 4.21 ± 0.69

6 The requirement for loan is

beyond the reach of SMEs in

Nigeria

87 (24.6) 144 (40.7) 16 (4.5) 79 (22.3) 28 (7.9) 2.48 ± 1.29

7 Increased tax incentives would

lead to better accessibility of

2 (0.6) 7 (2.0) 12 (3.4) 241 (68.1) 92 (26.0) 4.17 ± 0.63

104

credit by SMEs

Grand mean 3.92

Source: The researcher

Fig 1: Kinds of Tax incentives available to SMEs

Analysis

Table 4.1.5 presents the descriptive statistics of the responses to the question on whether

tax incentives affect the accessibility of credit facilities by SMEs. The overall result

showed that there was a positive response with a grand mean of 3.92.

Series1, Minimum tax provisions, 78%

Series1, Tax holiday, 66.40%

Series1, Self assessment

provisions, 67.20%

Series1, Others, 4.20%

105

Analysis showed that tax incentives enhances SMEs growth and survival and was proved

by the percentage response of 9.9% for strongly agree and 83.3% for agree with a mean

value of 4.01.

Also, the result showed that SMEs operators do not make use of the available tax

incentives to their utmost advantage. This is shown from the descriptive analysis as

strongly agree recorded 30.8% and agree had 64.7% with a mean value of 4.24 (more than

3.00). From the result obtained which is 20.3%(strongly agree) and76.6% (agree), with a

mean value of 4.17 (greater than 3.00), it was observed that SMEs do not employ experts

and trained personnel so as to aid them to explore the available tax advantages. Item 4 goes

further to check whether tax reliefs (tax holiday, self assessments, and minimum tax

provisions) are sources of encouragement to SMEs. It was proved right with the percentage

response of 16.9% for strongly agree and 81.6% for agree with a mean value of 4.15 which

is greater than 3.00. Item 5 had a mean value of 4.21 (more than 3.00) and percentage

response of 29.9% for strongly agree and 65.3% for agree to buttress the assertion that

SMEs do not access loan from financial institutions due to lack of collaterals.

However, there was a dissenting view that the requirement for loan is beyond the reach of

SMEs in Nigeria. This is justified by the result of responses: strongly disagree (40.7%) and

agree (22.3%) with a mean value of 2.48 which is less than 3.00. Also the notion that

increased tax incentives would lead to a better accessibility of credit by SMEs was

confirmed from our analysis result: 26.0% and 68.1% for strongly agree and agree

respectively.

Table 4.1.6 To what extent does having collaterals affected credit facilities

accessible by SMEs?

106

Items Strongly

disagree

n (%)

Disagree

n (%)

Neutral

n (%)

Agree

n (%)

Strongly

agree

n (%)

Mean ± SD

Collaterals are conditions for SMEs to

access bank loans.

6 (1.7) 0 (0.0) 12 (3.4) 151 (42.7) 185 (52.3) 4.45 ± 0.65

Most SMEs do not possess the required

collaterals for accessing credit facilities

from the banks.

7 (2.0) 0 (0.0) 4 (1.1) 233 (65.8) 110 (31.1) 4.26 ± 0.58

Banks inability to shift grounds on

collaterals makes it impossible for SMEs

to access the funds.

1 (0.3) 0 (0.0) 8 (2.3) 220 (62.1) 125 (35.3) 4.32 ± 0.53

Grand mean 4.34

107

Source: The Researcher Fig 2: Kinds of collaterals available to SMEs

Analysis

Table 4.1.6 presents a descriptive statistics the responses know the extent to which having

collaterals affects credit facilities accessible by SMEs. From analysis, the result proved that

collaterals are conditions for SMEs to access bank loans. This is justifiable by the

responses (52.3% & 42.7% for strongly agree and agree respectively with a mean value of

4.45 (more than 3.00). Item 2 confirmed that SMEs do not possess the required collaterals

for accessing bank loans. This is shown in the responses (31.1% % & 65.8% for strongly

agree and agree respectively with a mean value of 4.26 which is greater than 3.00. The

result from the analysis shows that Banks inability to shift grounds on collaterals makes it

impossible for SMEs to access loans. This is justified by 35.3% (strongly agree) and 62.1%

(agree) with a mean value of 4.32 (more than 3.00). Consequently, the grand mean is 4.32

proving that collaterals affects credit accessibility by SMEs.

Series1, Landed properties, 98.60%

Series1, Buildings, 92.90%

Series1, Share certificates, 39%

Series1, Others, 8.80%

108

Table 4.1.7 What is the extent to which SMEs are funded by international agencies?

S/n Items Strongly

disagree

n (%)

Disagree

n (%)

Neutral

n (%)

Agree

n (%)

Strongly

agree

n (%)

Mean ± SD 1 International agencies fund

SMEs through World Bank,

ADB and IFC

1 (0.3) 9 (2.5) 8 (2.3) 221 (62.4) 115 (32.5) 4.24 ± 0.65

2 Federal government has sought

for financing through World

Bank SME II loan

9 (2.5) 0 (0.0) 8 (2.3) 214 (60.5) 123 (34.7) 4.27 ± 0.63

3 Agencies like UNDP has

facilitated SMEs funding through

federal government

2 (0.6) 9 (2.5) 7 (2.0) 228 (64.4) 108 (30.5) 4.22 ± 0.66

4 Programmes like JICA (Japan

International Corporation

Agency) that have aided in

entrepreneurial development in

Nigeria

4 (1.1) 42 (11.9) 15 (4.2) 206 (58.2) 87 (24.6) 3.93 ± 0.93

5 Banks are not willing to advance

credit to SMEs due to lack of

collateral and default in

repayment

1 (0.3) 3 (0.8) 27 (7.6) 178 (50.3) 145 (41.0) 4.31 ± 0.67

6 Banks are not willing to advance

credit to SMEs due to lack of

poor accounting records and

bankable projects proposals

41 (11.6) 8 (2.3) 15 (4.2) 158 (44.6) 132 (37.3) 3.94 ± 1.24

7 CBN are playing more roles to

ensure that credits are advanced

to SMEs

17 (4.8) 4 (1.1) 7 (2.0) 208 (58.8) 118 (33.3) 4.15 ± 0.90

8 Banks charge higher interest rate

than other SMEs

3 (0.8) 0 (0.0) 22 (6.2) 145 (41.0) 184 (52.0) 4.43 ± 0.69

109

Analysis

Table 4.1.7 presented information on the extent to which SMEs are funded by

international agencies. Statistics shows that some international agencies actually provide

funds for SMEs operations .This is evidenced by the result obtained in item 1 which shows

that agencies like ADB, World Bank and IFC funds SMEs in Nigeria: 32.5% for strong

agree and 62.4% for agree with a mean of 4.24 (more than 3.00). Also, the mean value of

4.27 with response percentages of 34.7% (strongly agree) and 60.5% (agree) proved that

the federal government sought funds through World Bank SME II loan.

In the same vein, statistical analysis shows that agencies like UNDP have facilitated the

SMEs funding through the federal government. This is shown in the result: 30.5%

(strongly agree) and 64.4% (agree) with a mean value that is greater than 3.00 (4.22). We

can also see that programmes like JICA (Japan international corporations) have aided in

entrepreneurial development in the country as evidenced in the result: 24.6% (strongly

agree) and 58.2% (agree) with a mean value of more than 3.00(3.93). Analysis confirmed

that Banks are not willing to advance credit to SMEs due to lack of collaterals and default

in payment. This is confirmed by the mean value of 4.31 and the response percentage of

41.0% (strongly agree) and 50.3% (agree). It can be seen that Banks are not willing to

advance credit to SMEs due to lack of poor accounting records and bankable project

proposals. The mean value of 3.94 shows this though with the responses of 37.3%

(strongly agree) and 44.6% (agree).

scheme/government agencies e.g

BOI and SMIEIS

9 Banks are mandated to set aside

10% profit before tax for funding

of SMES

1 (0.3) 0 (0.0) 27 (7.6) 128 (36.2) 198 (55.9) 4.48 ± 0.65

Grand mean 4.22

110

Item 7 results proved that CBN are playing more roles to ensure that credits are advanced

to SMEs. This is evidenced by the mean value of 4.15 and responses of 33.3% (strongly

agree) and 58.8% (agree). A mean value of 4.43 with percentage responses of 52.0%

(strongly agree) and 41.0% (agree) confirmed the statement that Banks charge higher

interest rate than other SMEs schemes/government agencies like BOI and SMIEIS. Also,

Banks are mandated to set aside 10% profit before tax for funding of SMEs. The mean

value of 4.48 confirmed this statement with the responses of 55.9% (strongly agree) and

36.2% (agree). The overall grand mean of 4.22 confirmed that SMEs are actually funded

by international agencies.

Table 4.1.8 Procedures and protocols observed by SMEs during loan assessment

Frequency Percentage

How easy is the process of accessing credit facilities from

the bank?

Easy 6 1.7

Very easy 10 2.8

Tedious 187 52.8

Very tedious 151 42.7

What is the length of time taken to assess and obtain

credit facilities from the bank?

Within 1 month 28 7.9

Within 2 months 12 3.4

Within 3 months 116 32.8

4-6 months 198 55.9

How easy do SMEs operators find it to get sureties and

guarantors during loan assessment?

Easy 9 2.5

Very easy 5 1.4

Tedious 205 57.9

Very tedious 135 38.1

The time for the repayment of the loans is too short for

SMEs to cope with?

Strongly disagree 82 23.2

Disagree 88 24.9

Neutral 100 28.2

Agree 53 15.0

Strongly Agree 31 8.8

111

High interest rates target by banks hinder SMEs credit

accessibility

Strongly disagree 6 1.7

Disagree 10 28

Neutral 10 2.8

Agree 149 42.1

Strongly Agree 179 50.6

The time lag between the repayment of one loan and the

collection of another one is usually too long.

Strongly disagree 90 25.4

Disagree 123 34.7

Neutral 78 22.0

Agree 31 8.8

Strongly Agree 32 9.0

Analysis

Table 4.1.8 shows the procedures and protocols observed by SMEs during loan

assessment. Item 1 attempted to find out how easy is the process of accessing credits from

the banks. The frequency responses showed 52.8% (tedious), 42.7% (very tedious)

followed by 2.8% (very easy), and 1.7% (easy).This indicated that the process is actually

tedious. Also, item 2 sought to know the length of time taken to assess and obtain credit

facilities from the banks. The result shows 55.9%, 52.8%, 7.9% and 3.4% for 4-6 months,

within 3 months, within 1 month and within 2 months respectively. Item 3 analyzed how

easy SMEs operators find it in an attempt to find sureties and guarantors during loan

assessment. The responses are: 57.9%, 38.1%, 2.5% and 1.4% for tedious, very tedious,

easy and very easy respectively.

The responses obtained from item 4 which sought to know if the time for the repayment of

loans are too short for SMEs to cope with are 28.2%,24.9%,23.2% and 15.0% 8.8% for

neutral, disagree, strongly disagree, agree and strongly agree respectively. Item 5 sought to

find out whether high interest rates targeted by banks hinder credit accessibility. The

112

responses are 50.65%, 42.15%, 28.5%, 2.85% and 1.7% for strongly agree, agree, disagree,

neutral and strongly disagree respectively. Item 6 shows the time lag for the repayment of

one loan and the collection of another one. The responses are 34.7%, 25.4%, 22.0%, 9.9%

and 8.8% for disagree, strongly disagree, neutral, strongly agree and agree respectively.

4.2 Hypotheses Testing

4.2.1 Hypothesis 1

Ho1: Government policies do not significantly favour SMEs in Nigeria

Model Summary

Mode

l

R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .761a .579 .512 .69580

a. Predictors: (Constant), Government policy

ANOVAa

Model Sum of

Squares

Df Mean

Square

F Sig.

1

Regression .989 1 .989 112.043 .000b

Residual 170.415 352 .484

Total 171.404 353

a. Dependent Variable: Access to credit

b. Predictors: (Constant), Government policy

113

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 3.753 .436 8.605 .000

Government

policy 2.151 .105 -.076 9.429 .000

a. Dependent Variable: Access to credit

Results

The model summary table shows that the correlation coefficient r (0.761) indicates that a

strong linear relationship exists between government policy and access to credit by SMEs.

The coefficient of determination r2 (0.579) indicates that more than half the variation that

exists in the dependent variable – access to credit is explained by the independent variable

– Government policy. The ANOVA table tests for overall significance, (f = 112.043,

p<0.001).

Decision Rule:

Since the significant value (p<0.001) of the t-statistic is less than 0.05 level of significance,

the null hypothesis is hereby rejected and the alternative accepted. Therefore, Government

policies significantly favour SMEs in Nigeria. This effect is positive as indicated by the

regression coefficient (B = 2.151).

114

4.2.2 Hypothesis 2

Ho2: Access to credit facilities is not the greatest problem facing SMEs.

One-Sample Test

Items

Test Value = 3

Mean

Standard

deviation

t

df

P value

Mean

Difference

95% Confidence

Interval of the

Difference

Lower Upper

The only sources of fund for SMEs are

commercial/merchant banks 2.32 1.49 -8.547 353 .000 -.67514 -.8305 -.5198

The greatest problem facing SMEs is

accessibility to credit facilities 4.32 0.78 31.958 353 .000 1.31921 1.2380 1.4004

There are other sources of fund for SMEs which

are cheaper. e.g the SMIEIS, NERFUND e.t.c. 4.07 0.82 24.448 353 .000 1.06780 .9819 1.1537

The first four greatest problems facing SMEs in

the order of magnitude are: Access to credit/fund,

management structure, lack of infrastructures,

and environmental related problems.

4.33 0.74 33.914 353 .000 1.33051 1.2534 1.4077

The greatest problem facing SMEs is

management structure 1.99 0.97 19.537 353 .000 -1.00847 -1.1100 -.9070

The greatest problem facing SMEs is lack of

infrastructures 1.81 1.04 21.648 353 .000 -1.19209 -1.3004 -1.0838

The greatest problem facing SMEs are: access to

finance and management 2.40 1.33 -8.482 353 .000 -.60169 -.7412 -.4622

The greatest problem facing SMEs are finance,

management problem and lack of infrastructures

e.g roads, electricity.

2.91 1.25 -1.361 353 .174 -.09040 -.2210 .0402

Decision rule:

115

Since the significant values (p-value) of the t-statistics are less than 0.05 level of

significance for all the items except one, the null hypothesis is hereby rejected and the

alternative accepted. Therefore, access to credit facilities is the greatest problem facing

SMEs.

4.2.3 Hypothesis 3

Ho3: Tax incentives do not have a significant effect on accessibility of credit by SMEs

Model Summary

Mode

l

R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .781a .609 .509 .69771

a. Predictors: (Constant), Tax incentives

ANOVAa

Model Sum of

Squares

Df Mean

Square

F Sig.

1

Regression .048 1 .048 120.99 .000b

Residual 171.356 352 .487

Total 171.404 353

a. Dependent Variable: Access to credit

116

b. Predictors: (Constant), Tax incentives

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 2.984 .473 6.308 .000

Tax

incentives 3.138 .120 .017 7.314 .000

a. Dependent Variable: Access to credit

Results

The model summary table shows that the correlation coefficient r (0.781) indicates that a

strong linear relationship exists between Tax incentives and Access to credit by SMEs. The

coefficient of determination r2 (0.609) indicates that more than half the variation that exists

in the dependent variable – access to credit is explained by the independent variable – Tax

incentives. The ANOVA test indicate overall significance, (F= 120.99, p<0.001).

Decision Rule:

Since the significant value (p<0.001) of the t-statistic is less than 0.05 level of significance,

the null hypothesis is hereby rejected and the alternative accepted. Therefore, Tax

117

incentives have a significant effect on accessibility of credit by SMEs. This effect is

positive as indicated by the regression coefficient (B = 3.138).

4.2.4 Hypothesis 4

Ho4: Having collaterals do not significantly affect credit facilities accessed by SMEs.

Model Summary

Mode

l

R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .897a .805 .799 .69505

a. Predictors: (Constant), Collaterals

ANOVAa

Model Sum of

Squares

df Mean

Square

F Sig.

1

Regression 1.356 1 1.356 215.807 .000b

Residual 170.047 352 .483

Total 171.404 353

a. Dependent Variable: Access to credit

b. Predictors: (Constant), Collaterals

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

T Sig.

B Std. Error Beta

1 (Constant) 3.752 .372 10.086 .000

118

Collaterals 4.143 .085 -.089 11.675 .000

a. Dependent Variable: Access to credit

Results

The model summary table shows that the correlation coefficient r (0.897) indicates that a

strong linear relationship exists between Collaterals and Access to credit by SMEs. The

coefficient of determination r2 (0.805) indicates that more than half the variation that exists

in the dependent variable – access to credit is explained by the independent variable –

Collaterals. The ANOVA test indicate overall significance, (f= 215.807, p<0.001).

Decision Rule:

Since the significant value (p<0.001) of the t-statistic is less than 0.05 level of significance,

the null hypothesis is hereby rejected and the alternative accepted. Therefore, the

availability of collaterals significantly affects accessibility of credit facilities by SMEs.

This effect is positive as indicated by the regression coefficient (B = 4.143).

119

4.2.5 Multiple Regression Analysis result of effect of Government policy, Tax

incentives and Collaterals on Accessibility of credit facilities by SMEs.

Model Summary

Mode

l

R R Square Adjusted R

Square

Std. Error of

the Estimate

1 .812a .659 .600 .69366

a. Predictors: (Constant), Collaterals, Government policy,

Tax incentives

ANOVAa

Model Sum of

Squares

df Mean

Square

F Sig.

1

Regression 2.994 3 .998 211.074 .000b

Residual 168.410 350 .481

Total 171.404 353

a. Dependent Variable: Access to credit

b. Predictors: (Constant), Collaterals, Government policy, Tax incentives

120

Coefficientsa

Model Unstandardized

Coefficients

Standardized

Coefficients

t Sig.

B Std. Error Beta

1

(Constant) 3.715 .556 6.688 .000

Government

policy 2.198 .124 -.100 3.592 .014

Tax incentives 2.224 .143 .099 3.563 .001

Collaterals 4.149 .091 -.093 9.629 .000

a. Dependent Variable: Access to credit

Results:

The model summary table shows that the correlation coefficient (r = 0.812) indicates that

there is a strong linear relationship between the dependent variable (Credit access) and the

explanatory variables (Government policy, Tax incentives and Collaterals). The coefficient

of determination (r2 = 0.659, i.e 66%), indicates that more than half the variation that exists

in Credit access is explained by the multiple explanatory variables.

Decision rule:

Since the significant values are less than 0.05 level of significance (p< 0.05), we hereby

conclude that Government policy, Tax incentives and Collaterals have significant positive

effect on credit accessibility by SMEs. Hence the regression equation: Y = 3.715 +

2.198X1 + 2.224X2 + 4.149X3.

121

CHAPTER FIVE

DISCUSSION OF FINDINGS, RECOMMENDATIONS AND SUMMARY

5.0 Introduction

This chapter discusses in details the findings of the four hypotheses.

122

5.1.1 Discussions on findings of hypothesis 1

The result of the regression analysis shows that government policies significantly favour

SMEs in Nigeria. This finding validates our earlier finding of (Beck & Kunt et al, 2008) on

the effect of government policies on SMEs. They found out that direct government lending

to SME sector exists on a small scale through micro financing. .

Also, other studies like (MCcan & Calder,2012) who actually wanted to know the effect of

government policies on SMEs growth found out that they sought to alleviate their credit

constraints so as to enhance their growth potentials. Government policies are set amongst

other things to ensure that even financial institutions do not abuse the sub sector during

loan assessment. For instance the government mandates the banks to set aside 10% profit

before tax for lending to SMEs BOFIA 1991 as amended. In 1980, for instance, CBN

directed that at least 10% of the loans advanced to indigenous borrowers should be

allocated to SMEs.

The former CBN Governor, Soludo (2010) stated that government can provide funding to

the SMEs either through the direct provision of funds through a state bank, or through the

provision of funds which are leveraged by private sector investors. This kind of

intervention is common across developing countries. In as much as we observed that the

effect of government policies is of a greater effect in developed nations (Japan, Russia and

America etc) where the small and medium scale enterprises are the pivot of national

development and transformation.

We observe that the importance of picture some policies as regards the SMEs in Nigeria

cannot be over emphasized. This is because the government has the powers to meet out

laws, rules and regulations and such must be carried out by even the financial institutions.

The security and enabling environments are not off from what the government can do to

ensure that SMEs thrive well and become the pivot of the national development just like

the developed nations. In addition, (Udechukwu, 2003) stressed that government are not

left out in the move to make SMEs work. He observed that she does this through their

ministries of commerce and industries. He reiterated that despite the numerous constraints,

123

the government has ventured into many schemes and programmes to strengthen SMEs

through NERFUND,SMIEIS AND CMDs etc. All these efforts are geared towards making

SMEs not only become vibrant but stand out as the engine for national development.

5.1.2 Discussions on findings of hypothesis 2

The regression result shows that amongst the numerous problems facing SMEs in Nigeria,

that the greatest of all of them is access to credit facilities. This result is in line with the

findings in our earlier reviews: (Onwumere , 2000) in the CIBN journal showed that there

are several problems facing SMEs in Nigeria. They ranges from inadequacy of finance,

lack of infrastructures, low entrepreneurial skills, multiplicity of taxes ,restricted market

access, and poor implementation of policies etc. Among all the problems, the (NBS, 2012)

ranked access to credit as the greatest problem facing SMEs in Nigeria.

In the same vein, (World Bank & IFC, 2011) ranked economies according to their ease of

doing business and observed that the capacity to access credit is the most important

condition facing SMEs. Also, Global enterprise monitor (GEM, 2010) reported that

finance is the one of the key topmost factor for stimulating and supporting SMEs.

According to our review on the same subject, (Beck, 2011) in the “Investment climate

survey of World Bank” which opined that access to finance not only improves firms

performance but also, promotes innovations and entrepreneurial activities. Suffice it to say

that World Bank listed the financial constraints as second to nothing as regards the

problems facing SMEs (World Bank, 2008). (Fatai, 2009) showed that epileptic finance is

a great problem facing SMEs. Just like in a thesis by (Gbandi, 2012) who studied the ease

to which SMEs access credit from the financial institutions, using many banks across

Nigeria. He found out that the greatest challenge facing SMEs is finance. IFC reported also

that (37-39)% of SMEs in Nigeria are financially constrained just like access to credit in

Asian countries are critical (Harvie & Lea,2005).

124

5.1.3 Discussions on findings of hypothesis 3

The result of the regression analysis for the third hypothesis also shows that there is a

positive and significant effect of tax incentive on the accessibility of credit by SMEs. This

is however, indicated and proved by the findings of (Carpentier & Suret, 2005) who

stressed the importance of tax reliefs to the SMEs sub sector. They went further to show

that tax relief would help SMEs not only to survive but step up to the next level of growth

potentials. They found out that even enterprises that could venture into asset procurement

could be granted annual allowances (AA) yearly. According to (Dagogo & Ollor, 2012) in

their own findings, observed that one of the greatest challenges of SMEs amongst other

factors is institutionalizing tax benefits for equity investments. This they said will attract

foreign investors.

Also, (OECD,2013a) reported that even with the credit constraints faced by small

businesses, which usually cause them to exist the market, tax incentives would aid their

stabilization so as to enhance growth and subsequently export. (Hobon, 2011) showed

that the UK economy was recovered by small manufacturers who were struggling to

generate enough funds to expand their businesses or capitalize on new opportunities with

the reduction of small business tax rate from 23%. He also said that various tax incentives

that can be extended to SMEs can be through individual savings accounts (ISA), Venture

capital Trust (VCT), Enterprise Investment Scheme (EIS) etc. (Bear, 2012) also said that

UK government needs to move the SMEs funding by thinking about the tax incentives for

the different form of finances so as o enhance accessibility of finance.

125

5.1.4 Discussions on findings of hypothesis 4

The analysis from the regression result for the fourth hypothesis indicated that the

availability of collaterals has a positive and significant effect on accessibility of credit

facilities by SMEs. This is confirmed by our previous findings: (OECD, 2013a) report

proved that much justification has existed to confirm that credit constraints exist for SMEs.

However, they attributed the reason to be due to lack of collaterals, shorter credit history,

and lack of agency credit rating and paucity of verifiable financial information which could

help financial institutions to make objective credit allocation decisions.

In the same vein, Banks are more likely to adopt more stringent lending policies favouring

those who are able to provide more collaterals or established records. In other words, banks

adopt credit rationing measures so as to minimize problems of bad debts. (Gentler

&Gilchrist, 1994) said that the extent of credit rationing when SMEs are mentioned are

obvious. They attributed the cause to lack of collateral to back up the credit facility been

sought in case of default by the enterprise concerned.

5.2 Conclusion

Our result shows that accessibility of credit facility from financial institutions by SMEs in

Nigeria has been bedeviled by many problems. This is evident in the responses from the

questionnaires to the SMEs operators in the manufacturing sector of the economy. The

resultant effect is that there is poor accessibility of credit facility from the financial

institutions.

There is indeed a great need for our government to wake up to the responsibility of

providing avenues that will make funds available and accessible to the sub-sector in

addition to providing enabling environments, upgraded infrastructures and favourable

policies. These will not only give opportunity for SMEs to grow but will become the

greatest pivot and driver of national development. Our focus and strengths should be

126

drawn from other developed nations across the globe that supported SMEs and it worked

for them.

The financial institutions on the other hand should not be allowed by government to abuse

the extant rules and laws that affect the small and medium scale enterprises. The

government must as a matter of urgency react to the abuse of these rules and laws so that

they will be reduced to the barest minimum. For instance, in other to generate widespread

interest in the scheme and maximize its development impact, a reasonable portion of the

money set aside should be used to give working capital loans at interest rates that are in

tune with the viability of SMEs.

5.3 Recommendation

From the forgoing, there is need to support and equip SMEs with government fiat:

policies, related legislation and enabling environments to add value to the operations of

SMEs in Nigeria.

One should understand that the effect of whatever international assistance our country may

attract largely depends on the foundation which has been laid by our own efforts in the sub

sector. This foundation can come in the form: provision of tax incentives by government

(tax reliefs, minimum tax provisions, tax holiday), overhauling the criteria for SMEs

registration, creation of ministries and extra ministerial departments that would have the

task of monitoring and controlling SMEs to ensure strict compliance to set rules or face

the wrath of default. One would not be too far from recommending that a rigorous whistle

blowing programs and broad information and feedback mechanism should be set by

government.

Suffice it to say that increased access to credit facilities, tax incentives and additional

international assistance can improve economic conditions in developing nations like ours.

This could be done by fostering innovations, macroeconomic resilience and GDP. All

these attention and support given SMEs are not farfetched from the obvious reasons that

they are job and wealth creators. They occupy a very vital position in the nation as the

127

“engine of growth” and catalyst for socio- economic transformation. SMEs if duly

supported are a veritable vehicle for the achievement of national economic objectives:

employment generation, value added, stimulation of entrepreneurship etc.

5.4 Contribution to knowledge

This study has made an important contribution to our understanding of the accessibility of

credit facility from financial institutions by SMEs in Nigeria: Evidence from Nigeria. The

study re- enforced the need to take SMEs to the next level by upholding the result of our

analyses.

5.5 Further studies

Overcoming our limitation may provide opportunities for further research into other factors

that could affect SMEs credit accessibility, in order to ascertain if such factors actually

affect them in equal measures.

128

BIBIOGRAPHY

Abdullahi, T. (2003), “Establishing a business in Nigeria. 4th edition.

Abereijo I.O and Fayomi A.O.(2005),Innovative approach to SME financing in Nigeria: a

review of SMIEIS. Journal of social science vol. 11(3) 219-227.

129

Abudu, M.I. (2009), “Analysis of Intersectional Linkages between Agriculture and

Industry in Nigeria. CBN Research Department Paper No. 23.

Achua, J.K. (2008),” Corporate social responsibility in the Nigerian banking system”:

society and business review vol. 3(1) 21.

Adams. D. W. (2002), “Taking a fresh look at informal finances” in Adams D. w. & D .A.

Fitchet (eds), Informal Finance in low income Countries. Boulder; west

viewPress,pp.5-23.

Ade, T. Ojo (2009), “The role of Policy in Management of SMEs’ in Nigeria”,

Lagos.Punkman Nig. Ltd

Adebusuyi, B.S. (1997), “Performance Evaluation of SMEs in Nigeria” CBN

Bullion.Vol.21(24.)

Adelaja, B.O. (2003), “Financing SME under SMIEIS”. Paper presentation from Union

Bank of Nigeria Plc.

Aderson, D. (2002), “Some Industry in |Developing Countries: Some Issues”. Staff

working paper No; 518, The World Bank, Washington, D.C.USA.

Afolabi, J.A. (2004), “Challenges of Private Sector Led Growth in Nigeria”. A Seminar

Presentation on 13th Annual conference of CBN Research unit.

Ajagu, A. (2005), “SMI Do not enjoy Any form of incentives”. Business day, Business

day Media Ltd, Lagos.

Allen, N.B. (2004), “Small and Medium Enterprises: Overcoming Growth Constraints”.

World Bank Conference Paper Presentation (aberger@frb.gov).

Amiti, M., & Weinstein, D. E. (2011).Exports and financial shocks. The Quarterly

Journal of Economics, vol. 126(4), 1841-1877.

Ang, J . S.(1992), “On the Theory of Finance for Privately held Firms”, The Journal of

small Business Finance, 1(3), pp.185-203.

130

Anyanwu C.M. (2001),“ Financing and Promoting SSI, concept issues and prospects’’

Bullion Publication of CBN. VOL. 25, No 3 Pp. 12-15.

Anyanwu, C.M. (2003), “The Role of CBN in SME Financing”. Paper presentation

Auboin, M. (2009) Restoring Trade finance: What the G20 Can Do, in The Collapse of

Global Trade, Murky Protectionism, and The Crises: Recommendations for the

G20, Ed. Richard Baldwin and Simon Event (London: Centre for Economic Policy

Research, 2009),

Ayozie D.O. (1999), “A handbook on Small Scale Business for National Diploma

Students’’. Danayo Inc. Coy. Ilaro.

Ayozie D.O. (1999), “A handbook on SME for National Diploma students”, Danayo Inc.

coy Ilaro.

Barth J.R., G. Caprio J.R.,& R. Levine (2001). Banking systems around the globe: Do

regulations and ownership affect performance and stability?, in F S Mishkin ( ED),

Prudential Supervision: What works and what doesn’t, University of Chicago,

Press Chicago, I L 31-96.

Bas, M. & A. Berthou, (2012), “The Decision to Import Capital Goods in India: Firms’

Financial Factors Matter.” World Bank Economic review Vol: 26 (3), pp 486-513.

Bates, F.(2007), Financing small business creation: The case of Chinese & Korean

immigrant entrepreneurs. Journal of business venture, vol. 12 pp109-124.

Beck, T.A., Demirguc-Kunt, and M. S. Martinez Peria, (2007) Reaching out: Access to and

use of banking services Across countries, Journal of Financial Economics 85, 234-

266.

Beck, T. A., and Dermiguc-Kunt, (2006), “Small and Medium –size Enterprise: Access to

finance as a growth constraint”, Journal of Banking & Finance, 30(11), pp. 2931-

2943.

Beck, T., Demirguc-kunt, A. and Maksimovic, V. (2005), “Financial and Legal Constraints

to Growth: Does Firm Size Matter?;, The Journal of Finance, 60(1), pp. 137-177

131

Beck, T., Demirguc-Kunt, A. and Maksimovic, V. (2008), “Financial Patterns around the

world: are Small Firms Different”, Journal of Financial Economics, 89(3), pp. 467-

487.

Beck. Thorsten, Asli Demirgue-Kunt and Vojislav Maksimovic (2004), “Bank

Competition and assess to Finance: International Evidence” Journal of

Money, Credit and Banking 36: 627-648.

Berger, A. N. and Udell, G.F. (2008), “The Economis of Small Business Finance: the

Roles of Private Equity and Debt Markets in the Financial Growth Cycle, Journal

of Banking & Finance, 22, pp.613-673.

Berger, A.N. and Udell, G.F. (2006), “a More Complete Conceptual Framework for SME

Finance”, Journal of Banking & Finance, 30(11), pp. 2945-2966.

Berman, N. and J. Hericourt (2010), Financial factors and the margins of trade: Evidence

from cross-country firm-level data, journal of developmental economics vol

93(2),pp 206-217.

Bertay, A.C,A. Demirguc-Kunt, and H. Huizinga (2012), Bank Ownership and Credit

over the Business Cycle: Is lending by state Banks pro- cyclical? CEPR Discussion

paper no 9034.

Birley, S. (1996), “Start up in Small business & Entrepreneurship, eds Burns P &

Dewhurst, J Macmilian

Blum,Laurie(1995),Free money for SMEs.4th edition, John Williams & Sons inc.

Breedon, T. (2012), Boosting finance options for business, Report of industry-led

working group on alternative debt markets, UK Department of Business,

innovation .and Skills.

Bricogne, J.C., Fontagne, L., Gaulier, G, Taglioni, D and V. Vicard (2009) WorldBank

Economic review, vol .36(3) pp514-523.

Buch,Claudia M.(2004),Information versus Regulations: What drives the international

activities of commercial banks journal of money credit and banking No 51-69.

132

Campello, M., Graham, J.R. and Campbell R. Harvey (2010), The real effects of financial

Constrains: Evidence from a financial crisis, Journal of financial Economics,97(3),

470-487.

Cassar, G. and Holmes, S. (2003), “Capital Structure and Finance of SMEs: Australian

Evidence”, Accounting & Finance, 43(2), pp. 123-147.

CBN (2011). Development finance. Retrieved on the 11th of January, 2011 from

http://www.cenbank.org

CBN (2012). Development finance. Retrieved from

http://www.cenBank.org/devfin/acgst.asp.

CBN(2011) SMEs in Nigeria. Retrieved on 11/1/11 from http://www.cenbank.org CBN.

Central Bank of Nigeria (2000), “The Changing Structure of the Nigerian Economy and

implication for Development. Realm communication Ltd, Lagos.

Chittenden, F., HALL, G. Hutchinson, P. (2006), “Small Firm Growth, Access to Capital

markets and Financial Structure: Review of Issues and an Empirical Investigation”,

Small Business Economics, 8, pp.59-67.

Cole, R.A. (2008), “The importance of the relationships to the availability of credit,

Journal of banking and finance Vol. 22 pp 959 -977.

De la Torree, A., Soledad, M., Peria, M. and Schmukler, S.L. (2010), “Bank involvement

with SMEs: Beyond Relationship Lending”, Journal of Banking & Finance, 34(9),

pp.2280-2293

Deyoung, Robert William C. Hunter and Gregory F. Udell (2004), The Past, Present and

probable future for community banks, journal of financial services Research

Djankov, S., McLiesh, C. and A. Shieifer (2007). “Private credit in 129 countries,”

Journal of Financial Economics, Elseviier vol.84(2), pages 299-329, May.

133

Fatai A.(2009),SMEs in Nigeria: the problem and prospects. Retrieved on the 15/3/12

http://www.thecjc.com/journal/index.php/econ.

Fatai, A. (2009), Small and Medium scale enterprises in Nigeria: the Problems and

prospects. Retrieved on the 22nd of January 2012 from

http://www.thecjc.com/Journal/index.php/econ.

FBN Plc Bi-annual Review of SME Financing in Nigeria (1993) Vol. 2 No. 4. February

23, p. 47.

Federal Ministry of Finance and Economic Development (1989), the National Economic

Reconstruction Fund, Informational Bulletin and Operational Guideline.

Federal Office of Statistics: (1997), Facts and Figures about Nigeria. Pp. 14-27.

Firth, M., Lin, C., Liu, P. and Wong, S.M.L. (2009), “Inside the Black Box: Bank Credit

Allocation in China’s Private Sector”, Journal of Banking & Finance, 33(6),

pp.1144-1155.

Frank, M.Z and Goyal,V.K. (2003), “Testing the Pecking Order Theory of Capital

Structure, Journal of Financial Economics, 67(2), pp.217-248. From R & D CBN,

Lagos.

FSS 2020. SME Sector report (2007). Retrieved on the 15th of March, 2012 from

http://npc.gov.ng.

Gertler, M. and Gilchrist, S.(2004), “Monetary Policy, Business Cycles, and the Behavior

of Manufacturing Firms”, Quarterly Journal of Economics, CIX, PP.309-340.

Growth”. Financial Standards. Millennium Harvest Ltd, Lagos. Guidelines, January

(2008).

134

Haddad, M., Harrison, A. and C. Hausman (2011) “Decompoing the Great Trade Collapse:

Products, Prices, and Quantities In the 2008-2009 Crisis, “NBER Working Paper

16253

Hall, C. (1995), APEC AND SME policy: suggestions for an action plan;available at

http://www.arts.monash.edu.au/ausapec/smepolic.html)

Hall, C. (1999), Using the International Entrepreneurial Engine to Restart Asian Growth,

in leo Paul Dana (ed) International Entrepreneurship, an Anthology, NTU

Entrepreneurship Development Centre, Singapore.

Hall, C. (2002), Profile of SMESs and SME Issues in East Asia, in C. Harvie and B.C. Lee

(eds),

Harvie and B.C. (2005), Introduction: the role of small and Medium Enterprises in

National Economies in East Asia, Edward Elgar, Cheltenham, UK. Chapter

2,pp.10-42.

Harvie and B.C. Lee (eds.), Sustaining Growth and Performance in East Asia: the role of

small and medium sized enterprises, studies of small and Medium sized Enterprises

in East Asia, Volume III, Chapter 1, pp.3-27, Edward Elgar, Cheltenham, UK..

Harvie, C. (2002), The Asian Financial and Economic Crisis and Its Impact on Regional

SMEs .

Harvie, C. and Lee, B.C. (2002), (eds) The role of small and medium-sized enterprises in

National Economies in East Asia, Edward Elgar, Cheltenham, UK.

135

Harvie, C. and Lee, B.C. (2005), “Introduction: the role of small and medium-sized

enterprises in achieving and sustaining growth and performance (with B.C. Lee), in

C.

Holton, S. and F. McCann (2012), Irish SME Credit supply and demand: comparisons

across surveys and countriesi 2012 No. 8.

Holton, S., Lawless, M and F. McCann (2013), SME financing conditions in Europe:

Credit crunch or fundamentals? National Institute Economic Review 225, pp

R52-R67

Honohan, P. (2010), Partial credit Guarantees: principles and practice, Journal of Financial

Stability 6, pp 1-9

Hyytinen, A. and Pajarinen, M. (2008), “Opacity of Young Business: Evidence from

Rating Disagreements”, Journal of Banking and Finance, 32, pp.1234-1241.

ICAN Students Journal, (2006), “Sourcing Finance for start up and existing

ICAN Students’ Journal (2007) October/Dec. Vol. 2, No. 4, PP. 12-14.

ICAN Students’ Journal (2008), “Importance of SME stressed” October/Dec. Vol.12 no.4.

Ihyembe R.H. (1999), “The problems of SMEs’ and the Development of Capital

Ihyembe, R.H. (2000), “Equity Participation in small Scale Enterprises: Issues and

prospects, conference paper, Sept, Abuja.

Iketaku, R.I, (2013) Introduction to Research. Fidgina Global books, Enugu, Nigeria.

ILO (2002), Women and Men in the Informal Economy: a Statistical Picture, Geneva, ILO.

Imaga, E. U.L. & Ewurum (1998), U.J. F. (ed) “Business Management Topics”. Oketek

publishers Enugu, pp238-242.

136

Industry Canada (2002), small and Medium-sized Enterprise Financing in Canada, Ottawa,

Industry Canada.

Izedonmi, F. (2006), “Sourcing Finance for start-up and existing businesses in Nigeria.

ICAN Students journal, April\June edition,vol.10(2) pp16-19.

James. S.L. (2011). Developing private equity and venture Capital: this day live. Retrieved

on the 30th of August from http://www.thisdaylive.com

Jones, T. d., Mcevoy & G. Barrett (1994), “ Raising Capital for the ethnic minority

Journal of Banking and finance. Vol. 19, pp. 67-92

Kauffman, C. (2004). Financing SMEs in Africa. Retrieve the 30th of August from

www.oecd.org/dev/54908457.pdf.

Kesavan R. (2002), “Small Business & Entrepreneurship Development: The US

experience. Gregory Ulferts DBA.

Keys, B.J., Mukherjee, T., Seru, A., and V. Vig (2010), Did Securitization Lead to Lax

Screening? Evidence from Subprime Loans .The Quarterly Journal of Economics

(2010) 125 (1): 307-362.

Kindleberger, C. and Henrick, B. (2004), “Economic Development”. Singapore McGraw

Hill.

Korean immigrants entrepreneurs”. Journal of Business Venturing. 12, pp.444-45.

Lawless, M., McCann, F. and C. O’Tool (2013), “The importance of banks in SME

Funding”, mimeo, Central Bank of Ireland, Economic and Social Research

Institute.

Lawless, M., McCann, F. and T. Mcindoe Caldera (2012),”SMEs in Ireland: Stylised Facts

from the real economy and credit market,” Quarterly Bulletin Articles, Central

Bank of Ireland, pages 99-123, April.

Luper,I(2011) does bank size matter to SMEs financing in Nigeria? International Journal

of Business and management tomorrow 2(3) 2-5.

137

Main, A., (2003), Foreign, private domestic, and government banks: New evidence from

emerging markets, mimeo, University of Chicago OECD (2013a) Credit mediation

for SMEs and Entrepreneurs: An OECD Scorecard. Market in Nigeria. FICAN

Seminar.

McCann, F. & T. Mcindoe-Calder (2012), Bank competition through the credit cycle:

Implications for SME financing. Central Bank of Ireland Economic Letter 2012

No. 4.

McCann, F. (2009), importing, Exporting and Productivity in Irish manufacturing, UCD

centre for economic research working paper 20 -22

Mordi F. (2005), “Manufacturers, CBN diagnoses on causes of SMIS stunted Growth”

Financial standards, Millennium Harvest ltd, Lagos.

Mungcal I.(2011). AFDB approves finance for Nigeria SMEs. The Development

newswire. Retrieved from http://www.devex.com Mushin, Lagos

Myrdal G. (2006), “Economic Theory and Underdeveloped Region”. London Macmillian

Publishers.

Ngoc, T.B.L. and Nguhen, T.V. (2009), “The Impact of Networking on Bank Financing:

The Case of small and Medium-Sized Enterprises in Vietnam”, Entrepreneurship

Theory and Practice, 33(4), pp.867-887.

Nigerian Economic Summit Group (1999), 6th Nigerian Economic Summit.Spectrum

Books Ltd.

Nnanna, G. (2005), “SMEDAN explains un-development of SME sub-sector”. Small

Business journal. Business .Day Media Lagos.

Nofsinger, J.R. and Wang, W.(2011), Determinants of Start-up Firm External Financing

Worldwide”, Journal of Banking & Finance, in press, Corrected Proof, Available

online 28 January 2011.

138

Nwankwo, O.O. (1998), “Strategies for Private Sector financing in Africa” Journal of

Banking and Finance, vol3.pp25-37.

OECD (2006a), The SME Financing Gap, (Theory and Evidence), Vol. I, Paris.

OECD (2006b), The SME Financing Gap, Vol.II, Proceeding of the Brasilia Conference,

March, Paris, OECD.

OECD (2006c), Financing SME and Entrepreneurs, POLICY Briefs, Paris.

Ogolo, M.B. (2007), Students Guide to Writing Research & Project proposals. City-Creeks

Publishers, Port-Harcourt, Rivers State.

Ogubunka U.M. (2003), “Walking ahead of bank distress: a practical guide” Rhema

enterprise, Lagos.,

Okafor, F.O. (1999), “Micro Credit: An Instrument for Economic Growth and Balanced

Development October Lecture.

Okwara L (2003) SMIEIS Industry Journal.

Olorunshola, J.A. (2001), “Industrial Financing in Nigeria: Some Institutional

Arrangements” CBN small firms” in Hughes &D.S Storey (eds) Financing Small

firms. London Roufledge. Economic and Financial Review, vol24,no 4.

Olorunshola, J.A. (2001), “Industrial Financing in Nigeria: Some Institutional

Arrangement”CBN Economic and Financial Review.

Olu, A.O.(2009), A paper presented at the First Bank Business and Economic Report

summit pp1-5.

Onugu, B.A. (2005), “SMEs in Nigeria: Problems & Prospects” Dissertation paper

presented to clement University, Lagos.

Onwumere J.U.J. (2009), Business & Economic research Methods. Vougasen Ltd, Enugu

Onwumere, J.U.J. & C.S. Ige (2000), “Economic Development: Meaning, Measurement

and relevance

139

Organisation for Economic cooperation and Development (2013b), Credit mediation for

SMEs and Entrepreneur

Osa-Afiana, L. (2003), “Critical Success factors in the implementation of SMIEIS.

Seminar Paper from BOI.

Oshagbemi F.A. (1982), “Small business management in Nigeria”. London: Longman.

Osuala E.C. (1993), Introduction to Research methodology. Africana Publishers Ltd,

Onitsha, Nigeria.

Owuala S. I. (1999), “Entrepreneurship in Small Business firms” G. Mag Investment Ltd

Ikeja, Lagos.

Oye, Akinsulire (2006), Financial Management, page 578. El-Toda Ventures Ltd,

Peek, Joe and Eric S. Rosegreen (1995), “Bank regulation and Credit Ginch. Journal of

Banking and Finance vol.19, pp 67-92.

Performance and stability?, in F.S. Mishkin (ED.), Prudential supervision: What works

And what doesn’t, University of Chicago Press, Chicago, IL, 31-96.

Petersen, M.A. and Rajan, R.G. (2004), “The Benefits of lender Relationships: Evidence

from Small Business Data”, Journal of Finance, 49(1), pp.3-37.

Salami, A.T. (2003), “Guideline and Stakeholders Responsibility” in SMIEIS: A seminar

paper from Development dept., CBN.

Saunders A. (2000), “Financial Institution Management, Boston: Irwin McGraw

Scale Practices. April/June, vol. 44, No. 2, pp. 36-38.

Schneider, F. (2002), Size and Measurement of the Informal Economy in 110 countries

Around the World, World Bank, Mimeo, July.

Seers D. (2002), “What are we trying to measure? Journal of Development Studies

vol.8(3)April 21- 36

140

Seifert, B. and Gonenc, H. (2008), “The International Evidence on the Pecking Order

Hypothesis”, Journal of Multinational Financial Management, 18(3), pp.244-260.

SMEDAN/NBS 2010 National Collaborative Survey

SMEDAN/NBS National Collaborative Survey 2010 MAN (AGM Brochure 2012).

Stevenson, H.H. and Jarillo J.C. (1990) “A paradigm of entrepreneurship: Entrepreneurial

Management” Strategy Management Journal. Vol. II, pp. 17 – 27.

Stiglitn, J.E. And A. Weiss(1981), “Credit Rationing in Markets with Imperfect

Information.” American Economic Review, 71(3), pp.393-410.

Storey, D.J. and Thompson, J. (1995), “The Financing of New and Small Enterprises in

OCED Countries, Paris, OECD..

Sule E. I.K. (1996), “SMI in Nigeria: concepts Appraisal of Government Policies and

suggested Solutions to identified problems “CBN Economic and Financial

Sule, E.I.(1996),SMI in Nigeria; Concept appraisal of Government Policies suggested

solutions to identified problems. CBN Economic and Financial Review vol. 14,no

2.

Terungwa A.(2011). An empirical evaluation of SMIEIS in Nigeria. Journal of

Accounting and Taxation vol.3 (5) 79-90

Thanh. V.T., Narjoko, D. and Oum, S. (Eds.) (2009), Integrating Small and Medium

Enterprises (SMEs) into the More Integrated East Asia, ERIA Research Project No.

8, Jakarta. Available at http://www.eria.org/research/y2009-no8.html

The Bankers committee (2001), Code of Ethics and Professionalism in the Banking and

finance industry, the CIBN ,Lagos.

The Daily Sun Newspaper (2010), “The role of Banking in SME development,febuary 23,

pp47.”.

141

The Guardian Newspaper (2010), “Nigeria at 50: Special Report on Achievement

The Nigerian Accountant (2001), “IFAC Increases support for SMEs practices, April\June,

vol.44, no.2, pp36-38.

The Nigerian Bankers (2000) “CBN in-house Journal” July/Dec. edition.

Toyo, E. (2004), “Partial prescription for economic self-Reliance. (A Critique)”in Ukwu

I.U.(eds)”The spirit of self Reliance; Enugu Institute for Developmental Studies.

Udechukwu, F.N. (2003), |Small & medium Scale Equity Investment Schemes (SMIEIS)

Seminar paper from R&D Dept CBN, Lagos.

Udechukwu, F.N. (2003), “Survey of SMI and their potentials in Nigeria. Seminar paper

in SMIEIS, CBN, Lagos.

Udell G.F. (2004), “Asset Based finance, New York: The Commercial Finance

Association.

Uduebo, M.A. (1985), “The role of Monetary and Fiscal Policies in Industrial and

Agricultural Development in Nigeria” CBN Economic and Financial Review.

United Nations UNCITRAL Website: www.uncitral.org.

Usman, I. (2007), “Problems of SME In Nigeria And Solutions”. FBN Plc Economic Bi-

Annual Review.

Venkatarman, S. (2004), “Financing SSI: Problems and Prospects”. Ibadan: Oxford Vol.

23, No. 1.

Vos, E., Yeh, A.J.Y., Carter, S. and Tagg, S. (2007), “The Happy Story of Small Business

Financing”, Journal of Banking & Finance, 31, pp.2648-2672.

W.D. & Ollor, G.W. (2012 Dagogo). The effect of venture capital Financing on the

economic value added profile of Nigerian SMEs Retrieved on the 16th of March

from http://www.globib.com Washington D.C. USA.

Watson, T. and Wilson, N. (2002), “Small and Medium Size Enterprise Financing: a Note

on Some of the Empirical Implications of a Pecking Order”, Journal of Business

Finance & Accounting, 29(3) & (4) .

142

World Bank (2005), “Private Sector Development in Low Income Countries”

World bank 2002 Lithuania, Insolvency and Credit Right System, February

Worldbank Development Report 1992 – 2000.

www.cenbank.org/out/publicaton/dfd/2004/smi

Zuveskas, C. (2009), “Economic Development: An Introduction London. Macmillian Press

Ltd.

APPENDIX I

Faculty of Business Administration,

University of Nigeria,

143

Enugu Campus

12th July, 2014

Dear Respondent,

This questionnaire, being presented for your completion is purely for academic purpose in

partial fulfillment of the requirements for the award of Masters Degree in Accountancy of

the University of Nigeria.

The essence is to gather information relating to accessibility of credit to Small and

Medium Scale Enterprises SMEs in Nigeria with your company as a point of study.

I wish, therefore, that you answer these questions sincerely as the success of this work

largely depends on your willingness to do so.

As a matter of confidentiality, I need only your position in the office but not your identity.

Thanks.

Yours sincerely

144

Eneh, Nnenna Sylvia

PG/MSc/10/55146

SECTION A

Please tick () which ever applies to you.

(a) Sex: (b) Male (c) Female

Which category do you belong in your organization: (a) Junior staff (b) Senior

(c)Management Staff

What is your highest academic/Professional qualification:-

(a)WASC (b) HND (c)Bachelors Degree (d)MBA (e)MSC

(f)Others Specify ------------------------------------------------------

Registered SMEs member under: (a) CAC (b) MAN (c) CAC & MAN

(a)Age: 25-35years (b)36-45years (c)46-55years (d)Above 55years

GENERAL GUIDE

145

Please tick (√) as you deem appropriate

Key: Strongly Agree - SA

Agree - A

Neutral - N

Disagree - D

Strongly Disagree- SD

SECTION B

Does Government Policies affect SMEs in Nigeria?

1. There are general government policies that affect SMEs in Nigeria.

(a)SA (b) A (c) N (d) D (e)SD

2. There is a dedicated ministry of SME that facilitates SMEs operation:

(a)SA (b) A (c) N (d) D (e)SD

3. There is an agency (SMEDAN) that was set to oversee the operations of SMEs:

(a)SA (b) A (c) N (d) D (e)SD

4. Government set SMIEIS Fund to enable all operation of SMEs to be workable in term of

financing:

(a)SA (b) A (c) N (d) D (e)SD

146

5 .The establishment of Bank of Industry (BOI) has helped in the funding of SMEs in

Nigeria.

(a)SA (b) A (c) N (d) D (e)SD

6 . Government subsidizes capital for SME operations through its transfer agencies and

banks (BOI):

(a)SA (b) A (c) N (d) D (e)SD

7. The beneficiaries of SMIEIS fund is rated highly in terms of repayment:

(a)SA (b) A (c) N (d) D (e) SD

8. Government through CBN has in the recent past disbursed funds to SMEs.

(a)SA (b) A (c) N (d) D (e) SD

SECTION C

Is access to fund the greatest problem facing SMEs?

9. The only sources of fund for SMEs are commercial/merchant banks:

(a)SA (b) A (c) N (d) D (e) SD

10. The greatest problem facing SMEs is accessibility to credit facilities.

(a)SA (b) A (c) N (d) D (e) SD

11 . There are other sources of fund for SMEs which are cheaper e.g. the SMIEIS,

NERFUND etc:

(a)SA (b) A (c) N (d) D (e) SD

147

12. The first four greatest problems facing SMEs in the order of magnitude are: Access to

Credit/Fund, Management Structure, Lack of Infrastructures, and Environmental related

problems.

(a)SA (b) A (c) N (d) D (e) SD

13.The greatest problem facing SMEs is management structure:

(a)SA (b) A (c) N (d) D (e) SD

14. The greatest problem facing SMEs is lack of infrastructures:

(a)SA (b) A (c) N (d) D (e) SD

15. The greatest problems facing SMEs are: (i) Access to finance (ii) Management

problems.

(a)SA (b) A (c) N (d) D (e) SD

16. The greatest problems facing SMEs are (i) Finance (ii) Management Problem (iii) Lack

of infrastructure, e.g. roads, electricity:

(a)SA (b) A (c) N (d) D (e) SD

SECTION D:

To what extent do Tax incentives affected credit accessibility by SMEs?

17. Tax incentives enhance SMEs growth and survival.

(a)SA (b) A (c) N (d) D (e) SD

18. Which kinds of Tax incentives are available for SMEs; (thick the appropriate ones)

i. Minimum tax provisions

148

ii. Tax Holiday

iii. Self assessment provisions

iv. Others (specify)

19. SMEs do not make use of the available tax incentives to their utmost advantage.

(a)SA (b) A (c) N (d) D (e) SD

20. SSMEs do not employ experts /trained personnel so as to explore the available tax

advantages.

(a)SA (b) A (c) N (d) D (e) SD

21. Tax reliefs (tax holiday, minimum company tax, self assessment provisions) are

sources of encouragement from government to SMEs.

(a)SA (b) A (c) N (d) D (e) SD

22. SMEs do not access loan from financial institutions due to lack of adequate collaterals.

(a)SA (b) A (c) N (d) D (e) SD

23. The requirement for loan is beyond the reach of SMEs in Nigeria.

(a)SA (b) A (c) N (d) D (e) SD

24. Increased tax incentives would lead to better accessibility of credit by SMEs.

(a)SA (b) A (c) N (d) D (e) SD

SECTION E:

What extent does having collaterals affected credit facilities accessible by SMEs?

149

25. Collaterals are conditions for SMEs to access bank loans.

(a)SA (b) A (c) N (d) D (e) SD

26. Which kinds of collaterals are available for SMEs to access credit facilities? (Thick as

u deem corrects).

i. Landed properties.

ii. Buildings.

iii. Share certificates.

iv. Others (specify):

27. Most SMEs do not possess the required collaterals for accessing credit facilities from

the banks.

(a)SA (b) A (c) N (d) D (e) SD

28. Banks inability to shift grounds on collaterals makes it impossible for SMEs to access

the funds.

(a)SA (b) A (c) N (d) D (e) SD

SECTION F:

Does government approach international agencies to source fund for SMEs

financing?

29. International agencies fund SMEs through World Bank, ADB and IFC:

(a)SA (b) A (c) N (d) D (e) SD

30. Federal government has sought for financing through World Bank SME II loan:

150

(a)SA (b) A (c) N (d) D (e) SD

31. Agencies like UNDP has facilitated SMEs funding through federal government

interventions

(a)SA (b) A (c) N (d) D (e) SD

32. Programmses like JICA (Japan International Corporation Agency) are one of the

international agencies that have aided in entrepreneurial development in Nigeria.

(a)SA (b) A (c) N (d) D (e) SD

33.Banks are not willing to advance credit to SMEs due to lack of collateral and default in

repayment.

(a)SA (b) A (c) N (d) D (e) SD

34. Banks are not willing to advance credit to SMEs due to lack of poor accounting records

and bankable projects proposals.

(a)SA (b) A (c) N (d) D (e) SD

35. CBN are playing more roles to ensure that credits are advanced to SMEs.

(a)SA (b) A (c) N (d) D (e) SD

36. Banks charge higher interest rate than other SMEs scheme/government agencies e.g.

BOI and SMIEIS.

(a)SA (b) A (c) N (d) D (e) SD

37. Banks are mandated to set aside 10% profit before tax for funding of SMEs.

151

(a)SA (b) A (c) N (d) D (e) SD

SECTION G:

Procedures and protocols observed by SMEs during loan assessment.

38. How easy is the process of assessing credit facilities from the bank?

(a) Easy (b) Very easy (c) Tedious (d)Very tedious

39. What is the length of time taken to assess and obtain credit facilities from the bank?

(a)Within 1 months (b)Within 2 months (c) Within 3 months (d) 4 to 6

months

40. How easy do SMEs operators find it to get sureties and guarantors during loan

assessment?

(a) Easy (b) Very easy (c) Tedious (d)Very tedious

41. The time for the repayment of the loans is too short for SMEs to cope with.

(a)SA (b) A (c) N (d) D (e) SD

42. High interest rates target by banks hinders SMEs credit accessibility.

(a)SA (b) A (c) N (d) D (e) SD

43. The time lag between the repayment of one loan and the collection of another one is

usually too long.

(a)SA (b) A (c) N (d) D (e) SD

152

APPENDIX II

Sex

Frequenc

y

Percent Valid

Percent

Cumulative

Percent

Valid

Male 240 67.8 67.8 67.8

Female 114 32.2 32.2 100.0

Total 354 100.0 100.0

Belonging category in an organization

Frequenc

y

Percent Valid

Percent

Cumulative

Percent

Valid

Junior staff 18 5.1 5.1 5.1

Senior 265 74.9 74.9 79.9

Management

staff 71 20.1 20.1 100.0

Total 354 100.0 100.0

153

Highest Educational Qualification

Frequenc

y

Percent Valid

Percent

Cumulative

Percent

Valid

WASC 9 2.5 2.5 2.5

HND 80 22.6 22.6 25.1

Bachelors

Degree 149 42.1 42.1 67.2

MBA 106 29.9 29.9 97.2

MSC 7 2.0 2.0 99.2

Others 3 .8 .8 100.0

Total 354 100.0 100.0

Registered SMEs member card

Frequenc

y

Percent Valid

Percent

Cumulative

Percent

Valid

CAC 55 15.5 15.5 15.5

MAN 96 27.1 27.1 42.7

CAC and

MAN 203 57.3 57.3 100.0

Total 354 100.0 100.0

Age

Frequenc

y

Percent Valid

Percent

Cumulative

Percent

Valid

25-35 years 35 9.9 9.9 9.9

36-45 years 113 31.9 31.9 41.8

46-55 years 178 50.3 50.3 92.1

154

Above 55

years 28 7.9 7.9 100.0

Total 354 100.0 100.0

B1

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 3 .8 .8 .8

Neutral 4 1.1 1.1 2.0

Agree 106 29.9 29.9 31.9

Strongly Agree 241 68.1 68.1 100.0

Total 354 100.0 100.0

B2

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 2 .6 .6 .6

Neutral 6 1.7 1.7 2.3

Agree 157 44.4 44.4 46.6

Strongly Agree 189 53.4 53.4 100.0

Total 354 100.0 100.0

155

B3

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 3 .8 .8 .8

Neutral 6 1.7 1.7 2.5

Agree 150 42.4 42.4 44.9

Strongly Agree 195 55.1 55.1 100.0

Total 354 100.0 100.0

B4

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 1 .3 .3 .3

Disagree 1 .3 .3 .6

Neutral 14 4.0 4.0 4.5

Agree 160 45.2 45.2 49.7

Strongly Agree 178 50.3 50.3 100.0

Total 354 100.0 100.0

B5

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 1 .3 .3 .3

Disagree 1 .3 .3 .6

Neutral 5 1.4 1.4 2.0

Agree 137 38.7 38.7 40.7

Strongly Agree 210 59.3 59.3 100.0

156

Total 354 100.0 100.0

B6

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 6 1.7 1.7 1.7

Disagree 5 1.4 1.4 3.1

Neutral 3 .8 .8 4.0

Agree 260 73.4 73.4 77.4

Strongly Agree 80 22.6 22.6 100.0

Total 354 100.0 100.0

B7

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 158 44.6 44.6 44.6

Disagree 105 29.7 29.7 74.3

Neutral 17 4.8 4.8 79.1

Agree 52 14.7 14.7 93.8

Strongly Agree 22 6.2 6.2 100.0

Total 354 100.0 100.0

B8

Frequency Percent Valid Percent Cumulative

Percent

Valid Strongly disagree 9 2.5 2.5 2.5

Disagree 12 3.4 3.4 5.9

157

Neutral 20 5.6 5.6 11.6

Agree 216 61.0 61.0 72.6

Strongly Agree 97 27.4 27.4 100.0

Total 354 100.0 100.0

C9

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 183 51.7 51.7 51.7

Disagree 5 1.4 1.4 53.1

Neutral 70 19.8 19.8 72.9

Agree 60 16.9 16.9 89.8

Strongly Agree 36 10.2 10.2 100.0

Total 354 100.0 100.0

C10

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 7 2.0 2.0 2.0

Disagree 1 .3 .3 2.3

Neutral 23 6.5 6.5 8.8

Agree 164 46.3 46.3 55.1

Strongly Agree 159 44.9 44.9 100.0

Total 354 100.0 100.0

C11

158

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 7 2.0 2.0 2.0

Disagree 20 5.6 5.6 7.6

Neutral 6 1.7 1.7 9.3

Agree 230 65.0 65.0 74.3

Strongly Agree 91 25.7 25.7 100.0

Total 354 100.0 100.0

C12

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 5 1.4 1.4 1.4

Disagree 7 2.0 2.0 3.4

Neutral 6 1.7 1.7 5.1

Agree 184 52.0 52.0 57.1

Strongly Agree 152 42.9 42.9 100.0

Total 354 100.0 100.0

C13

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 108 30.5 30.5 30.5

Disagree 195 55.1 55.1 85.6

Neutral 3 .8 .8 86.4

159

Agree 42 11.9 11.9 98.3

Strongly Agree 6 1.7 1.7 100.0

Total 354 100.0 100.0

C14

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 170 48.0 48.0 48.0

Disagree 133 37.6 37.6 85.6

Neutral 9 2.5 2.5 88.1

Agree 33 9.3 9.3 97.5

Strongly Agree 9 2.5 2.5 100.0

Total 354 100.0 100.0

C15

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 110 31.1 31.1 31.1

Disagree 123 34.7 34.7 65.8

Neutral 23 6.5 6.5 72.3

Agree 66 18.6 18.6 91.0

Strongly Agree 32 9.0 9.0 100.0

Total 354 100.0 100.0

160

C16

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 36 10.2 10.2 10.2

Disagree 150 42.4 42.4 52.5

Neutral 13 3.7 3.7 56.2

Agree 120 33.9 33.9 90.1

Strongly Agree 35 9.9 9.9 100.0

Total 354 100.0 100.0

D17

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 8 2.3 2.3 2.3

Neutral 16 4.5 4.5 6.8

Agree 295 83.3 83.3 90.1

Strongly Agree 35 9.9 9.9 100.0

Total 354 100.0 100.0

D18i

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 276 78.0 78.0 78.0

No 78 22.0 22.0 100.0

Total 354 100.0 100.0

161

D18ii

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 235 66.4 66.4 66.4

No 119 33.6 33.6 100.0

Total 354 100.0 100.0

D18iii

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 238 67.2 67.2 67.2

No 116 32.8 32.8 100.0

Total 354 100.0 100.0

D18iv

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 15 4.2 4.2 4.2

No 339 95.8 95.8 100.0

Total 354 100.0 100.0

D19

162

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 1 .3 .3 .3

Disagree 7 2.0 2.0 2.3

Neutral 8 2.3 2.3 4.5

Agree 229 64.7 64.7 69.2

Strongly Agree 109 30.8 30.8 100.0

Total 354 100.0 100.0

D20

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 2 .6 .6 .6

Neutral 9 2.5 2.5 3.1

Agree 271 76.6 76.6 79.7

Strongly Agree 72 20.3 20.3 100.0

Total 354 100.0 100.0

D21

Frequency Percent Valid Percent Cumulative

Percent

Valid Disagree 1 .3 .3 .3

163

Neutral 4 1.1 1.1 1.4

Agree 289 81.6 81.6 83.1

Strongly Agree 60 16.9 16.9 100.0

Total 354 100.0 100.0

D22

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 5 1.4 1.4 1.4

Disagree 6 1.7 1.7 3.1

Neutral 6 1.7 1.7 4.8

Agree 231 65.3 65.3 70.1

Strongly Agree 106 29.9 29.9 100.0

Total 354 100.0 100.0

D23

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 87 24.6 24.6 24.6

Disagree 144 40.7 40.7 65.3

Neutral 16 4.5 4.5 69.8

Agree 79 22.3 22.3 92.1

Strongly Agree 28 7.9 7.9 100.0

164

Total 354 100.0 100.0

D24

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 2 .6 .6 .6

Disagree 7 2.0 2.0 2.5

Neutral 12 3.4 3.4 5.9

Agree 241 68.1 68.1 74.0

Strongly Agree 92 26.0 26.0 100.0

Total 354 100.0 100.0

E25

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 6 1.7 1.7 1.7

Neutral 12 3.4 3.4 5.1

Agree 151 42.7 42.7 47.7

Strongly Agree 185 52.3 52.3 100.0

Total 354 100.0 100.0

E26i

Frequency Percent Valid Percent Cumulative

Percent

165

Valid

Yes 349 98.6 98.6 98.6

No 5 1.4 1.4 100.0

Total 354 100.0 100.0

E26ii

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 329 92.9 92.9 92.9

No 25 7.1 7.1 100.0

Total 354 100.0 100.0

E26iii

Frequency Percent Valid Percent Cumulative

Percent

Valid

Yes 138 39.0 39.0 39.0

No 216 61.0 61.0 100.0

Total 354 100.0 100.0

E26iv

Frequency Percent Valid Percent Cumulative

Percent

Valid Yes 31 8.8 8.8 8.8

166

No 322 91.0 91.0 99.7

3.00 1 .3 .3 100.0

Total 354 100.0 100.0

E27

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 7 2.0 2.0 2.0

Neutral 4 1.1 1.1 3.1

Agree 233 65.8 65.8 68.9

Strongly Agree 110 31.1 31.1 100.0

Total 354 100.0 100.0

167

E28

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 1 .3 .3 .3

Neutral 8 2.3 2.3 2.5

Agree 220 62.1 62.1 64.7

Strongly Agree 125 35.3 35.3 100.0

Total 354 100.0 100.0

F29

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 1 .3 .3 .3

Disagree 9 2.5 2.5 2.8

Neutral 8 2.3 2.3 5.1

Agree 221 62.4 62.4 67.5

Strongly Agree 115 32.5 32.5 100.0

Total 354 100.0 100.0

F30

168

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 9 2.5 2.5 2.5

Neutral 8 2.3 2.3 4.8

Agree 214 60.5 60.5 65.3

Strongly Agree 123 34.7 34.7 100.0

Total 354 100.0 100.0

F31

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 2 .6 .6 .6

Disagree 9 2.5 2.5 3.1

Neutral 7 2.0 2.0 5.1

Agree 228 64.4 64.4 69.5

Strongly Agree 108 30.5 30.5 100.0

Total 354 100.0 100.0

F32

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 4 1.1 1.1 1.1

Disagree 42 11.9 11.9 13.0

Neutral 15 4.2 4.2 17.2

169

Agree 206 58.2 58.2 75.4

Strongly Agree 87 24.6 24.6 100.0

Total 354 100.0 100.0

F33

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 1 .3 .3 .3

Disagree 3 .8 .8 1.1

Neutral 27 7.6 7.6 8.8

Agree 178 50.3 50.3 59.0

Strongly Agree 145 41.0 41.0 100.0

Total 354 100.0 100.0

F34

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 41 11.6 11.6 11.6

Disagree 8 2.3 2.3 13.8

Neutral 15 4.2 4.2 18.1

Agree 158 44.6 44.6 62.7

Strongly Agree 132 37.3 37.3 100.0

Total 354 100.0 100.0

170

F35

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 17 4.8 4.8 4.8

Disagree 4 1.1 1.1 5.9

Neutral 7 2.0 2.0 7.9

Agree 208 58.8 58.8 66.7

Strongly Agree 118 33.3 33.3 100.0

Total 354 100.0 100.0

F36

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 3 .8 .8 .8

Neutral 22 6.2 6.2 7.1

Agree 145 41.0 41.0 48.0

Strongly Agree 184 52.0 52.0 100.0

Total 354 100.0 100.0

F37

Frequency Percent Valid Percent Cumulative

Percent

Valid

Disagree 1 .3 .3 .3

Neutral 27 7.6 7.6 7.9

Agree 128 36.2 36.2 44.1

Strongly Agree 198 55.9 55.9 100.0

171

Total 354 100.0 100.0

G38

Frequency Percent Valid Percent Cumulative

Percent

Valid

Easy 6 1.7 1.7 1.7

Very easy 10 2.8 2.8 4.5

Tedious 187 52.8 52.8 57.3

Very tedious 151 42.7 42.7 100.0

Total 354 100.0 100.0

G39

Frequency Percent Valid Percent Cumulative

Percent

Valid

Within 1 month 28 7.9 7.9 7.9

Within 2 months 12 3.4 3.4 11.3

Within 3 months 116 32.8 32.8 44.1

4-6 months 198 55.9 55.9 100.0

Total 354 100.0 100.0

172

G40

Frequency Percent Valid Percent Cumulative

Percent

Valid

Easy 9 2.5 2.5 2.5

Very easy 5 1.4 1.4 4.0

Tedious 205 57.9 57.9 61.9

Very tedious 135 38.1 38.1 100.0

Total 354 100.0 100.0

G41

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 82 23.2 23.2 23.2

Disagree 88 24.9 24.9 48.0

Neutral 100 28.2 28.2 76.3

Agree 53 15.0 15.0 91.2

Strongly Agree 31 8.8 8.8 100.0

Total 354 100.0 100.0

G42

Frequency Percent Valid Percent Cumulative

Percent

Valid Strongly disagree 6 1.7 1.7 1.7

173

Disagree 10 2.8 2.8 4.5

Neutral 10 2.8 2.8 7.3

Agree 149 42.1 42.1 49.4

Strongly Agree 179 50.6 50.6 100.0

Total 354 100.0 100.0

G43

Frequency Percent Valid Percent Cumulative

Percent

Valid

Strongly disagree 90 25.4 25.4 25.4

Disagree 123 34.7 34.7 60.2

Neutral 78 22.0 22.0 82.2

Agree 31 8.8 8.8 91.0

Strongly Agree 32 9.0 9.0 100.0

Total 354 100.0 100.0

Descriptive Statistics

N Minimu

m

Maximu

m

Mean Std.

Deviation

B1 354 1.00 5.00 4.6441 .59543

B2 354 1.00 5.00 4.5000 .59388

B3 354 1.00 5.00 4.5085 .62178

174

B4 354 1.00 5.00 4.4492 .61516

B5 354 1.00 5.00 4.5650 .57078

B6 354 1.00 5.00 4.1384 .65234

B7 354 1.00 5.00 2.0819 1.28030

B8 354 1.00 5.00 4.0734 .83155

C9 354 1.00 5.00 2.3249 1.48614

C10 354 1.00 5.00 4.3192 .77666

C11 354 1.00 5.00 4.0678 .82175

C12 354 1.00 5.00 4.3305 .73814

C13 354 1.00 5.00 1.9915 .97122

C14 354 1.00 5.00 1.8079 1.03609

C15 354 1.00 5.00 2.3983 1.33470

C16 354 1.00 5.00 2.9096 1.24948

Valid N

(listwise) 354

Descriptive Statistics

N Minimu

m

Maximu

m

Mean Std.

Deviation

D17 354 2.00 5.00 4.0085 .48483

D19 354 1.00 5.00 4.2373 .61628

D20 354 2.00 5.00 4.1667 .47357

D21 354 2.00 5.00 4.1525 .41146

D22 354 1.00 5.00 4.2062 .68564

D23 354 1.00 5.00 2.4831 1.29107

D24 354 1.00 5.00 4.1695 .62938

E25 354 2.00 5.00 4.4548 .64702

E26i 354 1.00 2.00 1.0141 .11817

E27 354 2.00 5.00 4.2599 .57839

E28 354 2.00 5.00 4.3249 .53129

F29 354 1.00 5.00 4.2429 .64555

175

F30 354 2.00 5.00 4.2740 .63071

F31 354 1.00 5.00 4.2175 .65674

F32 354 1.00 5.00 3.9322 .92857

F33 354 1.00 5.00 4.3079 .67206

F34 354 1.00 5.00 3.9379 1.24440

F35 354 1.00 5.00 4.1469 .90068

F36 354 1.00 5.00 4.4322 .68755

F37 354 2.00 5.00 4.4774 .64820

G38 354 1.00 4.00 3.3644 .62523

G39 354 1.00 4.00 3.3672 .88144

G40 354 1.00 4.00 3.3164 .63103

G41 354 1.00 5.00 2.6130 1.23681

G42 354 1.00 5.00 4.3701 .81509

G43 354 1.00 5.00 2.4124 1.21346

Valid N

(listwise) 354

176

Reliability

Scale: ALL VARIABLES

Case Processing Summary

N %

Cases

Valid 30 100.0

Excludeda 0 .0

Total 30 100.0

a. Listwise deletion based on all variables in

the procedure.

Reliability Statistics

Cronbach's

Alpha

N of Items

.760 49

177

APPENDIX III

Number of Small and Medium Enterprises by State

STATE Employment Size Band

10-49 50-199 TOTAL

Number Percentage Number Percentage

Abia 526 98.62 7 1.38

534

Adamawa 235 95.58 11 4.42

245

178

Akwa Ibom 275 87.48 39 12.52

315

Anambra 656 89.01 81 10.99

737

Bauchi 497 91.02 49 8.98

545

Bayelsa 134 100.00 0 0.00

134

Benue 357 95.63 16 4.37

374

Borno 131 77.95 37 22.05

168

Cross River 318 87.02 47 12.98

365

Delta 578 94.64 33 5.36

608

Ebonyi 232 94.99 12 5.01

244

Edo 899 96.83 29 3.17

929

Ekiti 280 98.41 5 1.59

285

179

Enugu 402 93.03 30 6.97

432

Gombe 225 88.02 31 11.98

255

Imo 534 92.97 40 7.03

574

Jigawa 217 93.81 14 6.19

231

Kaduna 1,137 88.72 145 11.28

1,282

Kano 1,740 96.21 69 3.79

1,808

Katsina 464 86.86 70 13.14

535

Kebbi 221 95.13 11 4.87

232

Kogi 328 96.67 11 3.33

340

Kwara 415 93.66 28 6.34

443

Lagos 4,146 91.43 389 8.57

4,535

180

Nassarawa 387 92.43 32 7.57

418

Niger 433 90.48 46 9.52

478

Ogun 506 92.73 40 7.27

546

Ondo 596 97.13 18 2.87

614

Osun 100 100.00 0 0.00

100

Oyo 1,300 93.26 94 6.74

1,394

Plateau 613 92.56 49 7.44

663

Rivers 662 91.65 60 8.35

723

Sokoto 562 96.68 19 3.32

581

Taraba 242 97.80 5 2.20

247

Yobe 150 96.50 5 3.50

156

181

Zamfara 341 100.00 0 0.00

341

FCT 427 84.17 80 15.83

507

Total 21,264 92.78 1,654 7.22 22,918

Source: SMEDAN/NBS (2010)

APPENDIX IV

10-49 50-199

182

SECTOR Number Percentage Number Parentage TOTAL

Agriculture, Hunting

Forestry and Fishing

696 92.77 54 7.23 750

Mining & Quarrying 134 80.43 33 19.57 167

Manufacturing 5939 89.28 713 10.72 6652

Building and

Construction

194 81.13 45 18.87 239

Wholesale and Retail

Trade; Repair of Motor

Vehicles and Household

Goods

3,916

96.90

125

3.10

4,041

Hotels and Restaurants 2,088 94.52 121 5.48 2,209

Transport, storage and

Communication

680 83.89 131 16.11 811

Financial Intermediation

2166

93.22 158 6.78 2322

Real Estate, Renting and

Business Activities

908 94.62 52 5.38 960

Education 1,508 93.75 101 6.25 1,608

Health and Social Work 2,542 95.75 113 4.25 2,654

Other Community, Social

and Personal Service

Activities

495 97.98 10 2.02 505

Total 21,264 92.78 1,654 7.22 22,918

Source: SMEDAN/NBS (2010)

183

APPENDIX V

State

Ag

ric,

Hu

nti

ng

,

Fo

rest

ry &

Fis

hin

g

Min

ing

&

Qu

arr

yin

g

Ma

nu

fact

uri

ng

Bu

ild

ing

&

Co

nst

ruct

ion

Wh

ole

sale

&

Ret

ail

Tra

de,

Rep

air

of

Mo

tor

Veh

icle

an

d

Ho

use

ho

ld

Ho

tels

an

d

Res

tau

ran

ts

Tra

nsp

ort

,

Sto

rag

e &

Co

mm

un

ica

tio

n

Fin

an

cia

l

Inte

rmed

iati

on

Rea

l E

sta

te,

Ren

tin

g &

Bu

sin

ess

Ed

uca

tio

n

Hea

lth

& S

oci

al

Wo

rk

Oth

er

Co

mm

un

ity

,

So

cia

l &

Per

son

al

Ser

vic

e

Act

ivit

ies

To

tal

Abia 41 2 177 5 162 26 18 0 31 34 50 10 553

Adamawa 18 4 41 7 22 37 0 20 21 17 50 10 245

Akwa Ibom 23 0 68 2 37 32 22 39 21 17 50 5 315

Anambra 27 0 251 0 88 83 27 39 24 67 188 15 791

Bauchi 14 4 81 5 103 79 54 59 7 134 50 26 615

Bayelsa 0 0 14 5 7 37 11 0 0 50 0 10 134

Benue 9 0 81 2 74 37 44 39 21 84 0 0 390

Borno 5 0 61 2 29 11 0 0 3 17 25 15 168

Cross River 9 5 81 2 59 63 11 39 10 17 88 10 395

Delta 41 0 109 2 74 79 16 158 14 50 100 5 647

Ebonyi 14 13 75 0 44 21 16 20 10 34 0 41 287

Edo 14 56 224 9 125 126 49 158 38 17 138 20 973

Ekiti 14 0 95 0 59 11 0 20 7 50 25 5 285

Enugu 50 2 34 11 88 47 27 59 21 34 75 0 448

Gombe 32 24 54 9 74 16 5 20 17 0 0 5 255

Imo 27 2 88 5 96 47 27 79 52 34 125 10 591

Jigawa 9 0 102 5 15 21 16 0 0 34 25 5 231

Kaduna 45 2 272 29 287 116 33 177 76 34 200 28 1,295

Kano 45 9 978 11 427 121 60 0 45 17 50 66 1,829

Katsina 32 0 143 7 132 47 71 20 17 67 0 10 546

Kebbi 27 0 68 2 81 37 0 0 7 0 25 0 247

Kogi 18 0 88 0 22 53 11 79 17 0 63 0 350

Kwara 5 0 68 5 59 26 33 177 24 50 0 0 446

Lagos 72 9 1,195 36 545 295 71 335 200 452 526 126 3,862

Nassarawa 23 5 143 2 118 42 0 39 10 0 50 0 432

Niger 5 0 197 0 66 79 27 20 14 67 13 5 492

Ogun 18 2 122 2 81 58 5 98 14 34 113 46 593

Ondo 5 4 149 7 140 68 11 98 31 0 113 20 646

Osun 0 0 68 0 22 0 0 0 10 0 0 0 100

184

Oyo 32 7 272 20 294 121 54 177 110 117 200 61 1,467

Plateau 0 16 20 11 155 142 5 39 28 50 175 20 663

Rivers 5 0 156 18 140 95 27 138 10 34 100 15 738

Sokoto 18 4 170 11 191 37 11 59 10 34 50 5 600

Taraba 14 0 75 0 22 16 5 20 0 34 63 0 247

Yobe 14 0 34 0 22 26 16 39 3 0 0 5 160

Zamfara 45 0 81 5 169 11 27 20 10 0 0 0 368

FCT 5 0 75 2 81 132 27 39 55 34 38 26 512

Total 768 168 6,009 239 4,210 2,272 838 2,323 987 1,709 2,767 627 22,918

Source: SMEDAN/NBS (2010)

APPENDIX VI

STATE MANUFACTURING SECTOR

Anambra 251

Ebonyi 75

Enugu 34

Total 360

Source: SMEDAN/NBS (2010)

185

APPENDIX VIII

COMPANIES IN ENUGU AND THEIR STAFF STRENGHT

COMPANY STAFF STRENGHT SENIOR STAFF

OTHERS

Juhel Oil Nigeria Limited 135 8 127

Nbl Plc 9th Mile 203 23 180

Hardis & Dromedas Ltd 198 11 175

Sharon Paint Ltd, Udi 85 6 79

Pillar Pole Ltd Emene 71 4 67

Loc Metals & Minerals Ind. Ltd Emene 51 4 48

Dunon Furniture Ind. Ltd 32 4 28

186

Innoson Nig. Ltd, Emene 178 11

167

Fraser Driving International Ltd 10 3

7

Emenite Limited 155 14 141

Innoson Vehicle Nig. Limited Emene 132 8

126

DVS Plastic Limited Emene 68 4 64

Sunchi Integrated Foams Limited Emene 49 4 45

Andy Young Nig. Ltd, 9th Mile 24 3 21

Nalin Paint Nig. Ltd 62 ` 4 58

Alo Aluminum Mfg. Ltd 34 4 30

East Chase Aluminum Ltd, 9th Mile 55 6 49

Dezien Nig. Ltd 33 4 29

Anamco Ltd 150 13 135

Cospam Nig. Ltd Nsukka 28 3 25

Baslon Agro Allied Ind. Ltd 47 4 43

Basmic Ventures Nig. Ltd Enugu 80 10 70

Bons Food Ltd, Enugu 63 8 55

Brifina Ltd 50 5 45

Ginpat Alu Product Ltd. 38 4 34

L. L. Nwodike & Sons Ltd 42 5 47

Youn J. Nig. Ltd 22 3 19

Juhel Pham Ind. Ltd. 142 8 32

187

3,537 179

3358

COMPANIES IN EBONYI STATE AND THEIR STAFF STRENGHT

COMPANY STAFF STRENGHT SENIOR STAFF

OTHERS

Seacost Nig. Ltd Abakaliki 91 6 85

Edon Alu Mfg. Co. Ltd 62 4 58

Crystal Chemical Nig. Ltd 48 4 44

Ozalla Plastic Enterprise 87 6 81

Stena Mills Ltd 45 4 41

Offali Rural Industries Ltd, Ezillo 94 4 90

AESF Products Abakaliki 62 5 57

Niger Cement Co. Ltd. 102 8 92

Elephant Chemicals Ind. Ltd 68 6 62

Emos Best Ind. Ltd 42 4 38

188

Emy Holdings Nig. Ltd 38 3 35

F.A. Ike & sons Ltd 35 3 22

Gauje Pharm & Lab. Ltd. 77 6 71

Gloria –Gloria Pharm Ltd 67 5

62

Group Enterprise Nig. Ltd. 44 4 40

Damex Paint Nig. Ltd 71 5 66

Danco Mannyon Ind. Ltd 55 4 51

Denson Paper Mills Ltd 88 7 71

Dewaco Ind. International Ltd 58 5 53

Dezern Nig. Ltd 48 4 44

Don Martins W/A. Ltd 23 3 20

Dover Ind Ltd 65 6 59

Ogenna Rice mill Ltd 40 4 36

Tempo Mills Ltd 38 4 34

Sambros Mill Ltd 52 6 46

1,394 120 1274

189

COMPANIES IN ANAMBRA STATE AND THEIR STAFF STRENGHT

COMPANY STAFF STRENGHT SENIOR STAFF OTHERS

Pokobros Group W.A. Onitsha 105 11 94

A-Z Petroleum product 80 6 74

Polly Foam Nig. Ltd Onitsha 53 5 48

Zubec International Limited Onitsha 81 7 74

Kotech Group of company 124 12 112

PMS Electrical Co Nnewi 45 4

41

Ejenma Industrial Ltd Onitsha 44 3 41

A-C Drugs Nig Ltd 73 6 64

Tummy tummy Foods Nig. Ltd Nnewi 110 7 103

Unity Foam Ind. Ltd Onitsha 96 5 91

Tourist Garden hotels (TGHL) Awka 34 3 31

Cutix Cables Ltd Nnewi 15 3 13

Krisoral & Co. Ltd Onitsha 32 3 29

Charmax Pharma Ind. Ltd Obosi 88 6 82

Deco Foam & chemical Ind. Ltd Onitsha 112 6 106

190

DVS Plastic Ltd Nnewi 54 5 49

Jimex Ind. (Nig) Ltd, Nnewi 38 3 35

Peters & Damels Ind Ltd Onitsha 18 3 15

Dozzy Oil & Gas Ltd Onitsha 35 3 32

Emic Foam & allied Ind. Obosi 89 7 82

R.O. Ozigbo & company Ltd, Nnewi 43 3 40

Life breweries Ltd Onitsha 198 11 87

Nigeria Mineral Water Onitsha 165 10 150

Jezco Oil & Chemical Ind. Onitsha 63 5 58

Rico Pharma Nig. Ltd, Onitsha 81 6 75

Nemel Pharma Ltd Onitsha 101 7

97

Sidom Pharma Nig Ltd 98 5

93

Whiz Oil Ltd Awka 68 4

64

Unity Foam Nig. Ltd Onitsha 102 5

97

Heco Foam Nig. Ltd 84 4

80

191

Ibeto Ind. Ltd, Nnewi 73 4

69

Innoson Vehicle Mfg. Nnewi 158 8

150

Onitsha Alu Mfg. Ltd 66 5

61

Louis Carta Ind ltd, Nnewi 96 4

92

Ibeto Petro Chemical Ltd, Nnewi 121 7

107

Emic Foam Nig. Ltd Nnewi 78 5

73

Sidom Pharma Ind. Ltd. Onitsha 89 4

85

Safanaco Technical Co. Ltd 39 4

35

Busy bee Pharm Ind. Ltd 76 5

71

Citizens chemical Ind. Nig. Ltd 103 6

97

Jonz Mfg. Co Ltd, Nnewi 67 4

63

Clark Pharma Co. Ltd 77 5

72

192

Ngobros & Co Nig. Ltd 38 3

35

Innoson Tyres & tube Nnewi Co. Ltd 163 11 152

Adswitech Plc Nnewi 51 4 47

Ages Ind Ltd 49 5 44

ALF Williams Ind Ltd 28 3 25

Alliance International Ltd 108 6

102

Allied Steel Ind. Ltd 66 5 61

Alpha Paper mill ltd 58 4 54

Megafu Ltd 28 3 25

Anambra Motor Mfg. Ltd 94 4 90

A.N. Ejeagwu & Sons Ltd 24 3 21

Ano Plastic & Metal Ind. Ltd 55 5 50

Anuniru Alum Mfg. Co. Ltd 91 6 85

Astra metals Ind. Ltd 60 5 75

Astronauts Ventures Ltd, Nnewi 85 5 80

Atuchukwu Chem Ind. Ltd 77 4 73

Auskoye Ind. Nig. Ltd. 84 6 78

Austin Vic Ind. Nig. Ltd 53 5 48

Austin Vic Ind. Limited 47 3 44

Awutolo Inds. Ltd. 31 3 28

193

Basico Ind. & Cycle Mfg. Ltd, Nnewi 49 4 45

Bekks International co. ltd 189 11 178

Bengal Products Ltd. 68 5 63

Benmak & Cables Ltd Nnewi 74 4 70

Bentraco & Associates Ltd. 34 3 31

Best Alu Mfg. Ltd. Nnewi 42 4 38

Best Rose Ind. Co. Limited 26 3 23

Beta Cosmetics Mfg. Ltd 93 7 87

Bonanza Ind. Co. Nig. Ltd. 64 5 59

Bomface U. Onyenyiri & Co. Ltd 29 3 25

Bornatine Venture Nig. Ltd 57 3 54

Brollo Nig. Ltd 38 4 34

Brollo Pipes & profiles Ind. Ltd 43 5 35

Bulger Pharma Ltd, Nnewi 77 6 71

Bomface U. Onyenyiri & Co Ltd 29 3 26

Byco Pharma & Chem Ltd 111 7

102

Caprisage Export World & Fur 81 5 76

Citizens Chemical Ind. Nig. 48 4 44

GCM Onitsha 98 4 94

194

Sunrise floor Mills Ltd 123 10 103

Whiz Product Nig. Ltd 73 5 68

C.C. Umeji Agro Allied Co. Ltd 33 3 30

Ceadogal International W/A Ltd 64 5 59

Ceenek Pharm product Ltd 86 6 80

Cento International Nig. Ltd 38 4 34

Carlie Mcmok Nig. Ltd 29 3 25

Charlou Ind. Ltd 34 3 31

Cahrity Foam Ind. Nig. Ltd 88 4 84

Charmax Pharm Ind. Ltd 73 6 67

Chi-du-ben Ind. Ltd 29 3 36

Chikaton Mfg. Ind. Ltd 36 3 33

Criscord Ind. Ltd 63 4 59

Christomex Ind. Ltd 42 5 37

Cinnamon Drugs Ltd 58 6 52

Ciona International Nig. Ltd. 44 4 40

Chinyelugo Motor Nig. Ltd, Awka 38 4 34

195

City Biscuit Mfg co. Ltd 79 8 71

Clark Pharm Co. Ltd 80 5 75

Cle-Ike Ventures Ltd 34 3 81

Clemco Plastic Ltd 62 3 59

Cumax Ind. Ltd. 44 4 40

Confidence Product & Services Ltd 37 4 33

Crown Lacquer Nig. Ltd. 54 3 51

Curtix Jas Ind. Ltd. 28 3 25

Delta Flour Nig. Ltd. 77 6 71

Diamond Breweries Ltd 172 9 163

Dol Medlab Nig. Ltd 21 3 19

Dozzy Tiphan Ind. Ltd. 62 4 58

Dozzy Oil & Gas Co. Ltd. 48 5 33

Dozzy Plastic Nig. Ltd 81 5 76

Drag On Chem. Ind. Ltd 28 3 25

Dueman chem. Ind. Ltd 34 3 31

E.A. Agro Oil Ind. Ltd 46 4 42

196

E. Amobi Mfg. co. Ltd. 36 3 33

Eastern Distillers & co. ltd. 28 3 25

Ebele Journey Cycle Ltd 55 5 50

Ediso Auto Ind. Nig. Ltd 60 5 55

Edleoseka Ind. Ltd 78 4 74

Ehar Adrind Nig. Ltd 52 3 49

Ekene dili Chukwu Steel Struct. Ltd 32 3 29

Ekene Dilichukwu Ind. Co. ltd 62 5 57

Elephant Chem Ind. Ltd. 48 4 44

Elkoyz Nig. Ltd 39 3 36

Elostar Ind. Ltd 50 4 46

Emba Painting & Pub. Ltd 37 3 34

Emco International Nig. Ltd 38 3 35

Emos best Ind. Ltd 62 5 57

Emy Holding Nig. Ltd 74 5 69

Encristo Nig. Ltd 38 3 35

Envoy Oil Ind. Ltd. 25 3 22

Estco Ind. Ltd. 43 3 40

E.U. Best Ind. Nig. Ltd 33 3 30

197

Forward Shoe Mfg. Co. Ltd 45 3 42

Euco Ind. Ltd 28 3 25

Evepon Nig. Ltd 51 4 47

Excellent Lamp/Globe Mfg. ltd 49 4 45

Ejinwa Plastic Ind. Ind. Ltd 74 6 68

Ezenwata Chemical Industry Ltd 28 3 25

Eziobi Motor Nig. Ltd 36 3 33

Fabro Trading & Ind. Nig. Ltd 49 3 46

Fabino Ind. Ltd 62 6 54

F.A. Ike & Sons Ltd 38 3 35

Fenok Ind. Ltd. 17 3 14

Fertcho Ind. Ltd 20 3 17

Fezel Ind. Nig. Ltd 45 4 41

Fidelity Enterprises & co. Ltd 54 4 50

Finoplastic Ind. Ltd 52 4 48

Kenechris Property & Agric C;. Ltd 44 3 41

Kingsye Pgarm Nig. Ltd 48 4 44

Lucky Star Ind. Ltd 31 3 28

Man Plastics Ind. Ltd. 26 2 23

198

Map Industrial Co-operations Ltd 53 6 47

Marcity Chemicals Ind. Ltd. 45 4 41

Markson Chemical Ind. Ltd 48 4 44

Marta Inds. Nig. Ltd 39 5 34

Mar Vent. Nig. Ltd 60 6 54

Master Chem. Inds. Ltd 81 7 74

Matay Nig. Ltd. 76 5 71

Mayo Paper Mill Ltd 71 5 66

Mecury Foam Ind. Ltd. 73 4 69

Michelle Laboratories Ltd 28 3 25

Mikson Ind. Ltd 39 4 35

Millenum Ind. Ltd 41 4 37

Mocobros Allied Ind. Ltd 52 4 48

Munich Inds. Ltd. 18 3 15

Naco Motors Ltd 28 3 25

Nakpo Plastic Containers Ltd 52 4 48

Nando Pharm Ltd. 54 4 50

Nebesco Brothers Ent. Ltd 61 5 56

Nemel Pharm Nig. Ltd. 62 4 58

199

Next International Ltd 22 3 19

NICCUS Ind. Ltd 18 3 15

Niger Automotive Ind. Ltd 19 3 16

Niger Delta Floor Mills 25 3 22

Nigergas Ltd 18 3 15

Niger Paper Ind. Ltd 48 4 44

Niger Paints Ltd 71 7 64

Niger Starch Mills Ltd 62 4 58

Nuigbo Associates Ltd 34 3 31

Obike Ind. Ltd 28 3 25

OCE Fitter Mfg. Co Ltd 45 3 42

Ocean Wave Ind. Nig. Ltd 54 4 50

Oduav & Sons Nig. Ltd 28 3 25

Ojimba Anyaha & Sons Nig. Ltd 29 3 28

Okpoko Enterprise Ltd 39 4 35

Olympic Packers Ltd 18 3 15

Olympic Plastic Nig. Ltd. 73 7 66

Omatha Automobile Product Ltd. 28 3 25

Omatta Farms & Allied Ind. Ltd 27 3 24

200

Onitsha Alu Mfg. Co. Ltd 72 4 69

Osychris Alu Mfg. Co. Ltd 84 8 76

Pal Breweries Ltd 71 5 66

Pamob W.A. Ltd. 52 5 47

P.C. Major & Co. W.A. Ltd. 26 3 23

P.E. Asuzu & Sons Ind. Ltd. 32 3 29

Peco Feeds Ltd. 41 3 38

Pegofor Ind. Ltd 48 4 44

Piko Plastic Ind. Ltd. 61 4 57

Poko Oil Mills Ltd. 68 4 64

Premier Breweries Ltd 25 3 22

Rojemics Nig. Ltd 30 3 27

Heco Foam Ind. Nig. Ltd 82 8 74

Helco Ind. Nig. Ltd 23 3 20

Hemason Nig. Ltd. 30 3 27

Home Glass Ltd. 41 3 38

Homus Steel Ltd. 52 4 48

Horizontal Ind. 25 3 22

Hulton Chemical Co. Ltd. 37 3 34

Ibeabuchi Nig. Ltd. 28 3 25

201

Ifepe Group of co. Ltd. 58 4 54

Ifena Coy Ltd. 38 3 35

Igu Ind. Ltd. 48 4 44

International Enamelwane Ind. Ltd. 43 3 40

Isaho Ind. Ltd. 44 4 40

Iunt Ind. Ltd. 66 6 60

Izu Ind. Ltd. 28 3 25

Jacbon Ind. Ltd. 35 4 31

Jaluchi Agro Ind. Ltd. 63 4 59

Jagua Pan-African Ind. Ltd. 45 4 41

Jetworld Ind. Nig. Ltd. 54 4 50

Jimex Inds. Nig. Ltd. 34 3 31

Joelas Magnetic Ind. Ltd. 81 7 74

Johnwhite Ind. Ltd. 73 3 70

J. Omel (W.A.) Ltd. 64 4 60

Jonz Mftg. Co. Ltd. 24 3 21

Kamo Engineering Works & Ind. Ltd. 44 4 40

Kates Associates Ind. Ltd. 31 3 28

Franklin Marble Ind. Ltd. 34 3 31

Franonson Mannyon Ind. Ltd. 28 3 25

202

Gabec Ind. Ltd. 59 4 55

Gabinson Ind. Ltd. 70 5 65

Gaafa Ind. Ltd. 61 4 57

Gazasonner Ind. Nig. Ltd 43 4 39

Gees Denver Co. Ltd. 54 4 50

Geff Ind. Ltd. 39 4 35

General metals Nig. Ltd. 29 3 26

General Tyres & Tubes Co. Ltd. 46 3 43

Geoelus Cables Nig. Ltd. 48 4 44

Global Concept W.A. Ltd. 69 5 64

Gloria –Gloria Pharm ltd. 78 4 74

G.M.O. & Co. Ltd. 77 4 73

G.M.O. Galvanising Ind. Ltd. 62 4 47

G.M.O. Steel Ind. Ltd. 50 4 43

G.O.D. brothers & C. Ltd. 48 4 44

Godrach Nig. Ltd. 39 5 34

Godwin Kris Ind. Ltd. 71 5 76

Gofdwin Okafor & Sons Ltd. 20 4 17

Gohehol Ltd. 32 4 28

Golden Oil Ind. Ltd. 51 4 47

203

Green Pack Rubber Ind. Ltd 47 4 43

Greatlands Inds. Ltd. 29 3 26

\Greatlands Inds. Ltd. 32 4 28

Group Enterprises Nig. Ltd. 31 3 28

T. Adams Ltd. 40 4 36

Technoflex Co. Ltd. 28 3 25

Todsen Enterprises Ltd. 55 5 50

Trans-Heritage Investment Ltd. 48 4 44

Triple Star ltd. 30 4 36

The Cooper Benly Vent. Ltd. 47 4 43

Ulasi Agro Resources Ltd. 60 5 55

Union Autopart Mfg. Co. Ltd. 25 3 22

Union Oak Farms Ind. Ltd. 45 3 42

United Biochemical Ind. Nig. Ltd. 55 3 52

Uru Inds. Ltd. 65 4 61

VAC Industries Ltd. 40 3 37

Vadis Ltd. 45 3 42

Variation Ltd. 32 3 29

Venus Ventures Ltd 25 3 22

Vertical Inds. Ltd 33 3 30

204

Vinas Ind. Ltd. 50 5 45

Vincent Standard Steel Ind. Ltd. 40 4 36

Wins Ind. Ltd. 34 3 31

Zaken Ind. Co. Ltd. 47 4 43

Zevis Pharm Ltd. 65 4 61

Zimark Pharm ind. Ltd. 35 3 32

Zuriel Ind. Ltd. 50 5 45

Rugal Pharm Co. Ltd. 30 3 27

Safanaco Tech. Co. Nig. Ltd. 25 3 22

Saga Foam & Chem Ind. Ltd. 40 3 37

Sambro Ind. Ltd. 45 4 41

Sambro Integrated Inds. Ltd. 35 3 32

Sampson & Mbaebies Inds. Nig. Ltd. 45 4 41

San-Savannah & Chem Ind. Nig. Ltd. 50 4 46

Scalic Ind. Co. Nig. Ltd. 48 4 44

Showlight Farm & Food Progress Ltd. 72 3 69

Shri Fats & Margarine Ltd. 22 3 19

Sinsco Ind. Ltd. 55 5 50

Southern Atlantic Agro Allied Ind. Ltd. 45 4 41

Specialty Oil co. Nig. Ltd. 45 5 40

205

Star Candle Works & Polishes Ltd. 35 4 31

Stena Mills Ltd. 45 5 40

Stevenna Ltd. 21 3 18

St. Mary’s and Complex Ltd. 38 4 34

Superb Inds. Ltd. 35 4 31

Sylver Concrete Ind. Ltd. 15 3 12

______ _____ ______

16,169 1024 15145

Source: (MAN,2012)

206

SUMMARY

STATE NO OF STAFF SENIOR STAFF OTHERS

Anambra 16,169 1,024 15,145

Ebonyi 1,394 120 1,274

Enugu 3,358 179 3,358

Total 21,100 1,323 19,777