Accessibility of Credit Facility From Financial Institutions by Small PDF

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
Digitally Signed by: Content manager’s Name

Ebere Omeje
DN : CN = Webmaster’s name
O= University of Nigeria, Nsukka
OU = Innovation Centre
i
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
FEBUARY, 2015
ii
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
SUPERVISOR: PROF. (MRS) UCHE MODUM
FEBRUARY, 2014
iii
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
iv
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
_______________________
______________
DR, (MRS) G.N.OFOEGBU
DATE
HEAD OF DEPARTMENT
v
DEDICATION
To God the Father, the Son and the Holy Ghost are all honour and
glory.
vi
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
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
vii
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
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
viii
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.
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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
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
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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
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
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2.2.6 Entity Theory 40
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
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
4.2.5 Multiple Regression Analysis result of effect of Government
xii
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
5.2 Conclusion 95
5.3 Recommendation 96
5.4 Contribution to knowledge 97
5.5 Further studies 97
Bibliography
Appendix
xiii
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
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
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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
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.
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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,
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
3
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,
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.
4
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?
(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
5
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
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.
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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.
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.
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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.
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
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CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
The review of literature is arranged as follows:
2.1 Conceptual review
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
9
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
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).
10
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
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
11
why it captures the interest of government and other interest groups especially now that the
issue of poverty alleviation is on board.
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).
12
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.
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
13
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
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
14
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
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
15
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
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
16
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
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).
17
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
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).
18
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).
19
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
Total Credit SME Credit

Year (1) N’m (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)
(1) Percentage of Commercial (2) % of Merchant Bank
Year Bank Loan Loan
2005 16.2 10.7
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
20
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
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
21
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
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.
22
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
Fertilizer Production 175 2.7
No Response 853 13.2
Total 6,471 100.0
Source: SMEDAN/NBS(2012)
23
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
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)
24
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
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.
25
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;
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.
26
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
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.
27
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
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.
28
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
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
29
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).
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).
30
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.
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
31
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.
32
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 1,178 2,801 2,832 3,908 2,163 2,245 909 46
entrepreneurship/vocation
al training
Obsolete equipment 884 1,526 2,005 2,403 4,061 2,597 1,640 54
Lack of access to research 875 1,392 2,329 2,892 2,646 3,302 1,903 113
and development
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 237 363 193 149 151 186 104 142
support
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
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.
33
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.
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.
34
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).
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
35
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).
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.
36
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
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.
37
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
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).
38
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)
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.
39
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.
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
40
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).
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
41
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
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).
42
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
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.
43
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.
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).
44
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
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).
45
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
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.
46
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.
- 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.
47
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.
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.
48
(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.
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.
49
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.
50
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61
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
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.
62
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.
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.
63
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

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.
64
Cov = Average inter item covariance.
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 %
Valid 30 100.0
Cases Excludeda 0 .0
Total 30 100.0
a. Listwise deletion based on all variables in
the procedure.
Reliability Statistics
Cronbach's N of Items
Alpha
.760 49
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).
65
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
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
B0,B1,B2 ,B3 = regression parameters
ei = error term.
66
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.
67
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).
68
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.
69
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
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
70
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%).
71
Table 4.1.3 To what extent has government policies favoured SMEs in Nigeria?
Items Strongly Disagree Neutral Agree Strongly
S/n disagree Agree
n (%) n (%) n (%) n (%) n (%)

Mean ± SD
1 There are general government 3 (0.8) 0 (0.0) 4 (1.1) 106 (29.9) 241 (68.1) 4.64 ± 0.60
policies that affect SMEs in
Nigeria.
2 There is a dedicated ministry of 2 (0.6) 0 (0.0) 6 (1.7) 157 (44.4) 189 (53.4) 4.50 ± 0.59
SME that facilitates SMEs
operations
3 There is an agency (SMEDAN)that 3 (0.8) 0 (0.0) 6 (1.7) 150 (42.4) 195(55.1) 4.51 ± 0.62
was set to oversee the operations of
SMEs
4 Government set SMIEIS fund to 1 (0.3) 1 (0.3) 14 (4.0) 160 (45.2) 178 (50.3) 4.45 ± 0.62
enable all operations of SMEs to be
workable in terms of financing
5 The establishment of bank of 1 (0.3) 1 (0.3) 5 (1.4) 137 (38.7) 210 (59.3) 4.57 ± 0.57
industry (BOI) has helped in the
funding of SMEs in Nigeria
6 Government subsidizes capital for 6 (1.7) 5 (1.4) 3 (0.8) 260 (73.4) 80 (22.6) 4.14 ± 0.65
SME operations through its
transfer agencies and banks (BOI)
7 The beneficiaries of SMIEIS fund 158 (44.6) 105 (29.7) 17 (4.8) 52 (14.7) 22 (6.2) 2.08 ± 1.28
is rated highly in terms of
repayment
8 Government through CBN has in 9 (2.5) 12 (3.4) 20 (5.6) 216 (61.0) 97 (2.4) 4.07 ± 0.83
the recent past disbursed funds to
SMEs.
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
72
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).
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.
73
Table 4.1.4 To what extent is access to credit facilities the greatest problem facing
SMEs.
S/n Items Strongly Disagree Neutral Agree Strongly Mean ± SD
disagree agree
n (%) n (%)
n (%) n (%) n (%)
1 The only sources of fund for SMEs 183 (51.7) 5 (1.4) 70 (19.8) 60 (16.9) 36 (10.2) 2.32 ± 1.49
are commercial/merchant banks
2 The greatest problem facing SMEs 7(2.0) 1(0.3) 23 (6.5) 164 (46.3) 159 (44.9) 4.32 ± 0.78
is accessibility to credit facilities
3 There are other sources of fund for 7 (2.0) 20 (5.6) 6 (1.7) 230 (65.0) 91 (25.7) 4.07 ± 0.82
SMEs which are cheaper. e.g the
SMIEIS, NERFUND e.t.c.
4 The first four greatest problems 5 (1.4) 7 (2.0) 6 (1.7) 184 (52.0) 152 (42.9) 4.33 ± 0.74
facing SMEs in the order of
magnitude are: Access to
credit/fund, mgt. structure, lack of
infrastructures, and environmental
related problems.
5 The greatest problem facing SMEs 108 (30.5) 195(55.1) 3(0.8) 42(11.9) 6(1.7) 1.99 ± 0.97
is management structure
6 The greatest problem facing SMEs 170(48.0) 133(37.6) 9(2.5) 33(9.3) 9(2.5) 1.81 ± 1.04
is lack of infrastructures
7 The greatest problem facing SMEs 110(31.1) 123(34.7) 23(6.5) 66(18.6) 32(9.0) 2.40 ± 1.33
are: access to finance and
management
8 The greatest problem facing SMEs 36(10.2) 150 (42.4) 13 (3.7) 120 (33.9) 35 (9.9) 2.91 ± 1.25
are finance, management problem
and lack of infrastructures e.g roads,
electricity.
Grand Mean 3.02
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
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
74
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.
However, the grand mean (3.02) confirmed the statement that access to finance is the
greatest problem facing SMEs.
75
Table 4.1.5 To what extent do tax incentives affect the accessibility of credit facilities
by SMEs?
S/n Strongly Disagree Neutral Agree Strongly
disagree agree
n (%) n (%) n (%) n (%) n (%)
Mean ± SD
1 Tax incentives enhance SMEs 8 (2.3) 0 (0.0) 16 (4.5) 295 (83.3) 35 (9.9) 4.01 ± 0.48
growth and survival
2 SMEs do not make use of the 1 (0.3) 7 (2.0) 8 (2.3) 229 (64.7) 106 (30.8) 4.24 ± 0.62
available tax incentives to their
utmost advantage
3 SMEs do not employ 2 (0.6) 0 (0.0) 9 (2.5) 271 (76.6) 72 (20.3) 4.17 ± 0.47
experts/trained personnel so as
to explore the available tax
advantages
4 Tax reliefs (tax holiday, 1 (0.3) 0 (0.0) 4 (1.1) 289 (81.6) 60 (16.9) 4.15 ± 0.41
minimum company tax, self
assessment provisions) are
sources of encouragement from
government to SMEs
5 SMEs do not access loan from 5 (1.4) 6 (1.7) 6 (1.7) 231 (65.3) 106 (29.9) 4.21 ± 0.69
financial institutions due to lack
of adequate collaterals
6 The requirement for loan is 87 (24.6) 144 (40.7) 16 (4.5) 79 (22.3) 28 (7.9) 2.48 ± 1.29
beyond the reach of SMEs in
Nigeria
7 Increased tax incentives would 2 (0.6) 7 (2.0) 12 (3.4) 241 (68.1) 92 (26.0) 4.17 ± 0.63
lead to better accessibility of
credit by SMEs
Grand mean 3.92
76
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.
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
77
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?
Items Strongly Disagree Neutral Agree Strongly
disagree agree
n (%) n (%) n (%) n (%) n (%)

Mean ± SD
Collaterals are conditions for SMEs to 6 (1.7) 0 (0.0) 12 (3.4) 151 (42.7) 185 (52.3) 4.45 ± 0.65
access bank loans.
Most SMEs do not possess the required 7 (2.0) 0 (0.0) 4 (1.1) 233 (65.8) 110 (31.1) 4.26 ± 0.58
collaterals for accessing credit facilities
from the banks.
Banks inability to shift grounds on 1 (0.3) 0 (0.0) 8 (2.3) 220 (62.1) 125 (35.3) 4.32 ± 0.53
collaterals makes it impossible for SMEs
to access the funds.
Grand mean 4.34
78
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.
79
Table 4.1.7 What is the extent to which SMEs are funded by international agencies?
S/n Items Strongly Disagree Neutral Agree Strongly

disagree agree
n (%) n (%) n (%) n (%) n (%)
Mean ± SD
1 International agencies fund 1 (0.3) 9 (2.5) 8 (2.3) 221 (62.4) 115 (32.5) 4.24 ± 0.65
SMEs through World Bank,
ADB and IFC
2 Federal government has sought 9 (2.5) 0 (0.0) 8 (2.3) 214 (60.5) 123 (34.7) 4.27 ± 0.63
for financing through World
Bank SME II loan
3 Agencies like UNDP has 2 (0.6) 9 (2.5) 7 (2.0) 228 (64.4) 108 (30.5) 4.22 ± 0.66
facilitated SMEs funding through
federal government
4 Programmes like JICA (Japan 4 (1.1) 42 (11.9) 15 (4.2) 206 (58.2) 87 (24.6) 3.93 ± 0.93
International Corporation
Agency) that have aided in
entrepreneurial development in
Nigeria
5 Banks are not willing to advance 1 (0.3) 3 (0.8) 27 (7.6) 178 (50.3) 145 (41.0) 4.31 ± 0.67
credit to SMEs due to lack of
collateral and default in
repayment
6 Banks are not willing to advance 41 (11.6) 8 (2.3) 15 (4.2) 158 (44.6) 132 (37.3) 3.94 ± 1.24
credit to SMEs due to lack of
poor accounting records and
bankable projects proposals
7 CBN are playing more roles to 17 (4.8) 4 (1.1) 7 (2.0) 208 (58.8) 118 (33.3) 4.15 ± 0.90
ensure that credits are advanced
to SMEs
8 Banks charge higher interest rate 3 (0.8) 0 (0.0) 22 (6.2) 145 (41.0) 184 (52.0) 4.43 ± 0.69
than other SMEs
scheme/government agencies e.g
BOI and SMIEIS
9 Banks are mandated to set aside 1 (0.3) 0 (0.0) 27 (7.6) 128 (36.2) 198 (55.9) 4.48 ± 0.65
10% profit before tax for funding
of SMES
Grand mean 4.22
80
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).
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.
81
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
82
High interest rates target by banks hinder SMEs credit
accessibility
Disagree 10 28
Neutral 10 2.8
Agree 149 42.1
The time lag between the repayment of one loan and the
collection of another one is usually too long.
Disagree 123 34.7
Neutral 78 22.0
Agree 31 8.8
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
83
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
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 R R Square Adjusted R Std. Error of
l Square the Estimate
1 .761a .579 .512 .69580
a. Predictors: (Constant), Government policy
ANOVAa
Model Sum of Df Mean F Sig.
Squares Square
Regression .989 1 .989 112.043 .000b
1 Residual 170.415 352 .484
Total 171.404 353
a. Dependent Variable: Access to credit
b. Predictors: (Constant), Government policy
84
Coefficientsa
Model Unstandardized Standardized t Sig.
Coefficients Coefficients
B Std. Error Beta
(Constant) 3.753 .436 8.605 .000
1 Government
2.151 .105 -.076 9.429 .000
policy
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).
85
4.2.2 Hypothesis 2
Ho2: Access to credit facilities is not the greatest problem facing SMEs.
One-Sample Test
Test Value = 3
95% Confidence
Mean Interval of the
Items t df P value Difference Difference
Standard Lower Upper
Mean deviation
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, 4.33 0.74 33.914 353 .000 1.33051 1.2534 1.4077
and environmental related problems.
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 2.91 1.25 -1.361 353 .174 -.09040 -.2210 .0402
e.g roads, electricity.
Decision rule:
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.
86
4.2.3 Hypothesis 3
Ho3: Tax incentives do not have a significant effect on accessibility of credit by SMEs
Model Summary
1 .781a .609 .509 .69771
a. Predictors: (Constant), Tax incentives
ANOVAa
Model Sum of Df Mean F Sig.
Squares Square
Regression .048 1 .048 120.99 .000b
1 Residual 171.356 352 .487
Total 171.404 353
b. Predictors: (Constant), Tax incentives
Coefficientsa
B Std. Error Beta
(Constant) 2.984 .473 6.308 .000
1 Tax
3.138 .120 .017 7.314 .000
incentives
87
Results
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:
the null hypothesis is hereby rejected and the alternative accepted. Therefore, Tax
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
1 .897a .805 .799 .69505
a. Predictors: (Constant), Collaterals
ANOVAa
Model Sum of df Mean F Sig.
Squares Square
Regression 1.356 1 1.356 215.807 .000b
1 Residual 170.047 352 .483
Total 171.404 353
b. Predictors: (Constant), Collaterals
88
Coefficientsa
Model Unstandardized Standardized T Sig.
B Std. Error Beta
(Constant) 3.752 .372 10.086 .000
1
Collaterals 4.143 .085 -.089 11.675 .000
Results
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:
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).
89
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
1 .812a .659 .600 .69366
a. Predictors: (Constant), Collaterals, Government policy,
Tax incentives
ANOVAa
Model Sum of df Mean F Sig.
Squares Square
Regression 2.994 3 .998 211.074 .000b
1 Residual 168.410 350 .481
Total 171.404 353
b. Predictors: (Constant), Collaterals, Government policy, Tax incentives
Coefficientsa
B Std. Error Beta
(Constant) 3.715 .556 6.688 .000
Government
2.198 .124 -.100 3.592 .014
1 policy
Tax incentives 2.224 .143 .099 3.563 .001
Collaterals 4.149 .091 -.093 9.629 .000
90
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.
91
CHAPTER FIVE
DISCUSSION OF FINDINGS, RECOMMENDATIONS AND SUMMARY
5.0 Introduction
This chapter discusses in details the findings of the four hypotheses.
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
92
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,
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.
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
93
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).
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.
94
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
drawn from other developed nations across the globe that supported SMEs and it worked
for them.
95
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
“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.
96
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.
97
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108
APPENDIX I
Faculty of Business Administration,

University of Nigeria,
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
Eneh, Nnenna Sylvia

PG/MSc/10/55146
109
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
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:
3. There is an agency (SMEDAN) that was set to oversee the operations of SMEs:
4. Government set SMIEIS Fund to enable all operation of SMEs to be workable in term of
financing:
5 .The establishment of Bank of Industry (BOI) has helped in the funding of SMEs in
Nigeria.
110
6 . Government subsidizes capital for SME operations through its transfer agencies and
banks (BOI):
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.
SECTION C
Is access to fund the greatest problem facing SMEs?
9. The only sources of fund for SMEs are commercial/merchant banks:
10. The greatest problem facing SMEs is accessibility to credit facilities.
11 . There are other sources of fund for SMEs which are cheaper e.g. the SMIEIS,
NERFUND etc:
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.
13.The greatest problem facing SMEs is management structure:
14. The greatest problem facing SMEs is lack of infrastructures:
15. The greatest problems facing SMEs are: (i) Access to finance (ii) Management
problems.
16. The greatest problems facing SMEs are (i) Finance (ii) Management Problem (iii) Lack
of infrastructure, e.g. roads, electricity:
111
SECTION D:
To what extent do Tax incentives affected credit accessibility by SMEs?
17. Tax incentives enhance SMEs growth and survival.
18. Which kinds of Tax incentives are available for SMEs; (thick the appropriate ones)
i. Minimum tax provisions
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.
20. SSMEs do not employ experts /trained personnel so as to explore the available tax
advantages.
21. Tax reliefs (tax holiday, minimum company tax, self assessment provisions) are
sources of encouragement from government to SMEs.
22. SMEs do not access loan from financial institutions due to lack of adequate collaterals.
23. The requirement for loan is beyond the reach of SMEs in Nigeria.
24. Increased tax incentives would lead to better accessibility of credit by SMEs.
SECTION E:
What extent does having collaterals affected credit facilities accessible by SMEs?
25. Collaterals are conditions for SMEs to access bank loans.
26. Which kinds of collaterals are available for SMEs to access credit facilities? (Thick as
u deem corrects).
i. Landed properties.
ii. Buildings.
112
iii. Share certificates.
iv. Others (specify):
27. Most SMEs do not possess the required collaterals for accessing credit facilities from
the banks.
28. Banks inability to shift grounds on collaterals makes it impossible for SMEs to access
the funds.
SECTION F:
Does government approach international agencies to source fund for SMEs
financing?
29. International agencies fund SMEs through World Bank, ADB and IFC:
30. Federal government has sought for financing through World Bank SME II loan:
31. Agencies like UNDP has facilitated SMEs funding through federal government
interventions
32. Programmses like JICA (Japan International Corporation Agency) are one of the
international agencies that have aided in entrepreneurial development in Nigeria.
33.Banks are not willing to advance credit to SMEs due to lack of collateral and default in
repayment.
34. Banks are not willing to advance credit to SMEs due to lack of poor accounting records
and bankable projects proposals.
35. CBN are playing more roles to ensure that credits are advanced to SMEs.
113
36. Banks charge higher interest rate than other SMEs scheme/government agencies e.g.
BOI and SMIEIS.
37. Banks are mandated to set aside 10% profit before tax for funding of SMEs.
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.
42. High interest rates target by banks hinders SMEs credit accessibility.
43. The time lag between the repayment of one loan and the collection of another one is
usually too long.
114
APPENDIX II
Sex
Frequenc Percent Valid Cumulative
y Percent Percent
Male 240 67.8 67.8 67.8
Valid Female 114 32.2 32.2 100.0
Total 354 100.0 100.0
Belonging category in an organization

y Percent Percent
Junior staff 18 5.1 5.1 5.1
Senior 265 74.9 74.9 79.9
Valid Management
71 20.1 20.1 100.0
staff
Total 354 100.0 100.0
Highest Educational Qualification

y Percent Percent
WASC 9 2.5 2.5 2.5
HND 80 22.6 22.6 25.1
Bachelors
149 42.1 42.1 67.2
Valid Degree
MBA 106 29.9 29.9 97.2
MSC 7 2.0 2.0 99.2
Others 3 .8 .8 100.0
115
Total 354 100.0 100.0
Registered SMEs member card
y Percent Percent
CAC 55 15.5 15.5 15.5
MAN 96 27.1 27.1 42.7
Valid CAC and
203 57.3 57.3 100.0
MAN
Total 354 100.0 100.0
Age
y Percent Percent
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
Valid
Above 55
28 7.9 7.9 100.0
years
Total 354 100.0 100.0
B1
Frequency Percent Valid Percent Cumulative
Percent
Strongly disagree 3 .8 .8 .8
Neutral 4 1.1 1.1 2.0
Valid Agree 106 29.9 29.9 31.9
Strongly Agree 241 68.1 68.1 100.0
Total 354 100.0 100.0
116
B2
Percent
Neutral 6 1.7 1.7 2.3
Valid Agree 157 44.4 44.4 46.6
Strongly Agree 189 53.4 53.4 100.0
Total 354 100.0 100.0
B3
Percent
Neutral 6 1.7 1.7 2.5
Valid Agree 150 42.4 42.4 44.9
Strongly Agree 195 55.1 55.1 100.0
Total 354 100.0 100.0
B4
Percent
Disagree 1 .3 .3 .6
Neutral 14 4.0 4.0 4.5
Valid
Agree 160 45.2 45.2 49.7
Strongly Agree 178 50.3 50.3 100.0
Total 354 100.0 100.0
117
B5
Percent
Disagree 1 .3 .3 .6
Neutral 5 1.4 1.4 2.0
Valid
Agree 137 38.7 38.7 40.7
Strongly Agree 210 59.3 59.3 100.0
Total 354 100.0 100.0
B6
Percent
Strongly disagree 6 1.7 1.7 1.7
Disagree 5 1.4 1.4 3.1
Neutral 3 .8 .8 4.0
Valid
Agree 260 73.4 73.4 77.4
Strongly Agree 80 22.6 22.6 100.0
Total 354 100.0 100.0
B7
Percent
Disagree 105 29.7 29.7 74.3
Neutral 17 4.8 4.8 79.1
Valid
Agree 52 14.7 14.7 93.8
Strongly Agree 22 6.2 6.2 100.0
Total 354 100.0 100.0
118
B8
Percent
Disagree 12 3.4 3.4 5.9
Neutral 20 5.6 5.6 11.6
Valid
Agree 216 61.0 61.0 72.6
Strongly Agree 97 27.4 27.4 100.0
Total 354 100.0 100.0
C9
Percent
Disagree 5 1.4 1.4 53.1
Neutral 70 19.8 19.8 72.9
Valid
Agree 60 16.9 16.9 89.8
Strongly Agree 36 10.2 10.2 100.0
Total 354 100.0 100.0
C10
Percent
Disagree 1 .3 .3 2.3
Neutral 23 6.5 6.5 8.8
Valid
Agree 164 46.3 46.3 55.1
Strongly Agree 159 44.9 44.9 100.0
Total 354 100.0 100.0
119
C11
Percent
Disagree 20 5.6 5.6 7.6
Neutral 6 1.7 1.7 9.3
Valid
Agree 230 65.0 65.0 74.3
Strongly Agree 91 25.7 25.7 100.0
Total 354 100.0 100.0
C12
Percent
Disagree 7 2.0 2.0 3.4
Neutral 6 1.7 1.7 5.1
Valid
Agree 184 52.0 52.0 57.1
Strongly Agree 152 42.9 42.9 100.0
Total 354 100.0 100.0
C13
Percent
Disagree 195 55.1 55.1 85.6
Neutral 3 .8 .8 86.4
Valid
Agree 42 11.9 11.9 98.3
Total 354 100.0 100.0
120
C14
Percent
Disagree 133 37.6 37.6 85.6
Neutral 9 2.5 2.5 88.1
Valid
Agree 33 9.3 9.3 97.5
Total 354 100.0 100.0
C15
Percent
Disagree 123 34.7 34.7 65.8
Neutral 23 6.5 6.5 72.3
Valid
Agree 66 18.6 18.6 91.0
Total 354 100.0 100.0
C16
Percent
Disagree 150 42.4 42.4 52.5
Neutral 13 3.7 3.7 56.2
Valid
Agree 120 33.9 33.9 90.1
Total 354 100.0 100.0
121
D17
Percent
Disagree 8 2.3 2.3 2.3
Neutral 16 4.5 4.5 6.8
Valid Agree 295 83.3 83.3 90.1
Total 354 100.0 100.0
D18i
Percent
Yes 276 78.0 78.0 78.0
Valid No 78 22.0 22.0 100.0
Total 354 100.0 100.0
D18ii
Percent
Yes 235 66.4 66.4 66.4
Valid No 119 33.6 33.6 100.0
Total 354 100.0 100.0
D18iii
Percent
Yes 238 67.2 67.2 67.2
Valid No 116 32.8 32.8 100.0
Total 354 100.0 100.0
122
D18iv
Percent
Yes 15 4.2 4.2 4.2
Valid No 339 95.8 95.8 100.0
Total 354 100.0 100.0
D19
Percent
Disagree 7 2.0 2.0 2.3
Neutral 8 2.3 2.3 4.5
Valid
Agree 229 64.7 64.7 69.2
Strongly Agree 109 30.8 30.8 100.0
Total 354 100.0 100.0
D20
Percent
Disagree 2 .6 .6 .6
Neutral 9 2.5 2.5 3.1
Valid Agree 271 76.6 76.6 79.7
Strongly Agree 72 20.3 20.3 100.0
Total 354 100.0 100.0
123
D21
Percent
Disagree 1 .3 .3 .3
Neutral 4 1.1 1.1 1.4
Valid Agree 289 81.6 81.6 83.1
Strongly Agree 60 16.9 16.9 100.0
Total 354 100.0 100.0
D22
Percent
Disagree 6 1.7 1.7 3.1
Neutral 6 1.7 1.7 4.8
Valid
Agree 231 65.3 65.3 70.1
Strongly Agree 106 29.9 29.9 100.0
Total 354 100.0 100.0
D23
Percent
Disagree 144 40.7 40.7 65.3
Neutral 16 4.5 4.5 69.8
Valid
Agree 79 22.3 22.3 92.1
Total 354 100.0 100.0
124
D24
Percent
Disagree 7 2.0 2.0 2.5
Neutral 12 3.4 3.4 5.9
Valid
Agree 241 68.1 68.1 74.0
Strongly Agree 92 26.0 26.0 100.0
Total 354 100.0 100.0
E25
Percent
Disagree 6 1.7 1.7 1.7
Neutral 12 3.4 3.4 5.1
Valid Agree 151 42.7 42.7 47.7
Strongly Agree 185 52.3 52.3 100.0
Total 354 100.0 100.0
E26i
Percent
Yes 349 98.6 98.6 98.6
Valid No 5 1.4 1.4 100.0
Total 354 100.0 100.0
125
E26ii
Percent
Yes 329 92.9 92.9 92.9
Valid No 25 7.1 7.1 100.0
Total 354 100.0 100.0
E26iii
Percent
Yes 138 39.0 39.0 39.0
Valid No 216 61.0 61.0 100.0
Total 354 100.0 100.0
E26iv
Percent
Yes 31 8.8 8.8 8.8
No 322 91.0 91.0 99.7
Valid
3.00 1 .3 .3 100.0
Total 354 100.0 100.0
126
E27
Percent
Disagree 7 2.0 2.0 2.0
Neutral 4 1.1 1.1 3.1
Valid Agree 233 65.8 65.8 68.9
Strongly Agree 110 31.1 31.1 100.0
Total 354 100.0 100.0
E28
Percent
Disagree 1 .3 .3 .3
Neutral 8 2.3 2.3 2.5
Valid Agree 220 62.1 62.1 64.7
Strongly Agree 125 35.3 35.3 100.0
Total 354 100.0 100.0
F29
Percent
Valid Strongly disagree 1 .3 .3 .3
127
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
Percent
Disagree 9 2.5 2.5 2.5
Neutral 8 2.3 2.3 4.8
Valid Agree 214 60.5 60.5 65.3
Strongly Agree 123 34.7 34.7 100.0
Total 354 100.0 100.0
F31
Percent
Disagree 9 2.5 2.5 3.1
Neutral 7 2.0 2.0 5.1
Valid
Agree 228 64.4 64.4 69.5
Strongly Agree 108 30.5 30.5 100.0
Total 354 100.0 100.0
F32
Percent
Valid Strongly disagree 4 1.1 1.1 1.1
128
Disagree 42 11.9 11.9 13.0
Neutral 15 4.2 4.2 17.2
Agree 206 58.2 58.2 75.4
Strongly Agree 87 24.6 24.6 100.0
Total 354 100.0 100.0
F33
Percent
Disagree 3 .8 .8 1.1
Neutral 27 7.6 7.6 8.8
Valid
Agree 178 50.3 50.3 59.0
Strongly Agree 145 41.0 41.0 100.0
Total 354 100.0 100.0
F34
Percent
Disagree 8 2.3 2.3 13.8
Neutral 15 4.2 4.2 18.1
Valid
Agree 158 44.6 44.6 62.7
Strongly Agree 132 37.3 37.3 100.0
Total 354 100.0 100.0
F35
Percent
129
Disagree 4 1.1 1.1 5.9
Neutral 7 2.0 2.0 7.9
Valid
Agree 208 58.8 58.8 66.7
Strongly Agree 118 33.3 33.3 100.0
Total 354 100.0 100.0
F36
Percent
Neutral 22 6.2 6.2 7.1
Valid Agree 145 41.0 41.0 48.0
Strongly Agree 184 52.0 52.0 100.0
Total 354 100.0 100.0
F37
Percent
Disagree 1 .3 .3 .3
Neutral 27 7.6 7.6 7.9
Valid Agree 128 36.2 36.2 44.1
Strongly Agree 198 55.9 55.9 100.0
Total 354 100.0 100.0
G38
Percent
Valid Easy 6 1.7 1.7 1.7
130
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
Percent
Within 1 month 28 7.9 7.9 7.9
Within 2 months 12 3.4 3.4 11.3
Valid 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
G40
Percent
Easy 9 2.5 2.5 2.5
Very easy 5 1.4 1.4 4.0
Valid Tedious 205 57.9 57.9 61.9
Very tedious 135 38.1 38.1 100.0
Total 354 100.0 100.0
G41
Percent
Valid Strongly disagree 82 23.2 23.2 23.2
131
Disagree 88 24.9 24.9 48.0
Neutral 100 28.2 28.2 76.3
Agree 53 15.0 15.0 91.2
Total 354 100.0 100.0
G42
Percent
Disagree 10 2.8 2.8 4.5
Neutral 10 2.8 2.8 7.3
Valid
Agree 149 42.1 42.1 49.4
Strongly Agree 179 50.6 50.6 100.0
Total 354 100.0 100.0
G43
Percent
Disagree 123 34.7 34.7 60.2
Neutral 78 22.0 22.0 82.2
Valid
Agree 31 8.8 8.8 91.0
Total 354 100.0 100.0
132
Descriptive Statistics
N Minimu Maximu Mean Std.
m m 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
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
354
(listwise)
Descriptive Statistics
N Minimu Maximu Mean Std.
m m 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
133
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
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
354
(listwise)
134
Reliability
Scale: ALL VARIABLES
Case Processing Summary

N %
Valid 30 100.0
Cases Excludeda 0 .0
Total 30 100.0
a. Listwise deletion based on all variables in
the procedure.
Reliability Statistics
Cronbach's N of Items
Alpha
.760 49
135
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
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
136
Ekiti 280 98.41 5 1.59
285
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
Nassarawa 387 92.43 32 7.57
418
Niger 433 90.48 46 9.52
478
Ogun 506 92.73 40 7.27
546
137
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
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
138
APPENDIX IV
10-49 50-199
SECTOR Number Percentage Number Parentage TOTAL
Agriculture, Hunting 696 92.77 54 7.23 750
Forestry and Fishing
Mining & Quarrying 134 80.43 33 19.57 167
Manufacturing 5939 89.28 713 10.72 6652
Building and 194 81.13 45 18.87 239
Construction
Wholesale and Retail
Trade; Repair of Motor
Vehicles and Household 3,916 96.90 125 3.10 4,041
Goods
Hotels and Restaurants 2,088 94.52 121 5.48 2,209
Transport, storage and 680 83.89 131 16.11 811
Communication
Financial Intermediation 93.22 158 6.78 2322
2166
Real Estate, Renting and 908 94.62 52 5.38 960
Business Activities
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 495 97.98 10 2.02 505
and Personal Service
Activities
Total 21,264 92.78 1,654 7.22 22,918
139
APPENDIX V
State
Personal Service
Repair of Motor
Communication
Health & Social

Agric, Hunting,
Manufacturing
Intermediation
Retail Trade,
Construction
Wholesale &
Community,
Restaurants
Real Estate,
Vehicle and
Forestry &
Building &
Transport,
Hotels and
Quarrying
Household
Renting &
Education
Storage &
Mining &
Financial
Business
Social &
Fishing
Other
Work
Total
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
140
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
APPENDIX VI
STATE MANUFACTURING SECTOR

Anambra 251
Ebonyi 75
Enugu 34
Total 360
141
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
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
3,537 179 3358
142
COMPANIES IN EBONYI STATE AND THEIR STAFF STRENGHT
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
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
143
COMPANIES IN ANAMBRA STATE AND THEIR STAFF STRENGHT
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
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
144
Unity Foam Nig. Ltd Onitsha 102 5 97
Heco Foam Nig. Ltd 84 4 80
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
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
145
Austin Vic Ind. Limited 47 3 44
Awutolo Inds. Ltd. 31 3 28
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
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
146
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
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
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
147
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
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
Map Industrial Co-operations Ltd 53 6 47
Marcity Chemicals Ind. Ltd. 45 4 41
Markson Chemical Ind. Ltd 48 4 44
148
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
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
149
Olympic Plastic Nig. Ltd. 73 7 66
Omatha Automobile Product Ltd. 28 3 25
Omatta Farms & Allied Ind. Ltd 27 3 24
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
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
150
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
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
Green Pack Rubber Ind. Ltd 47 4 43
151
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
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
152
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
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)
153
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
154

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ENEH, SYLVIA NNENNA

ACCESSIBILITY OF CREDIT FACILITY FROM FINANCIAL

FACULTY OF BUSINESS ADMINISTRATION

Digitally Signed by: Content manager’s Name

O= University of Nigeria, Nsukka

IN PARTIAL FULFILLMENT OF THE REQUIREMENT

SUPERVISOR: PROF. (MRS) UCHE MODUM

CHAPTER ONE: INTRODUCTION

CHAPTER TWO: REVIEW OF RELATED LITERATURES

CHAPTER THREE: METHODOLOGY

CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS

CHAPTER FIVE: DISCUSSION OF FINDINGS, RECOMMENDATIONS AND

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

1.2 Statement of Problem

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

1.3 Objectives of the Study

1.5 Hypotheses of the Study

1.7 Significance of the Study

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

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

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

SMEDAN/NBS 2010 National Collaborative Survey

REVIEW OF RELATED LITERATURE

2.1 CONCEPTUAL REVIEW

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

2.1.1 Relevance of SMEs in Economic Development

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

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

2.1.2 SOURCES OF FINANCE FOR SMEs

2.1.3 VENTURE CAPITAL AND BUSINESS ANGELS

2.1.4 PENSION REFORM ACT AND SMEs FINANCING.

2.1.5 SME FINANCING ISSUES AND THE BANK

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

Government policies could also favor implementing industrialization and/or import

2.1.6 THE ROLE OF BANKS IN SME DEVELOPMENT

2.1.7 THE EXISTENCE OF SME FINANCING GAP

2.1.8 CONCEPT AND CAUSES OF A FINANCING GAP

2.1.9 IMPERATIVES OF GOOD BANKING HABITS FOR SUCCESSFUL SMEs

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

Total Credit SME Credit

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

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

Small Scale Industries Credit Scheme (SSICS)

Nigerian Bank for Commerce and Industry (NBCI)

Central Bank of Nigeria (CBN)

Policy Most Favourable Policy

NATIONAL ECONOMIC RECONSTRUCTION FUND (NERFUND)

2.1.9.2 Current Financing Initiatives and the Way Forward

The Small and Medium Industries Equity Investment Scheme (SMIEIS)

Nigerian Agricultural, Cooperative and Rural Development Bank (NACRDB)

Refinancing and Rediscounting Facility (RRF)

SMEs Financing By International Development Agencies

2.1.9.3 Some Countries Experiences in SMEs Development

United State of America (USA)

2.1.9.4 Problems of SME in the Development Process

2.1.9.5 The Ten Commandments of Small Business Finance

2.1.9.6 Closing the Financing Gap for SMEs in Nigeria

2.1.9.7 Prospects of SMEs in Nigeria

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

Close Monitoring of SMEs

2.2.1 Agency Theory

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

2.2.2 Signaling Theory