EFFECTS OF FINANCING ON GROWTH OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA: A STUDY OF KADUNA METROPOLIS

Abstract

This study investigates the effect of finance on the growth of small and medium-scale enterprises in Kaduna Metropolis, Nigeria. SMEs are very important to the economy in terms of economic growth and employment generation; however, they suffer greatly due to a lack of access to finance. The study adopts a descriptive design intended to ascertain the relationship between access to finance and some business performance indicators like profitability and sales growth through a survey of 120 SMEs across different sectors. Descriptive and inferential analyses show that bank loans, microfinance, and personal savings are the facilitators of SME growth, with bank loans being the most significant of these. However, it was observed that high interest rates and stringent collateral requirements, along with complicated procedures in securing a loan, were major impediments. It is suggested that policy efforts be targeted at increasing access to finance, reducing interest rates, and simplifying procedures in loan applications. Recommendations include the introduction of credit guarantee schemes and increased financial literacy programs for SME owners to optimize their contributions to economic development.