Microfinance and SME Growth in Nigeria: An Evaluation of the Impact of Microfinance Banks on Entrepreneurial Outcomes in Ilorin West Local Government, Kwara State

Abstract

Microfinance Banks (MFBs) were purposefully created in Nigeria to render financial assistance to small and medium scale enterprises (SMEs) in the country, even the lack of continuity of many small and medium scale enterprises in Nigeria can be attributed to the shortage of finances. Therefore, this study investigated the impact of Microfinance Banks financing on Small and Medium Scale enterprises (SMEs) in Ilorin West Local Government Area of Kwara State. The population of the study included the thirty-one (31) Microfinance banks in Ilorin West Local Government and their SME customers, while only three (3) MFBs were chosen and 300 respondents using purposive sampling technique to determine the sample size. The descriptive survey research was employed for the study while a structured questionnaire was employed for data collection from respondents. Regression analysis was used to test the hypothesis formulated. The findings from the study showed that the number of SMEs that have secured loans from microfinance banks in Ilorin West Local Government of Kwara state is insignificant. Consequently, the study concluded that the contribution of Microfinance banks to Small and Medium-scale investors to set up their new ventures or expand, the existing ones is not enough. The study recommended that the requirements, procedures, and the period of loan repayment should be extended with low interest rate to enable more investors to benefit from MFBs in the study.