IMPACT OF MICROFINANCE INSTITUTIONS ON SMALL AND MEDIUM ENTERPRISES (SMEs) GROWTH IN TARABA

Abstract

This study investigates the impact of microfinance institutions on small and medium enterprises (SMEs) growth in Taraba. The main objectives were to examine the impact of microloans, interest rates, loan duration and experience on SMEs growth in Taraba State. The study employed a survey research design and multiple regression analysis to analyze a survey of 174 randomly selected SMEs in Taraba State. The study found strong evidence that access to microfinance does enhance the growth of SMEs in Taraba State. However, other SMEs' characteristics such as loan duration and experience are found to have negatively impacted enterprise growth, but not significantly. The study recommends SMEs operators utilize the benefits of MFBs to promote their business and in the long run improve the economic performance; and that MFBs should increase the duration of their clients' loans, or spread the repayment over a longer period of time and in that way enable the clients to have greater use of the loan over a longer period for the acquisition of capital assets and technology.