IMPACT OF MICROFINANCE CREDIT FACILITIES ON UTILIZATION CAPACITY OF SMALL AND MEDIUM ENTERPRISES IN SOUTHWESTERN NIGERIA

Abstract

This study investigated the effect of microfinance banks contribution to the utilization capacity
of SMEs’ performance in Southwestern Nigeria. The study employed a descriptive survey
design. Data on microfinance credit services and performance of SMEs were obtained through
the administration of questionnaire. multistage sampling technique was adopted in the
selection of respondents totaling 354 out of 400 sample size from the population of 9,602,249
registered SMEs in Southwestern Nigeria. simple random sampling technique was used to
select 3 out of the 6 states in the zone, while stratified sampling technique were used to select 4
local government areas from the 3 selected states based on senatorial district. Then, simple
random technique was used to select 3 towns and communities from the 12 selected local
government areas, consequently, simple random technique was used to select an average of 12
SME owner managers from 36 towns in Southwestern Nigeria. Data obtained were analysed
using descriptive statistics and simple percentages. The results showed that credit facilities
offered by microfinance banks to small and medium-scale enterprises in Southwestern Nigeria
include long-term and short-term loans, ranging from bank overdraft (38.1%) to term loans
(40.7%) to assets/equipment financing (18.1%). The result revealed that 70% of the SMEs in
Southwestern Nigeria had access to microfinance credit facilities. The study concluded that
microfinance credit services were veritable tool for enhancing the performance of small and
medium-scale enterprises in Southwestern Nigeria.