THE IMPACT OF MICROFINANCE BANK IN GROWTH OF SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA

THE IMPACT OF MICROFINANCE BANK IN GROWTH OF SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA

ABSTRACT

This study discusses the impact of Microfinance Institution (Microfinance bank) on the growth of Small and Medium Scale Enterprises (Small and medium scale business) in the Owerri Urban. The study examined the detailed profile of Small and medium scale business in the Owerri Urban of Nigeria, the contribution of Microfinance bank to entrepreneurial growth, the challenges encountered by Small and medium scale business in accessing credit and the rate of credit utilization by Small and medium scale business. An analysis of the profile of Small and medium scale business shows that most Small and medium scale business area their Micro stages since they employ less than six people and these factory considerably dominated by the commerce sub-sector. There search also indicates that Microfinance bank have had a positive effect on the growth of Small and medium scale business. Some of the critical contributions of Microfinance bank include; greater access to credit, savings enhancement and provision of business, financial and managerial training. Irrespective of the contributions of Microfinance bank to the development of Small and medium scale business, there are challenges that affect the operations of both Small and medium scale business and Microfinance bank. The major challenge faced by Small and medium scale business is the cumber some process associated with accessing credit of which collateral security and high interest or setback. On the other hand, Microfinance bank face some challenges relating to credit misappropriation and non- disclosure of the relevant facts of the business operations of Small and medium scale business. The final analysis of their search clearly reveals that Microfinance bank have a positive effect on the growth of Small and medium scale business. In order to enhance a sustained and accelerated growth in the operations of Small and medium scale business, credits should be client- oriented and not product-oriented. Proper and extensive monitoring activities should be provided for clients who are granted loans.

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