Winners and Losers: Between Bank Loan and Small Medium Enterprises Equity Investment Scheme (SMEEIS) as Funding Sources for Northern Nigerian SMEs

The performance of the Small and Medium Enterprises in Northern Nigeria have been characterized as suboptimal, due to the myriad of challenges bedevilling the sector, notable among which is the financial constraint. The creation of Small Medium Enterprise Equity Investment Scheme (SMEEIS) was necessitated by the desire of the private sector to complement government’s effort of supporting the Small and Medium Enterprises subsector. What is more, it was also intended to ease the burdensome regulatory restrictions and conditionality for SMEs’ access to formal credit from the conventional Banks in Nigeria, and, furthermore, venturing into the potentially untapped revenue base of the sub-sector, which promises opportunities for the conventional banks. This study assesses the comparative financial and non-financial performance between SMEEIS-intervened SMEs, and SMEs financed by the conventional bank loans, and also determines the factors responsible. From a sample of 362 SMEs using sample t-tests and multiple linear regression analysis the result obtained revealed that the SMEs financed by conventional banks significantly outperformed their SMEEIS beneficiary counterparts in both financial as well as non-financial performance. The study established and revealed a significant positive relationship between capital structures, years of operation, knowledge of the program, financial literacy, and ownership structure preference with financial and non-financial performance. Therefore, the study concluded that capital structure, ownership structure, financial literacy, applicable interest rate, and years of operation are key determinants of the SMEs performance of the Northern Nigerian SMEs. Hence the need for the conventional banks and policy makers to assist the SMEs to build capacity in the identified areas, towards the sustainability of the existing and future intervention initiatives with similar objectives.

Grantor

Graduate School of Business (GSB)

Year dc:date.issued

2019

Author dc:creator

• Adamu, Aliyu

Advisor dc:contributor.advisor

• Alhassan, Abdul Latif

Handle dc:identifier.uri

http://hdl.handle.net/11427/30353

OAI identifier oai:identifier

oai:open.uct.ac.za:11427/30353