The study was conducted to investigate
the effects of government funding schemes on development of Small and
Medium Enterprises (SMEs) in Nigeria. To meet the objectives of the
study, survey research method was applied and a sample of 50 respondents
was administered to SMEs Owners and Staff in Ojo Local Government Area.
Data collection was done through questionnaire administration and the
data collected were statistically analyzed with the aid of SPSS
software. It was found that government funding schemes significantly
affects SMEs growth and development in Nigeria. However, only few
entrepreneurs have access to the loans. Therefore, the study recommends
that entrepreneurs need to be educated about the procedures and
processes required to secure loans from the financial schemes available
TABLE OF CONTENTS
1.1 Background of the study
1.2 Statement of the problem
1.3 Objectives of the study
1.4 Research questions
1.5 Research hypothesis
1.6 Significance of the study
1.7 Scope and limitations of the study
1.8 Plan of the study
1.9 Definition of terms
2.2 Conceptual Framework
2.2.1 Definition of SMEs
2.2.2 Role of SMEs in an Economy
2.2.3 Challenges of SMEs
2.2.4 Emergence of the Small and Medium Industries
Equity Investment Scheme (SMIEIS)
2.3 Theoretical Framework
2.4 Empirical Framework
CHAPTER THREE (RESEARCH METHODS)
3.2 Restatement of research questions
3.3 Restatement of research hypothesis
3.4 Research design
3.5 Population of the study
3.6 Sample size and sampling techniques
3.7 Source of Data
3.8 Data collection instrument
3.9 Administration of research instrument
3.10 Method of data analysis
Data Presentation, Analysis and Presentation
4.1 Data analysis and presentation of result
4.2 Data analysis of the demographic characteristics
4.3 Test of hypothesis
4.3.1 Hypothesis one
4.3.2 Hypothesis two
4.3.3 Discussion of result (tested hypothesis)
Summary, Conclusion and Recommendation
5.1 Summary of findings
1.1 Background To The Study
Small and Medium Enterprises (SMEs)
occupy a place of pride in virtually every country or state. Because of
their (SMEs) significant roles in the development and growth of various
economies, they (SMEs) have aptly been referred to as "the engine of
growth" and "catalysts for socio-economic transformation of any country"
(Onugu, 2005). Several studies (i.e Sanusi, 2003; Onugu, 2005; Osuagwu,
2006; Ehinomen and Adeleke, 2012) have revealed that funding has been
one of the major challenges facing the growth and development of SMEs in
developing countries. Hence, the significance of government funding
schemes towards the development of SMEs sector cannot be over emphasis.
Governments at various levels (Local,
State and Federal levels) had in one way or the other focused on the
Small and Medium Enterprises. While some governments had formulated
policies aimed at facilitating and empowering the growth and development
and performance of the SMEs, others had focused on assisting the SMEs
to grow through soft loans and other fiscal incentives.
According to Onugu (2005), various
special measures and programmes have been designed and policies
enunciated and executed by government to encourage SMEs development and
make them more vibrant in Nigeria. The highlights of these measures
include; Fiscal incentives and protective fiscal policies, Specialized
financial institutions and funding schemes for the SMEs, Favourable
tariff structure, Small and Medium Industries Equity Investments Scheme
(SMIEIS), Small and Medium Enterprises Development Agency of Nigeria
(SMEDAN) and Bank of Industry (BOI).
The various SMEs financing schemes have
been in operation for dose to three decades and it is expected that the
scheme should have contributed immensely to SMEs growth and development
in Nigeria. It is against this background that this study shall be
conducted to examine the effect of government funding on development of
in Lagos state.
1.2 Statement Of The Problem
For the past 30 years, the Federal
Government's policy interventions for the Small and Medium Enterprises
(SMEs) sector of the economy have not produced the desired results as
the sector currently contributes one per cent to the GDP (Alli, 2012).
It is a common knowledge that SMES in Nigeria find it relatively
difficult to obtain institutional credits from financial houses. The
need to address these problems comprehensively for a sustainable source
of long term financing necessitated the introduction of the Small and
Medium Industries Equity Investment Scheme (SMIEIS) by Bankers'
Committee at the initiative of the Central Bank of Nigeria.
The scheme as at the end of 2009 had
attracted a total of N42.03 billion with N28.87 equity investment in 336
projects (Alli, 2012). However, it is unclear how beneficiaries in
Lagos state access loan from the SMIEIS in order to develop their SMEs.
Therefore, the problem of this study is to investigate the mode of
operation of SMIEIS, impact of its financial advisory services,
challenges facing SMEs operators to access loan from
the scheme and find out the extent to which the, SMIEIS have contributed to SMEs development.
1.3 Objective Of The Study
The main objective of the study is to
examine effects of government funding schemes on development of Small
and Medium Enterprises (SMEs) in Nigeria. However, the specific
- i. To examine the effect of Small and Medium Industries
Equity Investments Scheme (SMIEIS) on provision of loans to small
- ii. To examine the conditions for accessing SMIEIS loan and its effect on growth of SMEs in Lagos state.
- iii. To examine the effect of financial advisory services by SMIEIS administrators on application of loan.
- iv. To assess the compliance of banks to the disbursement arrangement for administering SMIEIS loans to SMEs operators.
1.4 Research Questions
The following research questions guide the study;
- What are the effects of Small and Medium Industries Equity Investments Scheme (SMIEIS) on provision of loans to SMEs?
- Does SMIEIS loan have effect on the growth of SMEs in Lagos state?
- How does the financial advisory service by SMIEIS administrators affect application of loans by SMEs in Lagos state?
- Does banks complied with the disbursement arrangement for administering SMIEIS loans to SMEs operators?
1.5 Research Hypotheses
The research tests the following hypotheses;
1. Ho: Small and Medium Industries
Equity Investments Scheme (SMIEIS) does not have significant effect on
SMEs operations in Lagos state.
Hi: Small and Medium Industries Equity Investments Scheme (SMIEIS) has significant effect on SMEs operations in Lagos state.
2. Ho: SMIEIS does not enhance the growth of SMEs in Lagos state.
Hi: SMIEIS enhances the growth of SMEs in Lagos state.
3. Ho: Financial advisory service by SMIEIS administrators does not have significant effect on application of loans.
Hi: Financial advisory service by SMIEIS administrators has significant effect on application of loans.
1.6 Significance Of The Study
The study contribute to knowledge in the
area of SMEs development in Nigeria. The study will examine the Small
and Medium Industries Equity Investment Scheme (SMIEIS) and how SMEs
have benefited from the scheme.
The study shall unravel the factors that
hinder SMEs access to loan from government financial schemes in the
country and proffer solutions to any problem identified in the course of
The findings of the study will assist
SMEs operators and policy makers in finding a better way of improving
SMEs performance in Nigeria.
Also, the study will be relevant to students who may conduct similar study in the future.
1.7 Scope And Limitations Of The Study
The study covers government funding
schemes in support of SMEs growth and development in Lagos State. Focus
will be on the mode of operation, challenges of the scheme and its
contribution towards providing financial assistance to SMEs in Lagos
State. The study shall be limited to Small and Medium Industries Equity
Investment Scheme (SMIEIS) implementation in Lagos state.
The study will further be limited by
availability and access to data from the Central Bank of Nigeria (CBN)
on SMIEIS fund disbursement in Lagos state. However, time and financial
constraints are expected to be a major limitation of the study. Also,
getting beneficiaries (respondents) to comment on how they secure and
implement funds from SMIEIS is another limitation to the study.
1.8 Plan Of The Study
The researcher presented the study in five chapters as follows Chapter One
presented general background to the study followed by statement of the
research problem; objectives of the study, research questions, research
hypotheses, significance of the study, scope and limitation of study,
organization of the study and definition of terms.
In Chapter Two
literatures were review with respect to SMEs funding scheme in Nigeria
under conceptual framework, theoretical framework and empirical study.
Chapter Three cover the
research methodology with respect to research design, population of the
study, sample and sampling technique, instrument of data collection and
Chapter Four cover data analyses, presentation and discussion of
findings from the data analysis.
Chapter Five however present summary, conclusion drawn and recommendation.
1.9 Definition Of Terms
The courses of the study, some basic concepts were used. These
concepts are defined below;
Funding: is the act of
providing resources, usually in form of money (financing), or other
values such as effort or time (sweat equity), for a project, a person, a
business, or any other private or public institutions.
Government Funding: Refers to financial support from government to SMEs in Nigeria.
Small Enterprise: An
enterprise whose total cost including working capital but excluding cost
of land is between ten million naira (N10,000,000) and one hundred
million naira (N100,000,000) and/or a workforce between eleven (11) and
seventy (70) full-time
staff and/or with a turnover of not more than ten million naira (N10,000,000) in a year.
Medium Enterprise: A
company with total cost including working capital but excluding cost of
land of more than one hundred million naira (N100,000,000) but less than
three hundred million naira (N300,000,000) and/or a staff strength of
between seventy-one (71) and two hundred (200) full-time workers and/or
with an annual turnover of not more than twenty million naira
Large Enterprise: Any
enterprise whose total cost including working capital but excluding cost
of land is above three hundred million naira (N300,000,000) and/or a
labour force of over two hundred (200) workers and/or an annual turnover
of more than twenty million naira (N20,000,000) only.
Small and Medium Industries Equity Investments Scheme (SMIEIS):
Refers to the funding scheme by which the government directive from the
CBN that commercial banks should set aside 10% of the profit after tax
to provide loan for SMEs in Nigeria.