MICRO FINANCING AND SMALL BUSINESS GROWTH IN SOUTH EAST, NIGERIA
ABSTRACT
The study examined the effect of micro financing on growth of micro and small business enterprises in Nigeria, using the MSEs in the South East, Nigeria as the study area. The literature was reviewed based on conceptual review, theoretical framework, theoretical literature and empirical review. The theoretical literature segment of the literature review, was carried out in such a way that the specific objectives of the study were sufficiently reflected in the body of the literature to put the study in the proper perspective. Being a descriptive survey design, an item structured instrument which was designed to reflect a five (5) point Likert Scale of strongly agree, agree, disagree, strongly disagree and undecided was used to elicit data from the respondents. The validity and reliability tests conducted for the instrument indicated that the instrument for data collection was very adequate. The analysis of data was carried out in two main sections: answer to research questions and test of hypotheses. Whereas summary statistics of percentages were used in answering the research questions, Pearson correlation coefficient and multiple regression analysis were used to test the hypotheses. The correlation analysis showed there was no multicollinearity among the independent variables. The results of the regression analysis showed that overall; regression model is statistically significant, valid and fit for any predictive purposes. Regression coefficient showed that 82.1 percent relationship exists between the dependent and independent variables. Equally, the coefficient of determination represented by ‘R2’ showed that 80.9 percent of variation in micro and small business growth can be explained by the independent variables. It was found that timely and regular disbursement of loans to small business operators will promote their growth and expansion. It was also found that high interest rate and demand for collateral negatively affect business growth in Nigeria. The result revealed also that long loan duration/repayment period and non-financial services rendered by the MFBs positively and significantly affect the growth and expansion of micro and small business enterprises. It was recommended among others that the supervisory and regulatory authorities should endeavour to monitor the activities of microfinance institutions to keep them in check always so that the objectives for setting them up may be met.