Effects of Microfinance on the Financing of SMEs in Taraba State, Nigeria
Mustapha Tafida Aminu & Isa M. Adamu (PhD)
Department of Economics
Faculty of Arts and Social Sciences
Taraba State University, Jalingo
Email: tafidainfo@gmail.com, isaardo@gmail.com
ABSTRACT
Accessibility to credit is universally considered to be a crucial factor in enhancing the growth and development of SMEs. The main goal of this paper was to evaluate effects of microfinance on the financing of small and medium scale enterprises towards ensuring the economic development and diversification goals of the governments in both Taraba state and Nigeria at large. To achieve the primary objectives of this study, Stratified random sampling technique and structured questionnaire were employed in collecting data from the 317 SMEs that formed the sample size of the research population. Multiple regression of the statistical package for social science (SPSS) version 20 was utilized to analyze the data. It was found that micro loan and interest rate are significantly related to SMEs financing as well as their growth potential in Taraba state. It was also found that microfinance has been contributing enormously in financing of small and medium scale enterprises in Taraba state, despite the inherent hurdles. It has been observed that access to microloans have remarkably improved over the years, as many SMEs operators receive credit facilities with fairly affordable interest rates thus encouraging them and boosting their operations. The recommendations offered include: the need to review the current requirement to access microloans from MFIs; close monitoring and regulating the financial and non-financial activities of microfinance institutions; the need for governments and microfinance institutions to embark on campaigns, especially in rural areas to sensitize the people about availability and accessibility of credit facilities.
Keywords: Microfinance, Small & Medium Scale Enterprises, Grameen model, Micro-loan.
