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 to SMEs.
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
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
4.1 Data analysis and presentation of result
4.2 Data analysis of the demographic
4.3 Test of hypothesis
4.3.1 Hypothesis one
4.3.2 Hypothesis two
4.3.3 Discussion of result (tested
Summary, Conclusion and
5.1 Summary of findings
1.1 Background To The
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.
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.
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
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
scheme and find out the extent to which the, SMIEIS have contributed to SMEs
1.3 Objective Of 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 objectives are:
To examine the effect of Small and
Medium Industries Equity Investments Scheme (SMIEIS) on provision of loans to
small business entrepreneurs.
To examine the conditions for accessing
SMIEIS loan and its effect on growth of SMEs in Lagos state.
To examine the effect of financial
advisory services by SMIEIS administrators on application of loan.
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
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.
Financial advisory service by SMIEIS administrators does not have significant
effect on application of loans.
Financial advisory service by SMIEIS administrators has significant effect on
application of loans.
1.6 Significance Of The Study
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.
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 study.
findings of the study will assist SMEs operators and policy makers in finding a
better way of improving SMEs performance in Nigeria.
the study will be relevant to students who may conduct similar study in the
1.7 Scope And Limitations Of The Study
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.
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
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.
Chapter Two literatures were review
with respect to SMEs funding scheme in Nigeria under conceptual framework,
theoretical framework and empirical study.
cover the research methodology with respect to research design, population of
the study, sample and sampling technique, instrument of data collection and
cover data analyses, presentation and discussion of
from the data analysis.
however present summary, conclusion drawn and recommendation.
1.9 Definition Of Terms
courses of the study, some basic concepts were used. These
are defined below;
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.
Refers to financial support from government to SMEs in Nigeria.
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)
staff and/or with a turnover of not more than ten million
naira (N10,000,000) in a year.
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 (N20,000,000) only.
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.
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.