EFFECT OF MICRO FINANCE BANK FINANCING ON THE GROWTH OF SMES IN NIGERIA (2007-2023)

This study investigates the effect of Microfinance Bank Financing on the Growth of SMEs in Nigeria. Small and Medium Enterprises (SMEs) in Nigeria face significant barriers in accessing loans from microfinance banks. These barriers include stringent collateral requirements, high interest rates, and bureaucratic inefficiencies, all of which limit the ability of SMEs to secure financing and grow their businesses. As a result, many SMEs are unable to meet their financial needs, stifling their economic contributions. The broad objective of the study is to determine how microfinance bank financing affects the growth of SMEs in Nigeria. The specific objectives are to evaluate the effect of microfinance bank loans and advances on the number of registered SMEs in Nigeria, to determine the effect of microfinance bank loans and advances on the number of jobs created by SMEs in Nigeria, and to examine the effect of microfinance bank loans and advances on average SME turnover in Nigeria. The research employs the Ordinary Least Square (OLS) model using data spanning from 2007 to 2023. The findings reveal that the number of registered SMEs, the number of jobs created by SMEs, and the average SME turnover all had a positive and significant relationship with microfinance bank loans and advances in Nigeria. It was concluded that there was a positive and statistically significant relationship between microfinance loans and SME growth indicators, such as the number of registered SMEs, jobs created, and average SME turnover. The study concluded that SME growth positively influences microfinance bank financing in Nigeria. It is recommended, amongst others, that policymakers should encourage microfinance institutions to increase the availability of loans, particularly in underserved regions. This could drive the registration of even more SMEs, boosting economic activity and entrepreneurship across the country.