TITLE:               

EFFECTS OF INTERVENTION FUNDS ON THE BUSINESS FINANCING OF MSMEs IN SOUTH-WEST, NIGERIA

AUTHORS: 

Omosebi, Tolulope R. (Ph.D), Tella, Sheriffdeen A. (Ph.D.), Andy, Okwu T. (Ph.D)

 DOI:  10.5110/77. 1702               Page:   4-23         Vol: 19    Issue: 07   Year: 2024

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ABSTRACT

Access to finance and capacity development play a significant role in the sustenance and development of Micro, Small, and Medium Enterprises (MSMEs). Despite laudable government schemes and institutions established over the years to provide intervention funds to budding enterprises, the financing and performance of MSMEs have continued to fall below expectations. The study employed cross-sectional survey design to collect data from a population of 6,445,452, in proportion to the population of registered MSMEs in Lagos, Oyo and Ogun states in the South-West, Nigeria. A sample size of 1,560 was determined, from which a response rate of 1,192 was recorded. Descriptive and inferential analyses were used to explore the data at α = 0.05 level of significance. The robustness analysis utilizing the coefficient of multiple determination (adjusted R2) reveals that only 12% of the fluctuations in Operating cash flow can be attributed to the intervention funds. Additionally, the analysis of the adjusted R2 signifies that just 9.2% of fluctuations in Working capital can be attributed to intervention funds. Thus, it can be inferred that the effect of the intervention funds on the business finance of Micro, Small, and Medium Enterprises (MSMEs) is low, however significant. It is therefore recommended that intervention funds within the nation be structured as result-based financing. This entails that the designated program would solely provide assurance to banks to grant loans to MSMEs without requiring collateral and with reduced interest rates. Additionally, a first-time loan would be jointly financed by both the banks and the program.

 Keywords:

Business finance, Credit facility, Intervention funds, MSMEs, South-West, Nigeria

Received:  07 June 2024

Accepted:   29 June 2024

Published: 05 July 2024

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