Exploration And Exploitation Of Sources Of Fund Available To Small And Medium Scale Enterprise Presented

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The main purpose of this study is to identify, explorate and explorative the sources of funds available to the small and medium scale enterprises in Enugu State. To do this, data were collected from both primary and secondary sources. The main instrument of data collection was the questionnaire. The data were presented in tables as frequency, distribution in the data analysis, the techniques of percentage frequencies were used, the hypothesis were tested with Chi-square technique as 52 level of significance. The research work of exploration and exploitation of sources of fund available to SMEs in Enugu states is carefully prepared to strength into the sources of funding SMEs fro employment opportunities growth and development of the state and Nigeria at large. SMEs is the engine of economics growth and for promoting equitable development. As a result of this, radical decisions and recommendation encountered in financing SMEs, like quality of human resources, favorable macrocosmic environment, adequate infrastructural facilities, access to capital and access to market information  and technology for growth and development.



Title page                                                                         i

Approval page                                                                 ii

Dedication                                                                       iii

Acknowledgment                                                             iv

Abstract                                                                          v

Table of contents                                                             vi



INTRODUCTION                                                              1

1.1      Background of the study                                          1

1.2      Statement of the problem                                        5

1.3      Objective of the study                                              6

1.4      Research question.                                                  6

1.5      Research hypothesis                                                        7

1.6      Significant of the study                                            7

1.7      Scope of the study                                                   8

1.8      Limitation of the study                                             9

1.9      Plans of the study.                                                   10

References                                                               11



LITERATURE REVIEW                                                   12

2.1      Conceptual framework                                             12

2.2      Definition of small and medium scale enterprise:    14

2.3      Features of small and medium scale enterprise               18

2.4      Important of small and medium scale enterprise     20

2.5      Sources of finance available to small and medium

scale enterprise                                                                21

2.6      The problems facing small and medium scale

enterprises in Enugu state                                       31

2.7      Asset-based lending rule: an assessment                        32

2.8        the role of SMEs in economic growth and

development of Enugu state                                    33

2.8      Possible ways of encouraging small and medium

scale enterprises in Enugu state                              37

2.9      Historical background and development

commercial banks                                                   37

2.10    General operations of the bank and services offered 39

References                                                               42



RESEARCH DESIGN METHODOLOGY                           43

3.1      Research design                                                       43

3.2      Area of study                                                            44

3.3      Population of the study                                            44

3.4      Sample and sampling procedure                             44

3.5      Sample size determination                                       45

3.6      Instrument or data collection                                   46

3.7      Validation of the instrument                                    47

3.8      Reliability of the instrument                                    47

3.9      Method of data analysis                                           48

References                                                               50


4.1      Data presentation and analysis                                       51

4.2      Testing of hypothesis                                               58




5.1      Summary                                                                         62

5.2      Conclusion                                                              62

5.3      Recommendations                                                   64

Bibliography                                                            68

Questionnaire                                                          69














Small and medium scale enterprises (SMEs) occupy a place of pride in virtually every country of state. Because of the significant roles SMEs play in the growth and development of various economics, SMEs have aptly been referred to as “the engine of growth” and “catalysts for social-economic transformation of any country” SMEs represent a veritable vehicle for the achievement of national economic objectives of employment generation and poverty reduction at low investment cost as well as the development of entrepreneurial capabilities including indigenous technology. Other intrinsic benefit of vibrant SMEs include access to the infrastructure facilities occasioned by the existence of such SMEs in their surroundings, the stimulation of such SMEs in their surroundings, the stimulation of economics activities such as suppliers of various items and distributive trades for items produce and or needed by the SMEs, stemming from rural urban migration, enhancement of standard of living of the employees of SMEs and their dependants as well as those who are directly or indirectly associated with them. Supporting these facts, Ajose (2010) states that, SMEs are the pivot of economics growth and first point of contact for the business world.

Small and medium scale enterprises (SMEs) are a very heterogeneous group of business usually operating in the services, trade agri-business, and manufacturing sectors. They include a wide variety of firms such as village handicraft makers, small machines shops and computer software firms that possess a wide range of sophistication and skills. Some are dynamic, innovative, and growth-oriented while others are satisfied to remain small and perhaps family owned. SMEs usually operate in the formal sectors of the economy and employed mainly wage-earning workers. SMEs are often classified by the number of employees and/or by the value of their assets. The size classification varies within regions and across countries relative to the size of the economy and its endowments. It is important to not that there is a minimum as well as a maximum size for SMEs (inegbenebor, 2006).

SMEs have played and continue to play significant roles in the growth, development and industrialization of many economics the world over. In the case of Nigeria, SMEs have performed by low expectation due to a combination of problems which ranges from attitude and habits of SMEs them selves through environmental related factors, instability of governments and frequency government policy changes. The supportive business environment for SMEs is still weak in Nigeria. The SME support programmes are poorly coordinated and lack the necessary coverage to reach all sectors of the small business community. Almost al micro finance institutions (MFIs) are supposed to cater for those enterprises with credit lending. However, project lending and risk capital for SMEs is virtually unviable. The private equity and venture capital funds embellished in Nigeria are few and later primarily to the needs of expansion of established business and privatized companies.

However, as Hallberg (2000) observes, government assistance strategies in both development and developing countries often try to achieve a combination of equity objectives (alleviating poverty and addressing social, ethic and gender inequalities ) and efficiency objectives (rising the productivity and profitability of firms). Like wise, Ojo (2003) argues that all these SME assistance programs have failed to promote the development of SMEs.

This was echoed by Tumkella (2003) who observers that all these programmes could not achieve their expected desire due largely to abuses, poor project evolution and monitoring as well as moral hazards involved in using public funds for the purpose of promoting private sector enterprises.

However, the purposes of this study is to determine how polices can be utilized effectively to foster the development and the sources of finds available to SMEs and such as enhance economic growth and development. Socio-economic development of Nigeria can only be achieved by aggregating all the relevant and important sectors and sub-sectors of Nigeria. Nigeria as a nation exhibits some measures of sectoral disaggregtion and this has affected the ability of the country to properly account for factors contributing to changes in national income and economics growth. This has to death of information and data necessary for good and effective policy formation.



i.                   The unwillingness of retail banks to grant credit to SMEs because of the low credit worthiness of SMEs has hampered their growth over the years.

ii.                     Lack of finance whether for the establishment of new.

iii.                Inability to attract financial credit or resources has hindered or stifled the growth of SMEs.

iv.              Higher rate of interest charged on loan, which scares off potential small and medium scale enterprises.

v.                 Inadequacy of fund hinders the growth of small and medium scale enterprises.         


i.            To examine the sources of find available to SMEs in Nigeria.

ii.          To identify the problems encountered by SMEs in obtaining fund.

iii.        To examine the contribution of SMEs to the economy of Nigeria.

iv.         To examine if inadequacy of finance hinders the growth of SMEs in Nigeria.

v.           To appraise the contribution of commercial banks to the funding of SMEs in Nigeria.  


i.            Is there any problem encountered by SMEs obtaining fund for growth and development?

ii.          Is there any policy programs established by government to ensure SMEs growth in Nigeria?

iii.        Is inadequacy of fund hinders the growth of SMEs in Nigeria.

iv.         Are you aware of the existence of the government policy programs that are meant to assist SMEs?

v.           How does your firm obtain its fund?  


 1)    Ho: There is no problem encountered by SMEs in obtaining fund

        Hi: There is problem encountered by SMEs obtaining fund

2)     Ho: There is no policy programs established by government to ensure SMEs growth in Enugu State.

        Hi: There is policy programs established by government to ensure SMEs growth in Enugu state.

3)     Ho: Inadequacy of fund does not hinder the growth of SMEs in Enugu state.

        Hi: Inadequacy of fund hinders the growth of SMEs in Enugu State.          


The study will help to go a long way in finding the sources of fund available to small and medium scale enterprise.  The study is significant because it would help to evaluate the operations of vitae segment of the industries sector. Small and medium scale enterprises. Which have been identified as having very high potentials in promoting economic growth and development (Oni and Danily a, 2012). The evaluation shall be done with special focus on their financing thereby adding to the existing literature on the subject matter.

The study will also help to solve the problem or challenged facing SMEs in sourcing fund. As a result of his, there will be adequate infrastructural facilities and creativity for the SMEs, thereby enhancing employment opportunities, growth and development in the economy of Enugu State.            


        This research work focuses on the source of fund available to small and medium scale enterprises (SMEs) in Enugu state.  This study pays more attention on the loan granted to SMEs by financial institutions like commercial banks, microfinance Banks and schemes with the aim of evaluating their availability, accessibility and adequacy for SMEs growth and development in Enugu state.

Most of the information and data needed for the study would be gathered from existing literature and from relevant government agencies such as the central banks of Nigeria.  



Firstly, the financial constraint caused by the present economic condition of the country made it difficult for the researcher not to visit so many SMEs in Enugu state frequently as would have been the case through it bid not defeat the purpose and major objective of the study, as the research finally and successfully achieved the purpose of her research work.

Secondly, as a result of other academic schedule of the researcher, there was no enough time for the researcher to visit all the relevant areas which include SMEs libraries and commercial banks.

Furthermore, the researcher was also hindered by non response by the various levels of staff of the commercial Banks and the managers of SMEs. Unavailability of research materials also consulted major limitation to this research work.              


This study shall be divided into five (s) chapters. The first chapter, which is the introduction, shall. Presents the background of the study, statement of the problem, objectivities of the study, researcher question, hypothesis, and significance of the study, scope of the study and the limitation of the study. Chapter two shall review existing literature on the sources of fund available to SMEs, the constraints in sourcing their find, Their role in economic development and soon.

Chapter three shall explain the research methodology to be applied in the study. Chapter four shall focus on the data presented and analysis while the part of this study is chapter five where in a nutshell, the Summary of the findings, the conclusion and recommendation shall be presented.          


Doyle, E.P (2001) Practice of banking Macdonal and Evans third edition.

Exejelue A. C (2000) Basic principle of managing research projects: African FEB publishers, Onitsha.


Adelaja B. O. (2003), Financing SMEs, under SMIES being a paper presented central bank of Nigeria (CBN) Seamier on SMIEIS. Lagos, August, No 4, pp + 00 -114.


Oyelaran-oyeyinka (2003), financing and development of SMEs in Nigeria. Central bank of Nigeria economic and financial review. Vol. 24, No. 4, December.


Ajose (2010), Building small and medium scale enterprises: A strategy for Development in Nigeria.  Jos journal of economics, Vol.4, no 1.


Inegbenebor (2006) source of fund available to SMEs in Nigeria: central bank of Nigeria seminar on SMIEIS


Hallberg (2000) Development of SMEs: Arabian journal of business and management Review. Vol 1, No.7,pp.16 - 29.


Ojo (2003) Building SMEs: A strategy for economic development in Nigeria. Journal Economics , vol.4, No.1.


Tumkella (2003) Financing SMEs: Management Review vol.4, No.1.


Oni and Danilya Development of SMEs: Arabian journal of business and management review. Vol.1, No.7, pp.16-29.


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Exploration And Exploitation Of Sources Of Fund Available To Small And Medium Scale Enterprise    Presented