Government policy, financial inclusion and performance of SMEs in South Eastern Nigeria

Abstract

Objective: This study seeks to determine the contribution of government policy and Financial Inclusion (FI) to the financial and non-financial performance of SMEs in South Eastern Nigeria.

Research Design & Methods: The study adopts qualitative methodology. The interview guide was pre-tested for reliability and validity. The study data were generated from purposively selected one hundred and twenty respondents. The audio recorded interview was transcribed and subjected to thematic content analysis.

Findings: SMEs that received support from the government recorded marginal financial performance and improved non-financial performance. Also, SMEs that adopted FI strategies and devices experienced improvement in both their financial and non-financial performance. However, SMEs that combined government, friends and family supports, and FI strategies and devices recorded better improvements in their financial and non-financial performance.

Contribution & Value Added: The combination of government, friends/family supports and FI strategies and devices gives better improvement to the financial and non-financial performance of SMEs in South Eastern Nigeria. Thus, the government can reinvent its policies so as to strengthen its implementing agencies and the families of SME owners. SME owners can achieve better financial and non-financial performance by combining government entrepreneurship incentives, friends/family supports and FI strategies and devices.

Keywords

Government policy, FI, financial performance, non-financial performance, SME, CBN

Author Biography

Kenneth Chukwujioke Agbim

Doctoral candidate in the Department of Management, University of Nigeria, Enugu, Nigeria. He has M.Sc. in Development Studies, MBA in Management and M.Sc. in Management. His research interests are in the areas of strategic entrepreneurship, family business development and business ethics.

References

1. Abbasi, W.A., Wang, Z., & Abbasi, D.A. (2017). Potential sources of financing for Small and Medi-um Enterprises (SMEs) and role of government in supporting SMEs. Journal of Small Business and Entrepreneurship Development, 5(2), 39-47. https://doi.org/10.15640/jsbed.v5n2a4
2. Abdulrahman, D.H., & Olofin, O.P. (2017). Financial inclusion, small and medium scale enterprises and inclusive economic growth in Nigeria (1990-2015). Journal of Emerging Trends in Eco-nomics and Management Sciences, 8(4), 204-214.
3. Abeh, O. (2017). The problems and prospects of Small and Medium Scale Enterprises (SMEs) growth and development in Nigeria: A study of selected SMEs in Delta State. International Journal of Scientific Research in Education, 10(3), 278-294.
4. Aiyedun, E.A. (2004, Aug. 25). Creating enabling environment for micro and small scale enterprises in Nigeria [Workshop]. National Workshop, African Centre for Contemporary Studies.
5. Ajakaiye, O., & Olowookere, A. (2013). Financial inclusion in Nigeria. Newswatch Times, July 7, pp. 1-56, Lagos. Retrieved on January 20, 2019 from http://www.mynewswatchtimesng.com/financial-inclusion-in-nigeria/
6. Akinbogun, T.L. (2008). The impact of Nigerian business environment on the survival of small-scale ceramic industries: Case study, South-Western Nigeria. Journal of Asian and African Studies, 43(6), 663-679. http://dx.doi.org/10.1177/0021909608096659
7. Akingunola, R.O. (2011). Small and medium scale enterprises and economic growth in Nigeria: An assessment of financing options. Pakistan Journal of Business and Economic Review, 2(1), 78-97.
8. Altinay, L., & Altinay, E. (2006). Determinants of ethnic minority growth in the catering sector. The Service Industries Journal, 26(2), 203-221.
9. Anochie, U.C., Ude, D.K., & Egbo, V.O. (2015). Entrepreneurship and socio-economic development: The case of Nigeria. International Journal of Management Sciences, 6(7), 346-365.
10. Aremu, M.A., & Adeyemi, S.L. (2011). Small and medium scale enterprises as survival strategy for employment generation in Nigeria. Journal of Sustainable Development, 4(1), 200-206.
11. Ayozie, D.O., Oboreh, J.S., Umukoro. F., & Ayozie, V.U. (2013). Small and Medium Scale Enterpris-es (SMES) in Nigeria: The marketing interface. Global Journal of Management and Business Research Marketing, 13(9), 1-13.
12. Babajide, A.A., Adegboye, F.B., & Omankhanlen, A.E. (2015). Financial inclusion and economic growth in Nigeria. International Journal of Economics and Financial Issues, 5(3), 629-637.
13. Bubou, G.M., Siyanbola, W.O., Ekperiware, M.C., & Gumus, S. (2014). Science and technology Entrepreneurship for Economic Development in Africa (SEEDA). International Journal of Scien-tific and Engineering Research, 5(3), 921-927.
14. CBN (2012). Measuring Nigerian’s financial inclusion strategy. Retrieved January 20, 2019 from www.cenbank.com
15. CBN (2015). Micro, Small and Medium Enterprises Development Fund (MSMEDF). Revised guide-lines. CBN.
16. Chakravarty, S.R., & Pal, R. (2013). Financial inclusion in India: An axiomatic approach. Journal of Policy Modelling, 35(5), 813-837.
17. Eniola, A.A., & Entebang, H. (2015). Government policy and performance of small and medium business management. International Journal of Academic Research in Business and Social Sciences, 5(2), 237-248. http://dx.doi.org/10.6007/IJARBSS/v5-i2/1481
18. Esuh, O.I.L. (2012). The joint moderating effect of location and culture on small firms’ perfor-mance. International Journal of Academic Research in Business and Social Sciences, 2(1), 324-340.
19. Etumeahu, H.E., Okekeke, C.C., & Ukwandu, C.K. (2009). Small business problems in Nigeria: A comparison with Sweden [Unpublished Master Thesis]. School of Management, Blekinge In-stitute of Technology.
20. Harvie, C., Narjoko, D., & Oum, S. (2010). Constraints to growth and firm characteristic determi-nants of SME participation in production networks. In T.T. Vo, S. Oum, & D. Narjoko (Eds.), In-tegrating Small and Medium Enterprises (SMEs) into the More Integrated East Asia (pp. 70-113). ERIA Research Project Report 2010-8, ERIA.
21. Ibor, B.I., Offiong, A.I., & Mendie, E.S. (2017). Financial inclusion and performance of micro, small and medium scale enterprises in Nigeria. International Journal of Research - Granthaalayah, 5(3), 104-122. https://doi.org/10.5281/zenodo.439557
22. Imandojemu, K. (2018). Demystifying the microecomic foundation of economic development in Nigeria: Evidence from ease of doing business index. CBN Bullion, 42(2), 77-92.
23. Irankunda, D. (2017). Financial inclusion in the informal sector: A case study of street vendors in Kigali, Rwanda Nyarugenge District [Unpublished Masters Dissertation]. The Hague, The Netherlands, Institute of Social Studies.
24. Jasra, J.M., Hunjra, A.I., Rehman, A.U., Azam, R.I., & Khan, M.A. (2011). Determinants of business success of small and medium enterprises. International Journal of Business and Social Sci-ence, 2(20), 274-280.
25. Kama, U., & Adigun, M. (2013). Financial inclusion in Nigeria: Issues and challenges. Retrieved from http://www.cenbank.org/Out/2014/RSD/Occasional Paper No. 45 Issues and Challeng-es.pdf on January 20, 2019.
26. Kelley, D.J., & Nakasteen, R.A. (2005). Technology resources, alliances and sustained growth in new, technology-based firms. IEEE Transactions on Engineering Management, 53(3) 292-300.
27. Kihimbo, B.W., Ayako B.A., Omoka, K.W., & Otuya, W.L. (2012). Financing of Small and Medium Enterprises (SMEs) in Kenya: A study of selected SMES in Kakamega Municipality. Interna-tional Journal of Current Research, 4(4), 303-309.
28. Ministry of Budget and National Planning (MBNP) (2017). The Nigerian economic plan: Economic recovery and growth plan 2017-2020. MBNP.
29. Monday, J.U., Akinola, G.O., Ologbenla, P., & Aladeraji, O.K. (2014). Strategic management and firm performance: A study of selected manufacturing companies in Nigeria. European Journal of Business and Management, 7(2), 161-171.
30. NCI (2001). The thirteenth meeting of the National Council of Industry (NCI). NCI.
31. Noor, H. (2016). Determining factors that influence financial inclusion among SMEs: The case of Harare Metropolitan [Unpublished Master Dissertation]. University of Cape Town, South Afri-ca.
32. Nwafor, M.C., & Yomi, A.I. (2018). The nexus between financial inclusion and economic growth: Evidence from Nigeria. International Journal of Research and Innovation in Social Science, II(IV), 143-149.
33. Nwite, S.C. (2014). Implications of small and medium enterprises on South East development in Nigeria. Global Advanced Research Journal of Management and Business Studies, 3(12), 570-575.
34. OECD (2006). Financing SMEs and entrepreneurs [Conference session]. The 2nd OECD conference of Ministers responsible for SMEs. Istanbul, Turkey.
35. OECD (2009). The impact of the global crisis on SME and entrepreneurship financing and policy responses. Organization for Economic Co-Operation and Development.
36. Oladele, P.O., Oloowokere, B.A., & Akinruwa, T.E. (2014). Sources of finance and small and medi-um scale enterprises’ performance in Ado-Ekiti metropolis. European Journal of Business and Management, 6(28), 88-98.
37. Olekamma, K.C., & Tang, Z. (2016). The influence of entrepreneurial characteristics on small and medium-sized enterprise accessibility to debt finance in Nigeria. International Journal of Managerial Studies and Research, 4(10), 83-92. http://dx.doi.org/10.20431/2349-0349.0410008
38. Omoruyi, O.O., & Okonofua, B.A. (2005). Cottage industries: A tool for rural development and poverty reduction in Nigeria. Benin Journal of Social Sciences, 13(1), 13-26.
39. Onalo, U., Lizam, M., & Kaseri, A. (2017). Financial inclusion and the Nigerian economy: Empirical evidences. Asian Journal of Economics, Business and Accounting, 4(4), 1-10.
40. Onugu, B.A.N. (2005). Small and Medium Enterprises (SMEs) in Nigeria: Problems and prospects [Unpublished Ph.D Thesis]. St. Clements University.
41. Porter, M.E. (1985). Competitive Advantage. Free Press.
42. Rafiq, R. (2016). CBN should focus on its primary mandate. CBN.
43. SAEED (2009). Formality of financial sources and firm growth: Empirical evidence from Brazilian MEs 1999-2005. Journal of Academic Research in Economics, 1(2), 131-144.
44. Salman, A.Y., Ayo-Oyebiyi, G.T., & Emenike, O.A. (2015). Influence of financial inclusion on small and medium enterprises growth and development in Nigeria. International Journal in Man-agement and Social Science, 3(4), 390-401.
45. Sanusi, L.S. (2012). Achieving financial inclusion in Nigeria [Conference session]. Financial Regula-tors Forum of the 18th Nigerian Economic Summit, Abuja.
46. Sathe, V. (2006). Corporate entrepreneurship: Top managers and new business creation. Cam-bridge University Press.
47. SMEDAN/NBS (2012). Survey report on small and medium enterprises in Nigeria. NBS.
48. Triki, T., & Faye, I. (2013). Financial inclusion in Africa. African Development Bank Group.
49. Valentine, M.I. (2014). The impact of financial institutions financing on small and medium scale enterprises in Nigeria [Unpublished Master Dissertation]. Eastern Mediterranean University, Gazimağusa, North Cyprus.
50. Wiklund, J., & Shepherd, D. (2005). Entrepreneurial orientation and small business performance: A configurational approach. Journal of Business Venturing, 20(1), 71-91. http://dx.doi.org/10.1016/j.jbusvent.2004.01.001
51. World Bank (2015). Retrieved on January 20, 2019 from http://www.worldbank.org/en/country/nigeria/o verviewGov.UK https://smefinanceforum.org/data-sites/msme- country-indicators
52. Zarook, T., Rahman, M.M., & Khanam, R. (2013). Does the financial performance matter in access-ing to finance for Libya’s SMEs? International Journal of Economics and Finance, 5(6), 11-19.