SME FINANCING AND ECONOMIC GROWTH IN NIGERIA (ECONOMICS PROJECT TOPICS AND MATERIALS)
CHAPTER ONE
INTRODUCTION
Background to the study
A realization in today’s economy world is that government cannot single-handedly ensure the development of a country. Development is seen as a direct function of the various function in the economy particularly private sector, international community and other micro and macro constituents. Noticeable in today’s economy are the activities of small and medium scale enterprises which are described as the fourth realm of economic development (Muhammad and Muzzaffer, 2011).
Alese and Alimi (2014) observed that all over the world a lot has been said and written on small and medium scale enterprises (SMEs), which has formed the subject of discussion in so many seminars and workshops both locally and internationally. In the same token governments at various levels (local, state, and federal) have in one way or the other focused on the small medium enterprise (SMEs). While some governments formulated policies aimed at facilitating and empowering the growth, development and performance of the SMEs, others have focused on assisting the SMEsto grow through soft loans and other fiscal incentives. For instance, the World Bank group approved more than $10 billion in SME support programs over the period 1998-2002 (World Bank, 2002).. This pro-SME policy is based on three core arguments by Beck, Demirgue-kunt, L and Levine (2005); Kumar, Anthony, Singh, Tiwari and Perry (2006) and Collier (2009).Firstly, SME advocates argued that SMEs enhance competition and entrepreneurship and hence have external benefits on economy-wide efficiency, innovation, and aggregate productivity growth. Hence, direct government support of SMEs will help countries exploit the social benefits from greater competition and entrepreneurship. The second factprovided by the SMEs proponents is that SMEs are generally more productive than large firms, but financial market and other institutional failures impede their development. Thus, pending financial and institutional improvements, direct government financial support to SMEs can boosts economic growth and development. Lastly, they argued that SME expansion boosts employment than large firm growth because SMEs are more labour intensive. Eferakeya (2014) observed thateconomic development of any nation depends largely on the existence, growth and survival of small and medium scale enterprises (SMEs). As a propeller of economic growth, SMEs require serious attention so that their developmental role and sustainability will provide the much needed sustainable development of a nation with regard to job and wealth creation.
