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ENTREPRENEURSHIP AND ECONOMIC DEVELOPMENT IN NIGERIA: EVIDENCE FROM SMALL AND MEDIUM SCALE ENTERPRISES (SMES) FINANCING
Abstract
Entrepreneur as an agent of economic transformation in society is visible in employment and wealth generation, stimulation of indigenous entrepreneurship or promotion of entrepreneurial culture. To nurture entrepreneurial development, small and medium scale enterprise operators or entrepreneurs are being considered as main sustenance of the economy because of their capacity in enhancing the economy productivity and enhancing standard of living of the common man, as they account for over 50 percent of GDP of developing economies. However, lack of access to relative cheap and effective source of finance have been identified as the major factor hindering their contribution to economic growth in developing countries. This paper assessed the impact of SMEs financing on economic growth and development of Nigeria. The paper adopted correlational research design using secondary data for a period of 22 years (1992-2013). Autoregressive Integrated Moving Average (ARIMA) model was applied in the analysis, the study found that aggregate commercial banks financing of SMEs has significant positive impact on the economic growth and development of Nigeria. The study also found that Microfinance banks’ financing in the area of transportation and commerce, manufacturing and food processing and other activities have significantly impacted on economic growth and development of Nigeria during the period. The paper concludes that SMEs financing could significantly improve entrepreneurship in Nigeria and the economic development in return. The paper recommends that governments in Nigeria should make policies towards increasing the funds for financing SMEs both in the commercial and microfinance banks. The government should also encourage more financing in the agricultural and manufacturing activities of SMEs, as this could improve the productivity of the real sector.
Keywords: Microfinance, GDP, Agric Financing, Real Estate & Construction Financing