FORMAL SME’s FINANCING FOR RURAL POVERTY REDUCTION – STUDY OF SELECTED LOCAL GOVERNMENT AREAS IN KWARA STATE
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Date
2014-09-12
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department of local governement and development studies, ABU
Abstract
Recent development projects in Nigeria have been concentrated in the urban areaswith no regards for rural areas. This has resulted in poor economic growth and high c oncentration of poverty in the rural areas. In an attempt to address this, rural SMEs development have become paramount. This study investigates the relationship between SMEs financing and rural poverty reduction. A survey of 120 SMEs were undertaken across two local government areas on strata of agro-allied, manufacturing and trading/services with the aid of self-administered questionnaire. A total of 80 copies of correctly filled and returned questionnaires were analysed using correlation and t-test analyses. The results of the findings reveqals the correlation coefficient between SMEs finance and poverty reduction equal 0.685 i.e. 68.5% this implies that SMEs financing have a positive correlation with rural poverty reduction, as an increase in the former leads to corresponding decrease in the latter. The study concludes that formal and informal financing g available to rural SMEs operators are grossly inadequate to sufficiently cater for their financial needs. It is further concluded that poor access to finance is not the only SMEs constraint as others includes low managerial skill; infasturctuarl inadequacy; poor policy support and information asymmetry. The study recommends among others that the government should provide a platform for credit guarantee that will be responsible to provide collateral for rural SMEs.
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Small and medium enterprises, SMEs financing, rural poverty,rural economic and job creation