Government Micro-financing for Micro, Small, and Medium Enterprises and Business Performance in Awka, Anambra State, Nigeria

Abstract

Attempt is made in this study to decipher why many MSMEs in Nigeria continue to struggle with low productivity largely due to the accessibility and affordability challenges medium-term government intervention loans are fraught with. This study tried to analyze the implications of government-funded credit facilities on the performance of MSMEs in Awka, Anambra State. The systematic review method was used to examine the availability of these credit facilities and the barriers to accessing them by MSMEs in the area. The findings of the study indicate that government-funded credit facilities are available in Awka. However, the accessibility and affordability of these resources are hindered by various challenges, preventing a significant number of potential applicants from benefiting. Nonetheless, there is evidence that these credit facilities contribute positively to the performance of MSMEs in Awka. The study concludes that the actual impact of government-funded credit facilities is often less significant than what official statistics say, as evidenced by the small proportion of beneficiaries. The study recommends the introduction of tiered eligibility criteria for loans, linking collateral requirements to loan size and business maturity. It also suggests digitizing the loan application process and the adoption of a formalization strategy for MSMEs.