SMALL AND MEDIUM-SCALE ENTERPRISE (SME) FINANCING AND RURAL DEVELOPMENT: CHALLENGES AND PROSPECTS IN EHIME MBANO, IMO STATE, NIGERIA

Abstract

The study examines the effects of small and medium-sized enterprise (SME) financing on rural development in Nigeria, including the challenges and prospects. The objectives were to determine the extent to which access to finance influences SME performance and their contribution to rural development and to assess the extent to which financial constraints, tax policy, and insecurity affect SME performance and their contribution to rural development. The study further seeks to determine the extent to which government financial and institutional support influences SME performance and their contribution to rural development. The population of the study comprises all SMEs in the Ehime Mbano Local Government Area of Imo State, Nigeria. A purposive technique was used to determine the sample size of fifty (50) SMEs. Primary data for this study were collected mainly using a structured questionnaire. The study used descriptive statistics, including the mean and standard deviation, and correlation analysis to test the hypotheses. Findings revealed that access to finance significantly influences SME performance and their contribution to rural development. Financial constraints, tax policy, insecurity, and government policy also affect SME performance in rural areas. Based on the findings, policymakers and stakeholders should recognise the significant contributions of rural SMEs to rural development and support them by developing policies that foster their growth. The government should also provide adequate support to rural SMEs, including financial assistance, training, and capacity-building programmes, to enhance their performance and contribute to the overall development of rural areas.