An Evaluation of Funding Arrangements for Small And

This study which seeks to evaluate the alternative funding arrangement

available to the SMEs sector identifies the sector as the key to unlocking the

economic potentials of Nigeria. However, the sector is constraints by a

number of factors which include among others difficulty in accessing credit

facilities, high cost of credit; poor infrastructures, that is, power,

transportation, telecommunications; poor linkages among the enterprises,

poor technology; poor implementation of government programs and policies

toward the development of SMEs sector. The study revealed that the major

sources of credit available for the establishment and expansion of SMEs in

Nigeria is personal saving, banks and cooperatives. However, the problem

associated with bank credits is the demand for collateral, high cost of credit

and loans administrative cost. A viable means of promoting self-reliance in

economic development as well as introducing diversity into regional,

national and local economics is through the deliberate promotion of SMEs

and encouraging entrepreneurial spirit and skill in business venture. There

are different sources of credit available to the SMEs which include among

others financial institutions, government agencies, non-governmental

organizations, personal savings, friends and family, international donor

agencies, cooperatives. The importance of Small and Medium Scale

Enterprises as being crucial to the economic development strategies cannot

be over emphasized. It is therefore, important to consider conditions that

would ensure sustained growth in this sector. The SMEs should be seen as

an important sector of the economy requiring specific incentives to assist its

development. Government can accelerate the development of markets for

financial services suited to the special characteristics of SMEs by promoting

product innovation and building institutional capacity. Improving SMEs

access to credits requires an increase in the number of financial institutions

that find