IMPACT OF MICROFINANCE BANK ON THE GROWTH AND SUSTENANCE OF SMES: A CASE STUDY OF KWARA STATE

Abstract

This study looks at how microfinance institutions in Kwara State, Nigeria, affect the expansion and viability of small and medium-sized businesses (SMEs). By offering financial services to disadvantaged communities, especially in areas with limited access to regular banking, microfinance organizations have played a crucial role in promoting economic growth. SMEs, which are essential to economic growth, frequently encounter obstacles like restricted financial access, low financial literacy, and unfavorable regulatory frameworks. The purpose of this study is to investigate how well microfinance banks in Kwara State are able to handle these issues and promote the growth of SMEs. Both qualitative and quantitative methodologies are used in the study, including focus groups, interviews, and surveys with representatives of microfinance banks, SME owners, and other stakeholders. The results show that even while microfinance institutions are crucial in improving SMEs' financial accessibility, a number of obstacles still exist, such as strict qualifying requirements, exorbitant interest rates, and a lack of financial literacy among SME owners. These obstacles restrict the best possible effect of microfinance services on the expansion and sustainability of SMEs. The study also emphasizes the necessity of capacity-building programs and the significance of a supportive regulatory framework in order to enhance SME owners' financial literacy and business management abilities. The findings of this study have important ramifications for practitioners and policymakers. The study offers important insights into how microfinance interventions can be improved to better assist SME growth in Kwara State and comparable regions by identifying critical success drivers and potential roadblocks. The study's conclusions offer suggestions for improving microfinance banks' ability to serve SMEs specifically in order to advance inclusive economic development.