Financing Practices of Entrepreneurs in Small and Medium Enterprises in Southwestern Nigeria

Abstract

The study examined the financing practices engaged by entrepreneurs in Small and Medium Enterprises (SMEs) in Southwestern Nigeria and also determined the extent of their dependence on internal and external financing practices to operate their businesses. Specifically, the study is designed to determine the extent that the financing practices of small and medium enterprises are dependent on internal and external financing. Primary data obtained through questionnaire and in-depth interviews were analysed with the aids of descriptive statistical tools, to describe financing practices of SMEs, while logistic regression was employed to determine the relationship between dependent variable (SMEs) and independent variable (internal and /or external sources of finance). Findings revealed that owner-managers of SMEs employ both internal and external financing practices, and the study concludes policy makers need to ensure official discriminations between the small and medium enterprises, by treating them separately.  The policy interventions should make access to financing easier for small enterprises, this will not only fast track their growth into medium and large enterprises but will also increase their capacities, in production and provision of employment opportunities to massive number of youths that are presently unemployed.

Keywords: entrepreneurship; small and medium enterprises; internal financing; external financing.