Analysing Financing Challenges to Medium and Small Scale Industries in Nigeria: An Empirical Investigation

Abstract

Inadequate funding has been the major challenge to Small and Medium Scale enterprises in Nigeria since independence till date.Every political administration, including military and civilian governments attempted to make an issue of unaccomplishable wild propaganda out of this critical economic matter of national concern, but they were all talking and instituting policies on paper, more than achieving results by practically implementing the policies and turning the much ado about empty storytelling to action and results. The 1st to the 3rd Nigerian Economic Summits sponsored by the Babangida military Junta, focused more aggressively on Economic Development through industrialisation with increased concern for the expected impact of the Medium and Small Scale Industries in Nigeria. In spite of all the inactivated, unproductive policy statements, establishments of various “Development Financial institutions”, and the ultimate technically unprofessional “liberalisation of banking institutions licensing”, which made total mockery of the institution of banking in Nigeria, including its ethics and professionalism, the consequences, of which the industry is yet to recover from. As a result of all the political interferences in the banking industry, and consequent failure of the financial system to provide appropriate financing for MSSI'S (the back bone of industrialization), since attaining independence in 1960, Nigeria is yet to experience any remarkable achievement in industrialization. On the foreign scene, the World Bank, initiated three different tranches of subsidised credit to Medium and Small Scale industries in Nigeria, administered through deposit money banks, all of which totally failed to achieve their objectives. Small and Medium Scale Industries Equity Investment Scheme (SMEEIS) was initiated and established by the Obasanjo administration, plus an additional sum of 500 billion naira budgetary provision, to support MSSI's; In spite of these and other myriads of multilateral financial supports administered through Nigerian governments and the financial system, the good intentions of the foreign governments aids and multilateral financial institutions supports, were thwarted by the corruption and fraudulent tendencies of the Nigerian authorities, and the operators of the financial system.The findings of this research effort proved that there is a positive relationship between the appropriate financing of MSSI's and a systemic development and growth of industries which is also a required condition for national economic growth and development. Poor industrialization and stunted economic growth and development in Nigeria are direct consequences of the poor funding of Medium and Small scale Industries since independence, yet there is no evidence of any promising solution in sight in the immediate future.