Islamic Financing as Alternative Option for Small and Medium Enterprises in Southwestern Nigeria

Abstract

The realisation that, despite the great potentials they portend for economic growth and development across contexts, access to finance has remained a major stumbling block to most Micro, Small and Medium enterprises. This has increased impetus for the call for viable and sustainable alternative financing mechanisms. Thus, a cursory look into major offerings of Islamic financing as they suit the purposes of SMEs need to be considered. This study, therefore, examined Islamic Financing products/services as alternative options in terms of accessibility, risk-sharing, and non-adherence to collateral security. Primary data were obtained through the instrumentality of structured questionnaire, administered on 350 customers of Jaiz Bank Plc, across the seven (7) branches in the Southwestern Nigeria. And personal interview conducted on five (5) purposively selected owner-manager of SME customers of the bank. The data were analysed with the aids of descriptive statistical tools to determine accessibility, risk-sharing and unstrict adherence to collateral security. Findings revealed that all products/services offered by Islamic finance are better alternatives to conventional banking services. The study concludes that with government support, the bank is in a good stead to promote the development of Micro, Small and Medium enterprises and that appropriate policies be adopted to encourage the bank to improve access to finance of these business firms for overall economic development.