MICROFINANCE INSTITUTIONS’ SUPPORT AND GROWTH OF SMALL AND MEDIUM ENTERPRISES

Abio Morris Geoffrey,Kalu Onwukwe Emenike

doi:10.24002/kinerja.v22i1.1568

Abstract

This paper investigates the relationship between microfinance institutions’ (MFIs’) support and growth of small and medium size enterprises (SMEs) in Nimule, South Sudan. We use descriptive analysis, Pearson’s linear correlation coefficient (PLCC) analysis, and ordinary least square regression analysis to evaluate the responses obtained through questionnaires and interviews. The estimates of descriptive analysis show that majority of the respondents were females (53.7%); majority (33.7%) of the respondents had secondary education; and that the majority of respondents (46.3 %) have between 6-8 years experience. Results of the quantitative analysis using PLCC revealed that positive linear relationship exists between loan provision, savings account provision, managerial skills provision and growth of SMEs in Nimule, South Sudan. Similarly, results of the regression analysis indicate that loan provision, savings account provision, and managerial skills provision have positive and significant effect on SMEs growth in Nimule. These findings indicate, amongst others, that MFIs support contributes significantly to growth of SMEs in Nimule, South Sudan. The study recommends, among others, that MFIs should adopt Microfinance-group model as well as increase provision of non-financial services, such as managerial skills trainings, for SMEs.Keywords: microfinance institutions, SMEs growth, correlation, South Sudan.

Highlights

The importance of microfinance institutions (MFIs) in eradication poverty cannot be over-emphasised
The findings indicate that the MFIs have performed below a set standard on average due to some industry wide challenges, they have had a significant impact in linking Small and Medium Enterprises (SMEs) and the poor to sources of credit, and have contributed to the growing business capital and stock accumulation
While numerous empirical literatures exist on the relationship between MFIs services and SMEs growth in emerging and developing countries, such literature is scant for South Sudan

Summary

INTRODUCTION

The importance of microfinance institutions (MFIs) in eradication poverty cannot be over-emphasised. Several recent research findings tend to suggest that MFIs’ support in term of credit provision, saving, training on managerial skills and general effects contributes to growth of SMEs. There are a good number of empirical studies on the relationship between MFIs’ support and growth of SMEs both in developed and developing countries (see for example, Mutua, 2017; Mohamed & Al-Shaigi, 2017; Prah, 2016; Awuah & Addaney, 2016; Mulungi & Kwagala, 2015). The study aimed at analysing whether a relationship exist between provision of loan, saving account and managerial skill by MFIs, and growth of SMEs in Nimule, South Sudan. Microfinance institutions, for example, will identify the appropriate support that is required to enhance SMEs growth This will reduce loan default from SMEs to meet their obligations in accordance with agreed terms.

LITERATURE REVIEW

RESEARCH METHOD

Findings

CONCLUSION