Strategies for effective loan delivery to small - scale enterprises in rural Nigeria

Abstract

Economic growth and development cannot be achieved without putting in place well-focused programmes to reduce poverty through empowering the rural entrepreneurs with credit. In noting this, government has initiated many programmes to enhance adequate loan to rural entrepreneurs. However, these programmes have achieved mixed successes. This paper therefore examines the determinants of loan acquisition to rural enterprise and recommends best practices. The study noted that channel of loan delivery to rural entrepreneurs is politicized with huge bureaucratic network, which makes the loan almost inaccessible to rural entrepreneurs. In addition, the study noted that the major factors that determine loan acquisition by rural entrepreneurs are type of enterprise, gender of operator, experience of the operator as well as past loan history. The study therefore recommended a financial institution, which will not only be a joint venture of government, non-governmental organizations, rural entrepreneurs and rural communities but also less bureaucratic and requires asset-less collateral. The author trusts that such recommendations will enhance rural entrepreneur’s capacity to fight poverty Key words: Rural enterprise, financial institutions, poverty, loan, Nigeria.