Essay About High Cost Of Credit And Number Of Factors

An Evaluation of Funding Arrangements for Small And
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This study which seeks to evaluate the alternative funding arrangement
available to the SMEs sector identifies the sector as the key to unlocking the
economic potentials of Nigeria. However, the sector is constraints by a
number of factors which include among others difficulty in accessing credit
facilities, high cost of credit; poor infrastructures, that is, power,
transportation, telecommunications; poor linkages among the enterprises,
poor technology; poor implementation of government programs and policies
toward the development of SMEs sector. The study revealed that the major
sources of credit available for the establishment and expansion of SMEs in
Nigeria is personal saving, banks and cooperatives. However, the problem
associated with bank credits is the demand for collateral, high cost of credit
and loans administrative cost. A viable means of promoting self-reliance in
economic development as well as introducing diversity into regional,
national and local economics is through the deliberate promotion of SMEs
and encouraging entrepreneurial spirit and skill in business venture. There
are different sources of credit available to the SMEs which include among
others financial institutions, government agencies, non-governmental
organizations, personal savings, friends and family, international donor
agencies, cooperatives. The importance of Small and Medium Scale
Enterprises as being crucial to the economic development strategies cannot
be over emphasized. It is therefore, important to consider conditions that
would ensure sustained growth in this sector. The SMEs should be seen as
an important sector of the economy requiring specific incentives to assist its
development. Government can accelerate the development of markets for
financial services suited to the special characteristics of SMEs by promoting
product innovation and building institutional capacity. Improving SMEs
access to credits requires an increase in the number of financial institutions
that find