Credit Financing Accessibility on Growth and Sustainability of Small and Medium Scale Enterprises (SMEs) In Nigeria

This study examines the impact of credit financing accessibility on the growth and sustainability of Small and Medium Scale Enterprises (SMEs) in Nigeria. It aims to understand how variables such as credit to the private sector, lending rates, and the number of SME loans approved affect the contribution of SMEs to Nigeria’s GDP. The study utilizes the Autoregressive Distributed Lag (ARDL) model to analyze both short-run and long-run relationships between the variables. Data was sourced from the Central Bank of Nigeria statistical Bulletin, covering the period from 1981 to 2022. The ARDL model is selected due to its suitability for various sample sizes and its ability to distinguish between short-run and long-run dynamics. The results reveal that access to credit, measured by credit to the private sector, has a significant positive impact on the growth and sustainability of SMEs in the long run. However, high lending rates and the number of loans approved exhibit a more complex relationship, with lending rates negatively affecting SME growth in both the short and long run. The study also finds that policy inconsistencies and financial sector inefficiencies hinder the effective distribution of credit to SMEs. Enhanced access to affordable credit is crucial for the growth and sustainability of SMEs in Nigeria. Policy interventions should focus on reducing lending rates and improving the approval process for SME loans to stimulate economic growth.

 Keywords: Credit Financing, Growth and Sustainability, SMEs, Credit to Private Sector and Lending Rate