* Background of the Study
Many economies of the world-developed and developing have come to realize the value of privately owned enterprises. Dynamism, witty innovations, efficiency, and fast decision making processes characterize them. Private enterprises are grouped into three main categories- large-scale, medium-scale and small-scale enterprises. For this study, small and medium scale enterprises shall be the focus.
Small and medium enterprises account for very large segment of the productive population. In Nigeria, small and medium scale enterprises account for over 95% of non-oil productive activities excluding agriculture and hence have been described as the bedrock of our society. By nature, small and medium scale enterprise can be established anywhere given the right factors and can adapt easily to any environment they are found in. Small and medium scale enterprises (SME) contribute towards increasing the GDP of Nigeria and reducing the amount of foreign exchange that would otherwise have been used to pay for the imports. Due to their flexible nature, they help to check rural-urban migration and improve the standard and quality of living in areas where they exist (Okafor, 2000). Small and medium scale encourages real economic independence i.e. more industries will be Nigerian-owned and this facilitates the mobilization of idle capital and human resources towards economic development. In Nigeria, there are many small and medium scale industries, because of either inadequate finances or high demise rate of the founding owners. Based on the aforementioned features, it will be difficult to give an in-depth definition of small and medium scale industries as it concerns the subject, and definition of small and medium scale enterprise have not been and probably will not be standard because it varies from country to country, institution to institution and individual to individual. It should be noted that certain indicators/parameters exist in the definition namely; values of turnover, the number of paid employees and financial strength (Ihyembe, 2000). Dhar (1955:25) reviewed small and medium scale enterprises as a unit, which employs less than 50 persons if using power, or less than 100 persons without use of power and with a capital asset i.e. land, building and machinery. Vepa (1960:17) defines small and scale enterprise as comprising that industrial unit, which has capital investment in fixed assets like land, building, machinery and equipment. Professor Umoh (1966:29) defined small and medium scale enterprise as a “business owned execratively by a single individual who is the boss and that experts may be hired to work for the firm but unfortunately the profit or loss goes to the owner. Finance in this context, refers to funds used in the day-to-day running, maintenance and upkeep of businesses in order to satisfy customers and at the same time make reasonable profits. It is also known as working capital. The shortage of working capital constitutes a big hindrance as the ability of businesses to produce efficiently and effectively is greatly impaired. This problem is further compounded by the unwillingness of financial institutions to lend to SMEs on long-term basis. This is because they regard SMEs as very vulnerable with high credit risks. Thus, efforts have been made by government in the past to look into the funding issues confronting SMEs, as a way of proffering possible solutions. This led to the setting up of various government- affiliated-policy financial institutions called Development Financial Institutions (DFIs). Some of which were; Small Scale Industries Credit Scheme (SSICS), the Nigerian Agricultural and Cooperative Bank Ltd (NACB) in 1973, Nigerian Bank for Commerce and Industry (NBCI) in 1975, the National Economic Reconstruction Fund (NERFUND) in 1986, to mention a few. Regrettably, most of these schemes achieved very little results due to such reasons as...