Systematic Review of Small and Medium Enterprises (SMEs) in Nigeria

Abstract

Small and medium enterprises (SMEs) are critical for the development of any economy since they contribute to the business growth and economic development of countries. Financing for SMEs is crucial for economic growth. Although, inadequate SME financing persists. This chapter is a literature review that aims to present different financing sources of SME, and its main constraints, presenting the specific case of Nigeria. Main financing sources to SMEs include angel investors, private funds, retained earnings, individual savings, family and associates, debt capital, bootstrapping, trade credits, banks, commercial institutions, initial public offering, securities markets, and venture capital (VC). Crowdfunding also provided an alternative source of financing SMEs. Regarding constraints, SMEs have limited access to credit due to the absence of collateral security, poor record keeping, poor creditworthiness, inadequate project proposals, etc. The solutions proffered are not exhaustive to mitigate barriers to SME financing.