The impact of microfinance service, SMES' factors and social capital components towards the performance of SMES' in North-Western Nigeria

One of the crucial factors that continue to constrain the SMEs sector in developing economies is the issue of accessing loan, which has broadly impeded the SMEs performance in Nigeria. This study investigates the impact of microfinance services, SMEs factors and social capital components on the performance of SMEs. This study used Stratified Probability Proportionate Sampling Technique (SPPST) and sampled 375 SMEs in the North-Western Nigeria. The results of the Generalized Ordered Logit Model 2 (GOLOGIT2), Poisson Regression Model and Logistic Regression Model, relatively varies in terms of its significance. The results generally indicate that both microfinance services, SME factors and social capital components have positive impacts on SME performance. The implication is that new policies should be enacted or adopted to ensure more efficient and quality access to MFIs. This may reduce the problem of accessing loans, improve business performance and contribute to economic growth. Institutions such as SMEDAN and NDE which act as agencies to help monitor the activities of MFIs in carrying out their key responsibilities towards the SMEs. In addition, MFIs and other stakeholders should guide prospective SME owners on the need to select better business motives for the viability of their business. This study identifies several constraints when the focus of the study covering the North -Western Nigeria alone may not be generalizable due to differences in economic location. Since this study only focuses on microfinance factors, SME factors and social capital components, further study of other regions or states will provide a clearer description of the problems faced by SMEs. It is also suggested that future studies look at SMEs in terms of internal and external factors as well as other microfinance facilities that can be used to further explore the impact of SMEs on their performance in the economy