Abstract

This study empirically evaluates the performance of the Small and Medium Scale Enterprises (SMEs). Equity Investment Scheme in Nigeria (SMEEIS), using Benue and Nassarawa States as case study. Secondary data of total credit to SMEs as percentage of banks total credit for a period from 1993 to 2008 were made available. Paired sample t-test was used as a technique to test the significance of bank loans before and after the introduction of SMEEIS. Mean scores and standard deviation was used to present and analyze the primary data obtained via questionnaires. The result shows that there was no significance difference between the loans disbursed by banks to SMEs before and after the introduction of SMEEIS and the conditions for accessing SMEEIS funds was beyond the reach of the predominant SMEs in Nigeria. This shows that SMEEIS, as a formal financing option, has not made any significant impact towards SMEs growth in Nigeria. The major recommendation is that both the government and the banking sector should mutually agree on a credit guaranteed scheme strategy that will incorporate a risk-sharing arrangement as a way of encouraging the banks to channel funds to the SMEs sub sector for their growth and development which would translate into the national economic growth and sustainable economic development of Nigeria.

Key words: Small medium enterprises, equity investment scheme, formal financing, risk-sharing and sustainable economic development.