“This study examines survey data in order to evaluate the characteristics of SMEs
that make it more difficult for them to be profitable and the particular problems that they face which may have contributed to their poor performance.The results of this study show that much initial financing for SMEs came from personal savings of the operators themselves and from formal financial institutions, while additional financing came mainly from informal sources. This demonstrates that, as they develop, SMEs are financed increasingly by the informal financial institutions. It also shows a complementary relationship
between the formal and informal financial institutions, with both providing resources to SMEs. In principle, Nigerian small-scale enterprises can be said to make a valuable
contribution to the economy, although this study has not addressed the specifics of that contribution. However, this study has shown that, by their nature, these enterprises have insufficient access to formal financial institutions, and as a result, rely more and more on their own or friends’ and relatives’ savings, and on informal financial institutions for investment capital. Thus,government policies aimed at the creation of a favourable environment for informal institutions are necessary to ensure their survival.”
