ABSTRACT 
This  research  work  investigated the effects of micro-financing on  Micro and Small Enterprises  (MSEs)  in South-west Nigeria. The study  examined how micro-finance and non-financial micro-financing activities and features such as group membership, pre-loan training, cross guaranteeship, loan size, technical and managerial training, among others, impact on  the  survival, growth, productivity  and performance  of  Micro and Small Enterprises in Southwest Nigeria. The hypotheses formulated were developed around the theories of  financial growth model, pecking order theory, and contract theory. Variables were  used to evolve  a detailed analysis of  the survival and growth models.  The theoretical  models  were  used in developing four  different hypotheses  that were investigated through the survey of  four hundred and forty three (443) micro enterprises and one hundred and eighty (180) small enterprises which were randomly selected using multi-stage random sampling technique.  Copies of well-structured  questionnaire were administered to entrepreneurs sampled. The validity and reliability of the instrument were measured  using Cronbach"Ÿs  alpha  which gave a result  of 0.72, while predictive  form validity was 0.84. Four hypotheses were raised and tested at 0.05 significant levels. The findings revealed that micro finance and micro-financing enhance survival of Micro and Small Enterprises (MSEs) but not sufficient for growth and expansion of such Micro and Small  Enterprises.  The result also revealed that microfinance has positive effects on productivity and performance of local entrepreneurs.  The  findings from the    interview sessions revealed that micro financing is not effective and substantially being practiced in Nigeria as many MFBs  grant  more  individual loans  than group based loans, thereby increasing their running cost and putting their portfolio at risk. We therefore recommend a collective and cooperative support as a critical microfinance strategy in the form of solidarity groups at the local level; and at the national and regional level, a networking of groups  among operators of MFBs. We also recommend  that  enterprises  supported by MFBs should be linked up with larger financing window like the SMEEIS fund  or Strategic Partners for expansion and growth funding after survival. 

TABLE OF CONTENTS                 Page (s) 
Title page ................ ....       (i)  
Certification ..............   (ii) 
Declaration ............ ......      (iii)                      
Dedication...................(iv)                    
Acknowledgements ........... ... (v) 
Abstract ............ .....(x) 
Table of Contents................(xi) 
List of Tables................(xvi) 
List of Figures..................(xix) 
List of Abbreviations..... .........(xx) 
                                                                                                                                                                         
CHAPTER ONE:   INTRODUCTION              
1.1  Background to the Study...............1 
1.2  Statement of the Problems..................6 
1.3  Research Questions...................7 
1.4  Objectives of the Study..................8 
1.5  Statement of Hypotheses................8 
1.6  Significance of the study................ .....9 
1.7  Scope of the study.................. ...10 
1.8  Limitation of the study...................10 
1.9  Definition of Terms ..................11 

CHAPTER TWO  LITERATURE REVIEW 
2.1  Introduction.....................12 
2.2  Review of Conceptual Issues..............12 
2.2.1  Concepts of Micro, Small and Medium Enterprises and Microfinance......12 
2.2.2  Impact Assessment of Microfinance..............20 
2.2.3  Methods of Data Analysis Found In Literature........25 
2.2.4  Measurement of Microfinance Impact...........28 
2.2.5  Enterprises Survival Prediction and Survival Analysis........ ..30 
2.2.6  Model Generation for Microfinance and MSMEs Survival........34  
2.3  Theoretical Framework..............38  
2.3.1  Financial Growth Theory................38  
2.3.2  Pecking Order Theory................39  
2.3.3  Contract Theory................41 
2.4  Entrepreneurship and Growth..............41 
2.4.1  The Firm and the Entrepreneur.............41  
2.4.2  Firm Life Cycle.................42  
2.4.3  Organizational Capabilities..............43  
2.4.4  Stages of Small Business Development..........43  
2.4.5  Small Business Development...............49  
2.4.6  Role of Enterpreneur in Business Formation and Growth......55 
2.4.7  SMEs & Growth... ................57 
2.4.8  MSMEs and Economic Development in Nigeria..........58 
2.4.9  Microcredit and Microenterprise..............60  
2.4.10  Political & Social dimension to Entrepreneurship in Nigeria.....68 
2.5  Theoretical Findings.................71 
 
 
CHAPTER THREE   -  RESEARCH METHODOLOGY  
3.1  Introduction....................74  
3.2  Research Methods...............74 
3.3  Research Design......... .............75  
3.4  Population of the Study.................75  
3.5  Sample Frame.................77 
3.6  Sampling Technique.................78  
3.7  Sample Size Determination ...............79  
3.8  Distribution of Questionnaire and Response Rate.......81 
3.9   Sources of Data Collection.............83 
3.10  Data Collection Method.................84 
3.11  Data Collection Instrument.............84 
3.11.1  The Questionnaire.................84 
3.11.2  Pre-Testing of Instrument................. ...84 
3.12  Method of Data Analysis ...............85 
3.12.1  Survival Analysis .................87 
3.12. 2 Regression Based Estimation...............88 
3.12.3  Methods for Empirical Analysis...............88 
3.12.4  Multiple Regressions Analysis.............90
3.13  Model Specification...................93 
3.14  Theoretical Justification of Variables Used in Study.......103 
3.15  Validity of Research Instrument..............106 
3.16  Reliability of Research Instrument.......... .....108 

CHAPTER FOUR: DATA PRESENTATION, ANALYSIS, AND INTERPRETATION   
4.1  Introduction.............109 
4.2  Profile of Respondents...........109 
4.3  Business Characteristics of Respondents...........114 
4.4  Business Characteristics of Respondents by Location (Urban)....116 
4.5  Business Characteristics of Respondents by Location (Rural).....119 
4.6  Cross Tabulation of Some Variables.........120 
4.7  Survival Analysis..............127 
4.7.1  Result Analysis................130 
4.8  Multiple Regression Analysis.............138 
4.9  Operations, Process and Practice of Microfinance in Nigeria....173 
 
Chapter Five: DISCUSSION, CONCLUSION AND RECOMMENDATION 
5.1  Introduction.................178 
5.2  Summary...............178 
5.3  Findings................179 
5.3.1  Microfinance and MSE Survival.............179 
5.3.2  Microfinance and MSE Growth.........180 
5.3.3  Microfinance and Entrepreneur"Ÿs Productivity.......181 
5.3.4  Non-Financial Services of Microfinance Banks and Business Performance....181 
5.4  Hypothesis Testing..............183 
5.5  Other Findings...............183 
5.6  Conclusion of Studies...........184 
5.7  Recommendations................185 
5.8  Contribution to Knowledge ..............187 
5.9  Suggestions for Further Studies............187 
Bibliography................189 
 
 
                                                                                                                         
Appendix A 
1  Distribution of MFB by geographical zone as at March 2009..207                      
Appendix B  
2.  Business Characteristics of Respondents by Location ......208 
Appendix C 
3.  Questionnaire .............210  


LIST OF TABLES          Page(s) 
Table 2.1:  Definitions of SMEs by Nigerian Institutions      12 
Table 2.2:  Classification adopted by National Policy On MSMEs    15 
Table 2.3:  Financial Growth Cycle Model          38 
Table 3.4:  License & Unlicense MFBs in Southwest Zone of Nigeria  
as at March 2009              76  
Table 3.5:  Distribution of MSMEs in Southwest Zone        77 
Table 3.6:  Distribution of SMEs operators users of Microfinance Bank    78                                 
Table 3.7:  Minimum Returned Sample Size table for Continuous/Categorical   
    data                     80 
Table 3.8:  Questionnaire distribution by State / Response rate of Micro & 
    Small Enterprises Operator            82 
Table 3.9:  Measurement of Variables " Hypothesis 1        95 
Table 3.10:  Measurement of Variables " Hypothesis 2        97 
Table 3.11:  Measurement of Variables " Hypothesis 3        100 
Table 3.12:  Measurement of Variables " Hypothesis 4        102   
Table 4.13:  Profile of Respondents            110                          
Table 4.14:  Business Characteristics of Respondents        113 
Table 4.15:  Business Characteristics of Respondents by Location "Urban   
Table 4.16:  Business characteristics of Respondents by Location " Rural      
Table 4.17:  Business Resident and Kind of Business        120 
Table 4.18:  Education and Business Resident          121 
Table 4.19:  kind of Business and Form of Business        122 
Table 4.20:  Level of Education and Source of Initial Capital      123 
Table 4.21:  Level of Education and Category of Business      124 
Table 4.22:  Kind of Business and Category of Business        125      
Table 4.23:  Sources of Capital and Composition of Capital      126 
Table 4.24:  Business Group and Enterpreneurial Training      127                              
Table 4.25:  Group Proportion with Regard to Long-term Survival    132 
Table 4.26:  Kaplan Meier Survival Estimate by Category      133
Table 4.27:  Diagonistic Test Kaplan Meier Estimate        133 
Table 4.28:  Kaplan Meier Survival Estimate by Kind of Business    134 
Table 4.29:  Diagonistic Test Kaplan Meier Estimate        135 
Table 4.30:  Adjusted Hazard Ratio for Cox Proportional Hazard Model   135 
Table 4.31:  Omnibus Test of Model Coefficient          1 38                             
Table 4.32:  Multiple Regression Analysis of Effect of Microfinance on  
    Small Business Growth by Category of Business      144                    
Table 4.33:  Multiple Regression Analysis of Effect of Microfinance on  
    Small Business Growth by Legal Status of Business     148                              
Table 4.34:  Multiple Regression Analysis of Effect of Microfinance on  
    Small Business Growth by Category of Kind of business  
    Business Activities              151                            
 Table 4.35:  Multiple Regression Analysis of Effect of Microfinance on  
    Small Business Operators Productivity by Category      155    
 Table 4.36:  Multiple Regression Analysis of Effect of Microfinance on  
    Small Business Operators Productivity by Legal Status of 
 Business                159 
Table 4.37:  Multiple Regression Analysis of Effect of Microfinance on  
    Small Business Operators Productivity by Kind of Business     162 
Table 4.38:  Multiple Regression Analysis of Effect of Non- Statutory  
Activities of Microfinance Bank on Small Business Performance   
by Category                 165 
Table 4.39:  Multiple Regression Analysis of Effect of Non- Statutory  
Activities of Microfinance Bank on Small Business Performance 
by Legal Status of Business             169 
Table 4.40:  Multiple Regression Analysis of Effect of Non- Statutory  
Activities of Microfinance Bank on Small Business Performance 
by Kind of business              172 
 



LIST OF FIGURES 
           
                                                                                                                                    Page(s) 
Figure 2.1:  Conceptual Model for Microfinance  
                   and SMEs Survival...........37   
Figure 2.2:  Stages of Small Business Growth Characteristics.....48 
Figure 2.3:  Stages of Small Business Growth Characteristics and Failure & Exit  Modes......................48 
            
Figure 2.4: Conceptual Framework and Hypotheses.........73

 LIST OF ABBREVIATIONS 
  CBs  -  Community Banks 
  CBN   "   Central Bank of Nigeria 
 
  GDP   "   Gross Domestic Product 
 
  MDF   -   Microfinance Development Fund 
 
  MDGs   "   Millennium Development Goals 
  
  MFBs   "   Microfinance Banks  
 
  MSMEDEF -   Micro, Small and Medium Enterprises Development Fund 
 
  MSMEs   "   Micro, Small and Medium Enterprises 
 
  NACCIMA "   National Association of Chambers of Commerce, Industry, Mines  
and Agriculture 
  
  NACRDB   "  Nigerian Agricultural, Cooperative and Rural Development Bank   
 
  NAFDAC  "   National Agency for Food and Drug Administration and Control  
 
  NAPEP   "   National Poverty Eradication Programme  
 
  NASME   "   National Association of Small and Medium Enterprise  
 
  NASENI   "   National Agency for Science and Engineering Infrastructure  
 
  NASSI   "   National Association of Small Scale Industrialists  
 
  NCIS  -  National Council on Industrial Standard 
 
  NDE   "   National Directorate of Employment  
 
  NEEDS   -   National Economic Empowerment and Development Strategy 
 
  NERFUND "   National Economic Reconstruction Fund  
 
  NEPAD "     National Economic Partnership for African Development  
 
  NGO   "  Non-Governmental Organisation  
 
  NIPC   "   Nigerian Investment Promotion Commission  
  MAN   -  Manufacturers"Ÿ Association of Nigeria. 
 
  SA   -  Survival Analysis 
 
  SEEDS   -  State Economic Empowerment and Development Strategy 
 
  SSI     -  Small Scale Industries 
 
  SSE   "   Small Scale Enterprise 
 
  SMEDAN  "   Small and Medium Enterprise Development Agency of Nigeria 
 
 
 
Appendices 
 
1.  Distribution of Microfinance Banks by Geopolitical Zone in Nigeria 
2.  Business Characteristics of Respondents by location Tables 4.14 and 4.15     
3.  Questionnaire