Lmd

Labour and management in development

JOURNAL
Volume 8

AN EXPLORATORY STUDY OF LOAN DELINQUENCY AMONG SMALL AND MEDIUM ENTERPRISES (SMES) IN ONDO STATE OF NIGERIA

T. M. Obamuyi Adekunle Ajasin University

www.labour-management.utas.edu.au

University of Tasmania

2007

AN EXPLORATORY STUDY OF LOAN DELINQUENCY AMONG SMALL AND MEDIUM ENTERPRISES (SMEs) IN ONDO STATE OF NIGERIA T. M. Obamuyi Adekunle Ajasin University Abstract This study offers exploratory insights into the level of loan delinquency among the small and medium enterprises (SMEs) in Ondo State of Nigeria, and the lending practices of the countrys bankers towards the SMEs It does offer nice description of the theoretical reasoning for the restricted SMEs lending portfolio for banks. The results were based on the analysis of interview in 2004 with the managers of 9 commercial banks and 115 SMEs that have been borrowers or currently have active loans from the banks. Findings reveal that several factors were responsible for banks altitude of not expanding loan portfolio, principal of which are poor credit worthiness, lack of collateral security and the constraint imposed on banks capital by regulations. The research shows that loans delinquency rate was low at 6.90 per cent of total loan obligations among in Ondo State of Nigeria. However, part of the result is likely to be due to the fact that sound-lending policy demands that for those small and medium enterprises that the bankers believe they have high probabilities of default, loan applications are not approved. Finally, measures were suggested to policy planners, which can be implemented, not only by Nigeria, but in other developing countries in their similar situations of growth process. Key words: Loan delinquency; banks lending; capital base. Acknowledgements The author gratefully acknowledges the anonymous reviewers and the authors included in the references. Introduction Small and Medium Enterprises (SMEs) in Nigeria, as defined by Small and Medium Industries Equity Investment Scheme (SMIEIS), are enterprises with a total capital employed not less than N1.5 million, but not exceeding N200 million, including working capital, but excluding cost of land and/or with a staff strength of not less than 10 and not more than 300. This definition is adopted in this study, because it is generally used by all banks for the purpose of financing the SMEs sector. The small and medium enterprises all over the world play important roles in the process of industrialisation and economic growth. As Ogujiuba et al. (2004) observe, apart from increasing per capita income and output, SMEs create employment opportunities, enhance regional economic balance through industrial dispersal and generally promote effective resource utilisation considered critical to engineering economic development and growth. There are indications in Nigeria that the SMEs account for about 70 per cent of industrial employment (Adebusuyi 1997) and well over 50 per cent of the gross domestic product (Odeyemi 2003). The important roles of SMEs, notwithstanding, the enterprises face serious difficulties when trying to obtain loans, especially from the formal financial institutions. Thus, the obvious question is: why banks do not expand SME portfolio? This study offers exploratory insights into the level of loan delinquency among the small and medium enterprises (SMEs) in Ondo State of Nigeria, and the lending practices of the countrys bankers towards the SMEs. It does offer nice description of the theoretical reasoning for the restricted SME lending portfolio for banks. The results were based on the analysis of interview in 2004 with the managers of 9 commercial banks and 115 SMEs that have been

T. M. Obamuyi

borrowers or currently have active loans from the banks. Findings reveal that several factors were responsible for banks attitude of not expanding SMEs loan portfolio, principal of which are poor credit worthiness, lack of collateral security, inadequate capital base of the banks for example. Sound lending practice also demands that when a bank considers a loan to be risky, they may not approve. The motivation for this study is to have a better understanding of the level of loan delinquency among SMEs and the lending practices of banks, which ultimately prevent banks from expanding SMEs portfolio. This is necessary in order to attract additional lending institutions and resources to the SMEs sector. Although, the study relates to the Nigerian situation, nonetheless, other developing countries with comparative economic growth will find the results of the study useful in their SMEs policy formulation. Financial situations of banks and SMEs in Nigeria In Nigeria, the financial system is dualistic and consists of formal and informal systems. The Informal Financial System (IFS) comprises the institutions such as moneylenders, rotating savings and credit associations for example, that are virtually outside the control of the established legal framework. The Formal Financial System (FFS) refers to an organised, registered and regulated sector of the financial system. The formal financial system comprises the banking sector, non-banking sector and the financial markets. Structurally, the financial system as at December, 2005, comprises the Central Bank of Nigeria (CBN), Nigeria Deposit Insurance Corporation (NDIC), the Security and Exchange Commission (SEC), the National Insurance Commission (NAICOM), 25 deposit money banks, 6 development banks, 757 community banks, 1 stock exchange, 1 commodity exchange, 5 discount houses, 9 primary mortgage banks, 112 finance companies, 126 bureaux de change, 103 insurance companies and 581 stock brokers (CBN, 2005). However, the formal sector is largely dominated by the deposit money banks in Nigeria in terms of total deposits, credit and total assets. In attempt to make the banking sector sound, stable, reliable, dependable and internationally competitive, the Central Bank of Nigeria (CBN) announced on July 6, 2004, that with effect from January 1, 2006, the minimum paid up capital should be N25 billion. To meet the N25 billion capitalisations, banks were allowed to merge, consolidate or even acquire another bank. At the end of the consolidation exercise, out of the 89 existing commercial banks, 25 groups of banks emerged, while 14 banks that could not merge were set for liquidation. To raise the funds the banks used strategies such as mergers, acquisition, floating of new shares and so on. The hope for the consolidation is that, banks would be able to mobilise a large amount of funds to provide loan-able funds to the productive sector. The sector is dominated by the small and medium enterprises in Nigeria. Thus, the tendency is for the SMEs to grow into large and conglomerate firms. The consolidation will enable banks to meet the minimum capital adequacy ratio of ten percent, as prescribed by the Basel Capital Adequacy Accord. The ten per cent ratio which relates capital to credit implies that for every N100 credit, a bank needs N10 capital. Basically, small and medium enterprises in Nigeria are expected to raise funds from two main sources: Equity and debt. The sources of equity (sometimes called internal funds) include owners savings and ploughed back profits. Funds from external source (debt) can be obtained from informal sources (that is friends/relatives, credit associations co-operative societies for example) and formal sources (that is banks, governmental agencies for example). Accessibility to formal financial system, especially by SMEs is very limited. On the supply side, banks are not expanding SMEs loans due to inadequate capital, imperfect information, high transaction cost of dealing with small loans, Labour

Rights And An Exploratory Study Of Loan Delinquency Among Small And Medium Enterprises (Smes) In Ondo State Of Nigeri 3

geographical dispersion of the SMEs and large number of borrowers and low returns from investment. On the demand side, SMEs are reluctant to obtain loans because of the collateral security, high interest rate, untimely delivery of credits, and other things. This problem of finance has persisted for a long time, despite the existence of various economic reform programmes put in place by the government to develop the SME sector. The list of past and present programmes and institutions established by the government to assist SMEs development in Nigeria include; Mandatory Credit Guideline in respect of SMEs (1970). Small Scale Industries Credit Guarantee Scheme (1971. Agricultural Credit Guarantee Scheme (1973). Nigeria Agriculture and Co-operative Bank (1973. Nigerian Bank for Commerce and Industry (1973). Rural Banking Scheme (1977). The World Bank Assisted SME I (1985) and The World Bank Assisted SME II (1990). Second Tier Security Market (1985). Peoples Bank (1989). National Economic Reconstruction Fund (1992). Small and Medium Scale Enterprises Loan Scheme (1992). Family Economic Advancement Programme (1997). African Development Bank Export Stimulation Loan Scheme (ADB-ESL) in 1988. Bank of Industry (BOI) - being merger of NIDB, NBCI and NERFUND) in 2001. Nigerian Agricultural Co-operative and Rural Development Bank (NACRDB) - being merger of NACB, Peoples Bank and Family Economic Advancement Programme (FEAP) in 2002; and Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in 2004. As Hallberg (2000) observes, government assistance strategies in both developed and developing countries often try to achieve a combination of equity objectives (alleviating poverty and addressing social, ethnic and gender inequalities) and efficiency objectives (raising the productivity and profitability of firms). However, as Ojo (2003) argues, all these SME assistance programmes have failed to promote the development of SMEs. Oftentimes, the finance provided have been misdirected, gone to wrong persons or found to be inadequate to impact on the expected development of the assisted firms. This was echoed by Tumkella (2003) who observes that all these programmes could not achieve their expected desires due largely to abuses, poor project evaluation and monitoring as well as moral hazards involved in using public funds for the purpose of promoting private sector enterprises. At the urban and rural levels, private individual and small firms have established Community Banks since 1990 as a means to stimulate the economy from the grassroots. The Bankers Committee introduced Small and Medium Industries Equity Investment Scheme (SMIEIS), from 1st August 2001, and directed all commercial banks to invest 10 per cent of their profit before tax in small and medium scale enterprises of their choice. This is aimed at improving the flow of funds to re-

T. M. Obamuyi

vitalise the real sector of the economy. A cumulative sum of N38.2 billion was set aside by 25 banks in 2006, out of which N17.5 billion or 45.9 per cent was invested in 248 projects (CBN, 2006). Although, commercial banking system aggregate credit to the domestic economy has grown phenomenally from N41, 810.0 million in 1992 to N954, 628.8 million in 2002, Table 1 shows that the ratio of loans of small-scale enterprises to commercial banks total credit to the economy has continued to decrease over the years. Table 1, reveals that commercial banks are ready to give a sizeable proportion of credits to SMEs, only if they are forced to do so. For instance, the table shows that since October 1, 1996, when the mandatory banks credit allocations of 20 per cent of the total credit to small scale enterprises wholly owned by Nigerians was abolished by the government through CBN directives, commercial banks credits to SMEs have declined progressively to 8.6 per cent in 2002. Theories and literature review The theoretical framework adopted for the paper involved the bank capital channel model, capital constraint model and model of lending behaviour based on an agency framework. The bank capital channel views a change in interest rate as affecting lending through banks capital, particularly when banks lending is constrained by a capital adequacy requirement. Thus, an increase in interest rates will raise the cost of banks external funding, but reduce banks profits and capital. The tendency is for the banks to reduce their supply of loans, if the capital constraint becomes binding. However, banks could also become more willing to lend during certain periods because of an improvement in their underlying financial condition. This bank behaviour is explained by the capital constraint models. Basically, banks are subjected to both market- and regulator imposed capital requirements. For prudential purposes, banks regulators generally require banks to maintain capital at not less than a stated fraction of the banks total assets. For instance, banks are expected to meet the capital adequacy requirement of the Basel Accord of ten per cent. Also in Nigeria, banks are expected to maintain a minimum of 40 per cent liquidity ratio of total deposits. Thus, the ability of banks to grant loans is constrained by the amount of financial resources at their command, based on the capital requirements. The agency theory is concerned with how agency affect the form of the contract and the way they are minimised, particularly, when contracting parties are asymmetrically informed. Fundamentally, the problem arises because lenders are imperfectly informed about the characteristics of potential borrowers, and it may be impossible, as a result, for lenders to distinguish good borrowers from bad ones (Fraser, 2004). As observed by Akerlof (1970), and cited by Kitchen (1972), a systematic bias may arise in SME financing, because of the theory of the market for lemons. Akerlof (1970) argues that small businesses, especially in developing countries, are regarded as high-risk, and the level of risk associated with the riskiest small business tends to be applied to all small businesses. Therefore, the problem of information asymmetries highlights the importance of relationships between lenders and borrowers. As Fraser (2004) observes, longer and broader relationships increase the amount and flow of information to lenders, enabling good borrowers to obtain better access to finance over time. Therefore, information asymmetries lead to sub-optimal flows of finance available to smaller firms compared to larger firms (Cook, 2001). The implication of the lack of adequate funding is that SMEs are caught up in a vicious cycle of low investment, low incomes, low profits and savings for investment.

An Exploratory Study Of Loan Delinquency Among Small And Medium Enterprises (Smes) In Ondo State Of Nigeri 5

Research methodology This exploratory study was conducted in Nigeria. The country has a large markets and overall economic development, which compares favourably with most of the developing countries, where SMEs are expected to play pivotal roles in the development process. Ondo State of Nigeria was chosen, being a typical state in terms of the characteristics of SMEs in Nigeria, availability of physical and financial infrastructure as well as economic resources derived from varieties of mineral deposits. The State has a large number of subsistence farmers, fishermen and lumbering men, civil servant and a growing profile of entrepreneurship, engaging in saw-milling, cassava and grain processing facilities, printing and publishing, educational services for example. Six out of the eighteen Local Government Areas (LGAs) were purposively selected. The six LGAs are: Akure South; Ondo West; Odigbo; Okitipupa; Owo; and Akoko North East. In each of the Local Government selected, a town was purposively chosen, mostly the Local Government Headquarters. The choice of the Local Governments and towns was due purposely to economic consideration such as presence of commercial banks, large market, infrastructural facilities and other related urban factors. A comprehensive structured questionnaire was developed to collect data through document review and interview with managers of commercial banks included in the sample in the State. The list of all commercial banks and their addresses were obtained from the Central Bank of Nigeria, Akure Branch. From a total of 28 commercial banks, a stratified random sampling technique in the six major towns was made. This study required that selected banks must have been in existence for 3 years to get meaningful data. Only a sample of 15 banks met the criteria. Open-ended questionnaires were distributed to the 15 banks, out of which 9 usable questionnaires were returned. The interview questions cover the following aspects: reasons why banks did not expand SMEs loans, maturity profile of loans; amount of loan granted; amount of loans repaid, amount of loans in default; classifications of loan repayment; causes of loan defaults; perception of SMEs by banks. Two methods were used to identify the SMEs, since no comprehensive listing of SMEs is available in the state. First, listing of firms from the Ondo State Board of Internal Revenue tax reports was used to identify the names and addresses of SMEs in the selected towns. Second, the names and addresses of SMEs were obtained from the listing at the Ondo Ministry of Commerce and Industry, Akure. From the two sources, a population of 166 SMEs was identified in the six selected LGAs. The paper was based on a study of sample of 115 SMEs that have been borrowers or currently have active loans from the banks, randomly selected from the six local governments. This study also required that selected firms must have been in existence for 3 years to get meaningful data. The questionnaire was pre-tested with 20 SMEs in two towns (that is Ado-Ekiti and Ikere Ekiti, both in a neighbouring State with similar characteristics as the selected towns in our sample). Research hypotheses The two hypotheses formulated for the study are stated below: Hypothesis 1: Loan delinquency rate is low among SMEs in Ondo State of Nigeria. Hypothesis 2: SMEs are credit constrained based on demand and supply factors.

T. M. Obamuyi

Banks lending policies towards SMEs The lending policies of banks to small and large enterprises in Nigeria are almost similar, except for the documentation relating to company registration/incorporation. While the big enterprises are required to submit Certificate of Incorporation, names of directors and good track records, the small firms, especially sole proprietorship are required to submit evidence of business name. Oftentimes, the same types of forms are used by both the small and large firms, with the firms filling the areas relevant to them. To the extent of the explanation above, one may be tempted to say that the lending practices towards SMEs are not different from those for large enterprises. In granting loans, however, banks employ some standard criteria to assess the creditworthiness of borrowers. The range of factors include financial strength, profitability, net worth, track record, management quality, relations and payment records with other banks, business prospects, business risks and collateral securities. In most cases, banks request for personal guarantee for SMEs loans. The banks requested for collateral as an additional requirement, apart from requiring personal guarantees for SME loans, because the financial and operational transparencies of SMEs were relatively low and their accounting standards were poor. The enterprises are also perceived as risky due to the fact that, in most cases, the death of the owner leads to the death of the business, diversion of funds, high cost of monitoring loans and the fact that most of the loans may not be collateralised. Generally, it is always difficult for the SMEs to meet the standardised requirements of the banks. However, when a bank is favourably disposed to lend to the small firms, the operational records of the small firms with the banks were used to determine the suitability or otherwise, of such enterprises in obtaining loan. Sometimes, the issues of the length of time of operating the accounts and the customers relationship with bankers were considered in lending. Based on the foregoing, a proposition is made for lending policies that will take into consideration the peculiarities and the contribution of SMEs to economic development. Such policies should clearly de-emphasise the issue of collateral securities (which in most cases are not available), and putting in place favourable terms of lending such as reduced interest rates, medium to long term lending, for example. All these can be done without necessary compromising the profits maximising objective of the banks and the safety of the loans. What has to be done is for the banks to emphasise relationship lending and encourage group lending, where feasible. Both the government and banks could also collaborate to provide formal and informal entrepreneurship education for SMEs to develop their managerial capability and accounting skills. This has the tendency to reduce loans diversion and delinquency. The overall effect will be to improve the profitability of the enterprises through proper book keeping. Critical factors influencing banks lending to SMEs The results of this study indicated that the banks inability to grant loans to SMEs is due to some problems associated with the SMEs themselves, apart from the inadequate banks lending resources, based on the Basel Capital Adequacy Ratio and other regulatory requirements. On the demand side, the reasons attributed to the activities of the SMEs which have constraint credit to the SMEs are summarised in Table 2.

An Exploratory Study Of Loan Delinquency Among Small And Medium Enterprises (Smes) In Ondo State Of Nigeri 7

As shown in Table 2, the major reasons attributable to the SMEs that have made accessibility to credit difficult include, although not limited to, poor credit worthiness (41.7 per cent), lack of collateral security (33.3 per cent), poor projectpackage (33.3 per cent), lack of adequate record (25.0 per cent) and high risk (25.0 per cent). All these problems have combined in several ways to make lending to the SMEs sector very difficult by the commercial banks. On the supply side, lending to SMEs are constrained due largely to regulatory/ market requirements and the soundness of the banking sector. The supply of loan able funds by banks depends on the soundness of the sector and based on the various regulatory requirements like Capital Adequacy Ratio (CAR), Reserve Requirements (RR), Liquidity Ratio (LR), Interest Rate Developments (IRD) and the lending policies of the banks. These requirements have varied degrees of influence on the amount of money available for lending by the banks. For instance, as at 2005, based on capital adequacy and other rating parameters, fifty two banks were rated sound/satisfactory, while thirty four (34) were rated marginal/unsound (Table 3). The CBN (2005) analysis shows that the marginal/unsound banks exhibited such weakness as undercapitalisation, illiquidity, weak/poor asset quality, poor earnings, among others. Thus, inadequate financial resources and distress on the part of the banks may constrain credit to the enterprises. The full implications of the various constraints to lending have been that commercial banks lending to firms, especially the SMEs sector, has been mainly on short-term basis. Table 3 shows that 76.5 per cent of the SMEs respondents claimed that lending by commercial banks were on short term basis of less than 1-2 years, followed by medium term loans of between 2-5 years, representing 28.7 per cent, and long term loans of more than 5 years (4.3 per cent). However, the short term lending of banks is understandable, since most of the funds were mobilised on short-term basis by the commercial banks. Moreover, the doctrine of anticipated income theory of lending encourages banks to grant short credit to industry and trade, which are self-liquidating in nature. Although, the SMEs need long-term loans, it has been claimed that it will amount to financial indiscipline on the part of commercial banks to finance longterm projects with short-term finance, especially in a country with macro economic instability and uncertainty in business environment. This behaviour of the banks is likened to risk aversion. The obvious consequences of this risk averse behaviour is that SMEs, which rely on bank loans, cannot plan on long term basis, thereby constraining growth plans and long term investment decisions. Loan delinquency and SMEs financing The issue of loan delinquency has been pronounced in many public lectures as one of the reasons why commercial banks have not shown much interest in SMEs financing. Loan default can be defined as the inability of a borrower to fulfil his or her loan obligation as at when due (Balogun and Alimi, 1990). High default rates in SMEs lending should be of major concern to policy makers in developing countries, because of its unintended negative impacts on SMEs financing. Von-Pischke (1980) states that some of the impacts associated with default include: the inability to recycle funds to other borrowers; unwillingness of other financial intermediaries to serve the needs of small borrowers; and the creation of distrust. As noted by Baku and Smith (1998), the costs of loan delinquencies would be felt by both the lenders and the borrowers. The lender has costs in delinquency situations, including lost interest, opportunity cost of principal, legal fees and related costs. For the borrower, the decision to default is

T. M. Obamuyi

a trade-off between the penalties in lost reputation from default versus the opportunity cost of forgoing investments due to working out the current loan. Many factors have been identified as major determinants of loan defaults. Okorie (1986) shows that the nature, time of disbursement, supervision and profitability of enterprises which benefited from small holder loan scheme in Ondo State, contributed to the repayment ability and consequently high default rates. Other critical factors associated with loan delinquencies are: type of the loan; term of the loan; interest rate on the loan; poor credit history; borrowers income and transaction cost of the loans. However, the lending perception by banks of SMEs as being involved in high loan defaults could not be confirmed by the study. The SMEs owners were asked to indicate the status of their loans in order to determine the level of default in loans repayment. Based on the responses and in line with acceptable banking practices, the loans were classified into Performing loans and nonperforming loans. A loan is deemed to be performing if the repayments of both principal and interest are up to date in accordance with the agreed repayment terms. On the other hand, a loan is deemed as non-performing when any of the following conditions exists: (i) interest on principal is due and unpaid for 90 days or more; (ii) interest payment equal to 90 days interest or more have been capitalised, rescheduled or rolled over into a new loan. In Table 4, with graphical illustration in Figure 1, it was shown that the rate of loan repayment was generally high among the SMEs, contrary to the notion that default rate is high among them. From the finding, 93.0 per cent paid as at when due, while only 7.0 per cent defaulted. Table 5 shows loan profiles to SMEs by banks and the analysis of loan repayment rates and the default rates. Interestingly, the amount of loans in default was minimal, which could have resulted from improved performance of the firms, as well as proper monitoring on the part of the bankers. From Table 5, the Loan Repayment Rate for all the banks in the sample was in the range of 81.87 and 95.39 per cent, giving an average of 93.10 per cent. At this rate, total loan in default was estimated at 6.90 per cent of total loan obligations during the period. The average total loans repaid and loans defaulted for the periods, as shown in Figure 2, also confirm the results of Table 4 and Fig 1. From the foregoing, the research reveals that loans delinquency rate was low among SMEs in Ondo State of Nigeria, contrary to the situation in some parts of Lagos State of Nigeria and some developing countries. For instance, Balogun and Alimi(1988) found that the default rates in loans to small farmers in Lagos region in 1985 and 1986 were in the range of 55 and 90 per cent respectively. However, the study by Balogun and Alimi(1988) relate only to small farmers, unlike this study that was based on enterprises from many sectors of the economy. Anderson (1982) spoke of default rates as varying from 10 per cent to 60 per cent or more in most developing countries. The observed low delinquency rates by the SMEs operators could be to preserve their reputations as good borrowers and to avoid the threat of direct sanctions. As warned by Albee (1996) and cited in Snow and Buss (2001), this development presumes that there is no potential debt trap for the borrowers by using new loans to pay off old loans, creating the illusion of high repayment rates. Other possible reasons for the low delinquency rates among the SMEs include: improved borrowers knowledge, commitment to business; counselling and monitoring activities of banks. As observed by Baku and Smith (1998), lenders actions in preventing delinquency include the underwriting process prior to making a loan, counselling and follow-up after a loan is made, collection.

An Exploratory Study Of Loan Delinquency Among Small And Medium Enterprises (Smes) In Ondo State Of Nigeri 9

practices should a borrower fail to make payments, and forbearance or movement to default and foreclosure. Conclusions and Implications This study offers exploratory insights into the level of loan delinquency among the small and medium enterprises (SMEs) in Ondo State of Nigeria, and the lending practices of the countrys bankers towards the SMEs It does offer nice description of the theoretical reasoning for the restricted SMEs lending portfolio for banks. The results were based on the analysis of interview in 2004 with the managers of 9 commercial banks and 115 SMEs that have been borrowers or currently have active loans from the banks. Findings reveal that several factors were responsible for banks altitude of not expanding SMEs loan portfolio, principal of which are poor credit worthiness, lack of collateral security and the constraint imposed by regulation, based on capital adequacy. The study shows that loans delinquency rate was low at 6.90 per cent of total loan obligations among SMEs in Ondo State of Nigeria, contrary to the situation in some parts of Lagos State of Nigeria and some developing countries. In view of the findings of this study and given the implications of loan default on the financial sector of a country, the government should collate and analyse information on SMEs, so that an informed decision could always be made on the full understanding of the problems of the sector. There is also a necessity for serious collaborations by the key stakeholders of the economy to reduce those factors militating against banks lending to SMEs, and put in place a strategy by which the perceived friskiness associated with the sector can be eliminated. Lastly, bank support to the SMEs through Small and Medium Industries Equity Investment Scheme (SMIEIS) should be properly coordinated to reduce costs and possible chance of default. However, the measures suggested in this study are of importance to policy planners, not only in Nigeria, but in other developing countries in their similar situations of growth process. REFERENCES Adebusuyi, B.S., 1997. Performance Evaluation of Small-Medium Enterprises (SMEs) in Nigeria. CBN Bullion, 21(4):46-52 (October/December). Akerlof, G., 1970. The Market of Lemons: Quality of Uncertainty and the Market Mechanism. Quarterly Journal of Economics 84:488-500. Albee, A., 1996. Beyond Banking for the Poor Credit Mechanisms and Womens Empowerment, Gender and Development, 4(3):48-53. Anderson, D., 1982. Small Industry in Developing Countries: A Discussion of Issues. World Development 10(11):913-948. Baku, E. and Smith, M., 1998. Loan Delinquency in Community Lending Organisations: Case Studies of Neighbour Works Organisations, Housing Policy Debate, 9(1):151-175. Balogun, E.D. and Alimi, A., 1988. Loan Delinquency Among Small Farmers in Developing Countries: A Case Study of the Small Farmer Credit Programme in Lagos State of Nigeria, CBN Economic and Financial Review, 26(3) September. Cook, P., 2001 Finance and Small and Medium-Sized Enterprise in Developing Countries, Journal of Developmental Entrepreneurship, April Http://www.findarticles.com/p/articles/m: Central Bank of Nigeria, 2002. Statistical Bulletin, 31st December. Central Bank Of Nigeria, 2005. Annual Report and Statement of Accounts, 31st December. Central Bank Of Nigeria, 2006. Economic Report for the fourth Quarter of 2006.

Fraser, S., 2004 Finance for Small and Medium Sized Enterprises, A Report on the 2004 UK Survey of SME Finances. Http://www2.warwick.ac.uk/fac/soc/wbs/research/csme/annual-report. Hallberg, K., 2000 A Market Oriented Strategy for Small and Medium Scale Enterprises; International Finance Corporation Discussion Paper 40, April. Kitchen, R., 1972 Venture Capital: Is it Appropriate for Developing Countries? Business Finance in Less Developed Capital Markets: An Emerging Field of Study. Book by Klaus P. Fischer, George J. Papaioannou, Greenwood Press. Odeyemi, J.A., 2003 An Overview of the Current State of SMEs in Nigeria and the Need for Intervention. A Paper Presented at the National Summit on SMIEIS Organised by the Bankers Committee and Lagos Chambers of Commerce and Industry (LCCI), Lagos, 10th June, 2003. Ogujiuba, K.K., Ohuche, F.K. and Adenuga, A.O., 2004 Credit Availability to Small and Medium Scale Enterprises in Nigeria: Importance of New Capital Base for Banks Background and Issues. Http://ideas.repec.org/p/wpa/wuwpma/0411002.html. Ojo, A.T., 2003 Partnership and Strategic Alliance Effective SME Development Small and Medium Enterprises Development and SMIEIS: Effective Implementation Strategies, CIBN Press Ltd, Lagos:185-212. Okorie, A., 1986 Major Determinants of Agricultural Loan Repayments Savings and development, X(1):8999. Snow, D.R. and Buss, T.F., 2001. Development and the Role of Micro Credit, Policy Studies Journal 29. Tumkella, K., 2003. The Challenge of Globalisation and SME Sector in Nigeria: Repositioning through Technology and Innovation, Paper presented at the National Summit on SMIEIS organised by the Bankers Committee and Lagos chambers of commerce and Industry (LCCI), Lagos, 10th June, 2003. Von-Pischke, J.D., 1980 Rural Credit Project Design, Implementation and Loan Collection Performance Savings and Development, IV(2):8191.