ASSESSMENT OF MFIs INVOLVEMENT IN CONSTRUCTION SMEs FINANCING IN EDO STATE

ABSTRACT

SMEs in the construction sector often face challenges in accessing formal financial services to support their growth and operations. Microfinance institutions (MFIs) have emerged as key players in providing financial services to underserved segments of the population, including SMEs. The research problem addressed in this study is the lack of comprehensive understanding regarding the involvement of microfinance institutions in promoting the growth and development of construction SMEs in Edo State, Nigeria. This research focuses on the assessment of microfinance institutions (MFIs) in their involvement in SMEs in the construction sector in Edo State, Nigeria. The study is to understand the financial needs of construction SMEs, examine the types of construction SMEs financed, identify the factors determining eligibility for financing, explore the common repayment terms, assess default penalties, and investigate the range of loans determined by the enterprises. The study employs a quantitative research approach, utilizing primary data collected through structured surveys administered to construction SMEs and representatives from microfinance institutions operating in Edo State. Additionally, secondary data from relevant literature, research articles, reports, and publications are utilized to support the findings. Statistical analysis techniques, including descriptive statistics were employed to analyse the data and draw meaningful conclusions. While the research contributes valuable insights, it is important to note certain limitations. The findings show that Mechanical and Electrical SMEs receive the most financing from MFIs and Financial stability stands as the most crucial eligibility criteria for MFI funding. The study further recommends options for better MFI financing of SMEs within the Edo construction industry.