Hillary Chijindu Ezeaku, Gabriel A. Anidiobu, Paschal I. P. Okolie


This paper assessed the effect of SMEs financing on manufacturing sector growth in Nigeria using annualised data from 1981 to 2014. A cointegrating relationship was determined using the Engel and Granger residual based approach which showed evidence of a long-run relationship between SMEs credit and manufacturing output growth in Nigeria. The results of the error correction model showed that SMEs financing had exerted positive influence on the manufacturing sector growth. The finding indicated that when credits to the SMEs increased by 1%, manufacturing output rose by 14.5%. The results also revealed that interest rate and inflation rate had negative effect on manufacturing sector growth. A unit change in interest rate led to 15.7% fall in output growth of the manufacturing sector. We conclude that while SMEs is an important sector that can drive the Nigerian economy, rising interest rate stifles their growth and overall economic impact. This sector needs nurturing hence the government and monetary authorities should make policies and create enabling environment for SMEs to thrive. Access to fund should also be made easy and at low interest rate.


Article visualizations:

Hit counter



SMEs, manufacturing sector, error correction model, Nigeria


Akingunola, R. O. (2011). Small and Medium Scale Enterprises and Economic Growth in Nigeria : An Assessment of Financing Options Small and Medium Scale Enterprises and Economic Growth in Nigeria : An Assessment of Financing Options. Pakistan Journal of Business and Economic Review, 2(1), 78–97.

Alese, J., & Alimi, O. Y. (2014). Globalization and Development Research Enterprises Financing and Economic Growth in Nigeria : Error Correction Mechanism. European Journal of Globalization and Development Research, 11(1), 639–652.

Ayozie, O. D. (2011). The Role of Small Scale Industry in National Development in Nigeria. Universal Journal of Management and Social Sciences, 1(1), 23–41.

Bamidele, R. (2012). Small and medium scale enterprises (smes): a panacea for economic growth in Nigeria. Journal of Management and Corporate Governance, 4(June), 83–98.

Eze, T. C., & Okpala, C. S. (2015). Quantitative analysis of the impact of small and medium scale enterprises on the growth of Nigerian economy: (1993-2011). International Journal of Development and Emerging Economics, 3(1), 26–38.

Ganiyu, A. O. (2010). Perspectives on the Nigerian Financial Safety-Net. An NDIC Book, 5-311

Motilewa, B. D., Ogbari, M., & Aka, D. O. (2015). A Review of the Impacts of SMEs as Social Agents of Economic Liberations in Developing Economies. International Review of Management and Business Research, 4(3), 903–914.

Muritala, T. A., Awolaja, A. M., & Bako, Y. A. (2012). Impact of Small and Medium Enterprises on Economic Growth and Development. American Journal of Business and Management, 1(1), 18–22.

Ogujiuba, K. K., Ohuche, F. K., & Adenuga, A. O. (2004). Credit Availability to Small and Medium Scale Enterprises in Nigeria: Importance of New Capital Base for Banks – Background and Issues. Working Paper, 1–25.

Opafunso, Z. O. (2014). The Impact of Small and Medium Scale Enterprises on Economic Development of Ekiti State, Nigeria. Journal of Economics and Sustainable Development, 5(16), 115–123.

Safiriyu, A. M., & Njogo, B. O. (2012). Impact of small and medium scale enterprises in the generation of employment in Lagos State. Kuwait Chapter of Arabian Journal of Business and Management Review, 1(11), 107–141.

Tawose, J. O. B. (2012). Effects of Bank Credit on Industrial Performance in Nigeria. International Business and Management, 4(2), 158–168.

Terungwa, A. (2011). An empirical evaluation of small and medium enterprises equity investment scheme in Nigeria. Journal of Accounting and Taxation, 3(5), 79–90.



  • There are currently no refbacks.

Copyright (c) 2018 Hillary Chijindu Ezeaku, Gabriel A. Anidiobu, Paschal I. P. Okolie

Creative Commons License
This work is licensed under a Creative Commons Attribution 4.0 International License.

The research works published in this journal are free to be accessed. They can be shared (copied and redistributed in any medium or format) and\or adapted (remixed, transformed, and built upon the material for any purpose, commercially and\or not commercially) under the following terms: attribution (appropriate credit must be given indicating original authors, research work name and publication name mentioning if changes were made) and without adding additional restrictions (without restricting others from doing anything the actual license permits). Authors retain the full copyright of their published research works and cannot revoke these freedoms as long as the license terms are followed.

Copyright © 2016 - 2023. European Journal of Economic and Financial Research (ISSN 2501-9430) is a registered trademark of Open Access Publishing GroupAll rights reserved.

This journal is a serial publication uniquely identified by an International Standard Serial Number (ISSN) serial number certificate issued by Romanian National Library. All the research works are uniquely identified by a CrossRef DOI digital object identifier supplied by indexing and repository platforms. All the research works published on this journal are meeting the Open Access Publishing requirements and standards formulated by Budapest Open Access Initiative (2002), the Bethesda Statement on Open Access Publishing (2003) and  Berlin Declaration on Open Access to Knowledge in the Sciences and Humanities (2003) and can be freely accessed, shared, modified, distributed and used in educational, commercial and non-commercial purposes under a Creative Commons Attribution 4.0 International License. Copyrights of the published research works are retained by authors.