IMPACT OF MICROFINANCE BANK SERVICES ON MSMEs PERFORMANCE IN NIGERIA

Abstract

Despite the importance of MSMEs in Nigeria, they face persistent challenges such as limited
access to finance, inadequate operational knowledge, and a lack of strategic support, which
hinder their performance and growth potential. This study investigates the impact of
microfinance services—credit access, savings, and advisory support—on the performance of
Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. Recognizing MSMEs as critical
drivers of economic growth, employment, and poverty reduction, this research explores how
microfinance services contribute to both financial and non-financial aspects of MSME
performance. Using a quantitative research design, data was collected from 255 MSMEs that
accessed microfinance services through a structured questionnaire using simple random
sampling technique. Descriptive and inferential analyses, including multiple regression, were
conducted to examine the relationship between each microfinance service and MSME
performance. The findings reveal that credit services have the strongest positive impact on
MSME performance, enabling business expansion, asset acquisition, and improved cash flow.
Savings services contribute to financial stability, allowing MSMEs to build reserves for
operational resilience and reinvestment, while advisory services improve financial literacy
and operational efficiency, though to a lesser extent. The study concludes with
recommendations for policymakers and microfinance institutions to expand and tailor these
services to further enhance MSME performance and, consequently, foster economic
development in Nigeria.