CHAPTER 1

     INTRODUCTION

1.1  Background to the Study

Thedevelopment of the various sectors of any economy is the basis for itssurvival, different measures have been   put in place by the Federal Government ofNigeria in order to achieve this objective, such as, the establishment of  the Finance and Research Institution in 2001,provision of direct financial assistance to small business  organization, the Small and Medium Industries  Equity Investment Scheme  (SMIEIS)  in 2001, establishment of  Small Scale Industrial Credit Scheme,establishment of Government Intervention Strategies in 2002,  provision of Credit Scheme, establishment of National Economic ReconstructionFund  (NERFUND)  in 1989, establishment of IndustrialDevelopment Centres and Industrial Estate Scheme, etc. The initial efforts were government-led through the vehicleof large industries, but lately emphasis have shifted to Small and Medium ScaleEnterprises (SMEs) following the success of Small Scale and Medium Enterprisesin the economic growth in the Asian countries. (See Ojo, 2003) as cited inBabajide, 2012). However, the growth of Small and Medium Scale Enterprises overthe years has been stunted because they have not been able to meet therequirements for obtaining financial services from the conventional commercialbanks, thus their opportunity for expansion has been greatly limited. Thisshortcoming of the formal financial institution is what initiated micro financing.