Nigerian banking sector Equity Investment Scheme in small and medium-scale enterprises: Are there lessons to learn?
As small and medium-scale enterprises (SMEs) are perceived as engine for economic growth in any economy, various government regimes in Nigeria have initiated a number of financing schemes and policies to ease SMEs’ access to investment funds. Whilst these government-led initiatives have been implemented through banking sector intermediation, they have largely failed to achieve their purpose for a number of reasons. In an effort to complement government’s initiatives, the Nigerian banking sector introduced the small and medium enterprises equity investment scheme (SMEEIS) for the purpose of rendering financial, managerial and technical support to SMEs. Like government-led initiatives, this scheme largely failed to achieve its purpose and has since been scrapped. This paper examines SMEEIS as a venture capital and provides plausible causes of its failure namely, banks’ lack of requisite skills to manage venture capital, apparent bias of banks towards SMEs and regulatory challenges. Whilst the scheme was profoundly important, the outcome suggests that its initiation and implementation were rather plausibly poorly articulated.
Keywords: SMEs, venture capital, banking sector