Does Entrepreneurship Financing Create Employment in Nigeria? The Role of Small and Medium Scale Enterprises (SMEs)

Abstract

The current level of unemployment in Nigeria in the recent times has been worrisome, and various advocacies by scholars and policy analysts have suggested that entrepreneurship, especially small and medium scale enterprises could generate employment in the large measures. Meanwhile, inadequate financing has been identified as a strong factor causing a setback to entrepreneurship development in Nigeria. Against this backdrop, this paper provided empirical answers to whether entrepreneurship financing, from the SMEs perspective could generate employment in Nigeria. In answering the research question, data were extracted from 1992 to 2019 from secondary sources. Consequently, the data passed through various pre-tests such as unit roots and Cointegration tests before it was estimated via the application of Canonical Cointegrating Regression (CCR). The findings of this study were summarized as follows; the Commercial Banks Loans to SMEs contributed both positive and significant impact to employment generation in Nigeria. Likewise, that Commercial Banks total credits to private sector contributed both positive and significant impact to employment generation in the country. Hence, this study submits that that entrepreneurship (SMEs) financing contributes to employment generation in Nigeria. In the light of the above submission, this study recommends that any time the policymakers in Nigeria desire to address the current devastating level of unemployment in Nigeria, financing of entrepreneurship, especially SMEs should be the priority of the government at levels in the country. And as such, employment generation will be stimulated in the long run.