THE EFFECTS OF INFORMAL FINANCIAL INSTITUTIONS ON MICRO AND SMALL SCALE ENTERPRISES IN JOS METROPOLIS OF PLATEAU STATE

Abstract

Micro and Small-Scale Enterprises (MSEs) in developing countries act as catalysts in the development process. They play significant roles in the economic activities of these countries. Nigeria as a developing country requiring sustained economic growth must pay attention to the MSE sector and harness the great potential of this sector as they contribute in providing income for many low income households, employment generation, and improving local technology especially in the informal sector: This study examined the effects of Informal Financial Institutions (IFIs) on Micro and Small Scale Enterprises in Jos Metropolis. A stratified random sampling technique was used and data was collected by administering 100 well structured questionnaires to collect primary data through field survey. Data analysis was based on descriptive statistical tools and Logistic Regression Analysis. The research findings revealed that frequency of meetings and membership size of informal financial institutions positively affect capital acquisition of micro and small scale enterprises while interest rates negatively affect capital acquisition of micro and small scale enterprises in Jos Metropolis Local Government. The study concludes that informal financial sector contribute to capitalization and subsequent financial intermediation of micro and small scale enterprise in Jos metropolis. The study recommended that integration of informal financial institutions into the central wheel of economic growth will play a vital role of invigorating the financial status of micro and small scale enterprises which will in turn, expedite the improved standard of living in Plateau state.