EFFECT OF ONDO STATE MICROCREDIT AGENCY (OSMA) OPERATIONS ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES

Abstract

Microcredit Agencies and Microfinance Institutions are key sources of finance with less stringent conditions for Small and Medium Enterprises (SMEs) in most nations. However, supports from most microcredit programmes have not translated into improved performances by the Small and Medium Enterprises as there still exist high non-performing loans and low investment activities. The study examined in separate the effect of sub-constructs and aggregated credit risk management, access to loan, project monitoring activities, training and advisory services of Ondo State Microcredit Agency (OSMA) on SMEs performance in Ondo State, Nigeria. The study used multi-staged sampling technique to select two hundred and six (206) OSMA loan beneficiaries. Data were analysed using descriptive and inferential statistics. The findings revealed that credit risk management (CRM) (β= 0.522, R2 = 0.383, f2 = 0.407, t = 8.763 and P< 0.05), project monitoring activities (PMA) (β= 0.358, R2 = 0.259, f2= 0.172, t = 5.942 and P< 0.05) and training (β= 0.149, R2 = 0.153, f2 = 0.172, t = 2.357 and P< 0.05) had a positive and significant effect on the performance of SMEs. However, access to loan (β= 0.199, R2 = 0.170, f2 = 0.047, t = 1.402 and P > 0.05) and advisory services (β= 0.069, R2 = 0.136, f2 = 0.005, t = 0.838 and P> 0.05) did not influence SMEs performance in the study area. The study concluded that effective CRM system, adequate project monitoring and training are predictors of SMEs performance. The study recommended the establishment of a robust CRM systems, efficient project monitoring systems and adequate training of loan beneficiaries, before loan disbursement, in order to reduce non-performing loan and improve SMEs performance.