Advantages And Disadvantages Of Accessing Finance

Difficulty in Accessing Finance

SMEs globally face difficulty in accessing finance from conventional financial institutions and the International Finance Corporation and World Bank efforts at improving the finance problems of SMEs reveals that different environment face contextual finance problems requiring home-grown, tailor made strategies to manage and overcome this predicament. SMEs in the two continents find it very difficult to access loans from the banks; most credit officers lack an in-depth understanding of SMEs business cycles, and averse to lending to them. The Central Bank of Nigeria has continually encouraged banks to design special product lines aimed at meeting their financing needs, yet most commercial banks favour the big

Porters (2000) proposition that a locations prosperity and productivity does not only depend on the competition in the industries but more of the "How" brings to the forefront the strategic role of human capital and group dynamics prevalent in such locations. The organizational behaviour framework bears positive or negative effect on the totality of business enterprises in the locations. SMEs face a rather peculiar human capital management which are usually not well structured and defined in most enterprises .These enterprises attract the type of labour they can afford and the fact that most SMEs business are owned and managed by family members poses grave hindrances to managing her human resources professionally. Hence, SMEs are prone to mistakes in decision making and fluid participation (Garbage can model) in both locations and confronted with human capital management dilemma which is a reflection of the huge labour force and unemployment level. Renaissance capital thematic research report (2013) shows that Lagos is the smallest state in Nigeria yet “its population density is equivalent to that of the fifth most densely populated country in the world, and half that of Hong Kong (6,800 people per km2

We note that Lagos state population is 18% higher than that of Zhenjiang but Zhenjiang’s GDP is 58% that of Lagos state with a much lower population, suggesting that Zhenjiang population is more productive than Lagos. One major reason for the low productivity of Lagos population (17.5million) may be traced to the high unemployment rate and huge presence of informal sectors participants of 2,307,281 persons representing 13% of the population, national unemployment rate was 21.1% of the labour force in 2010 ( National household and informal sector survey,2010). Harnessing the latent economic capability of the informal sector in Lagos remains a task for policy makers and Lagos State’s current resident registration scheme will help capture the true size of its inhabitants and economic planning. The Government collaborative partnership and recognition of informal trade associations and groups is yielding positive economic benefits with various grassroots capacity training and skill development opportunities aimed at fusing the informal-formal economy