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Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises

(MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-

Western Nigeria

Article  in  Advances in Social Sciences Research Journal · March 2021

DOI: 10.14738/assrj.83.9723

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AdvancesinSocialSciencesResearchJournal–Vol.8,No.3PublicationDate:March25,2021DOI:10.14738/assrj.83.9723.Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

MicrofinanceInstitution(MFIs)andSurvivalofMicroandSmallEnterprises(MSEs):EmpiricalEvidenceofTraderMoniScheme

BeneficiariesinSouth-WesternNigeria

WoleAdamolekunDepartmentofMassCommunication,ElizadeUniversity,Ilara–Mokin,OndoState.

J.A.Obadeyi

DepartmentofAccounting&Finance,ElizadeUniversity,Ilara–Mokin,OndoState.

SundayOseiwehOgbeideDepartmentofAccounting&Finance,ElizadeUniversity,Ilara–Mokin,OndoState.

A.A.Akande

DepartmentofAccounting&Finance,ElizadeUniversity,Ilara–Mokin,OndoState.

ABSTRACTDeregulation in Microfinance Institution (MFIs) in accordance withregulatory policy architecture since 2005 has not fully stimulatedsustainabilitytowardstheinformalsystemduetotheinabilityofMFIsto access funds and government to judiciously administer credits tobeneficiariesofvariousschemes;thishasledtothepartialcollapseofsome schemes in Nigeria; despite Government good intentions ofcreatingemploymentandalleviatingpoverty.Inviewofthis,thisstudyassessed Microfinance Institution (MFIs) and Survival of Micro andSmall Enterprises (MSEs): Empirical evidence of tradermoni schemebeneficiaries in South-Western Nigeria. The study adopted Tedeschimodel (2006) that examined incentives available for borrowers torepayloans.Furthermore,referencewasmadetoMarkovChainmodeltoinvestigatetheresponseofindividualborrowerasanapplicantandbeneficiaryoftradermonischemeinthecontextofthisstudy.EighteenMFIsweresampledfrom2009–2020.Paneldatawasadoptedforthestudy.TheresultshowedmixedinfluencesofMFIsonsurvivalofMSEs.WearehopefulthatfindingsofthispaperwouldhelptofilltheexistinggapontheinfluenceofMFIsonthesurvivalofMSEs.Keywords: Micro-financing, Financial Institutions, Micro and SmallEnterprises,TraderMoni,CentralBankofNigeria.

JELClassification:C58;G2;M13;O17

INTRODUCTIONTheMFIsusedtobeself-sustainingbankingsub-sectorinstitute;mostlymanagedandcontrolledby people, identified as financial professionals for efficient deposit mobilization and financial

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)servicesprovisionstodeveloptheinformalsector.TheinformalsystemwaslargelyrepresentedbyMicro,SmallandMediumEnterprises(MSMEs).Microcreditswereeitherminiorsmall loansprovided by MFIs to impoverished people, to alleviate poverty rate, to fund mini businessessurvivalandtoassistlowincomeearnerstobecomeself-employed(Akande,2005).Furthermore,Microcredits weretools whichpromotedeconomicdevelopmenttothepoorpeople and could help reduce poverty and malnutrition in the society. The government hasintroduced various schemes such as Subsidy Reinvestment and Empowerment Programme(SURE-P),FamilySupportProgramme,ConditionalCashTransfer,YouWin,N-Power,Tradermoni,Nigeria Youth Investment Fund, MSME survival fund and so on. This research work capturedindividuals who were beneficiaries under previous and present schemes and particularlytradermoni.Meanwhile,tradermonicouldberegardedascreditsmeanttoassistinthefundingofartisans,mini and small business owners inNigeria. Tradermoniwas a credit scheme to assistmicro and small enterprises (MSEs) courtesyof theGovernmentEnterprise andEmpowermentProgramme (GEEP).TheGEEPwasaschemeof theFederalGovernmentofNigeria, viaBankofIndustry(www.tradermoni.com.ng).Inlieuofthesimilarityindefinitions,exitingstructuresandfinancial roles of microcredits and tradermoni; therefore, microcredits were not less differentfromtradermoni.This study strongly believed thatMFIswere responsible for provision ofmicro credits topettytraders and small business owners andmanagers. Stakeholders in theMFIs banking subsectorwere aware of the fact that one of themajor challenges confronting the subsectorwas lack offundsor capital toprovide financial servicesandcreate savingsmobilizations soas toease thefinancialintermediationprocess(channelingfundsfromthesurplusunittodeficitunit).ItwasnodoubtthatfinancialperformanceofMFIswouldbeaffectedifgovernmentthroughitsregulatoryandsupervisoryagencieshavenotadequatelyprovidedenablingenvironmentandstablepoliciestoachieveeconomicsustainability.

LITERATUREREVIEW

TheConceptofMicrofinanceFinanceInstitutions(MFIs)MicrofinanceFinanceInstitutions(MFIs)comprisedofmicrofinancebanksestablishedtoprovidefinancial services tomini, small and low-income clients, including petty traders, small businessmanagers and owners, consumers, customers, retired and active individuals and the self-employed(Babajide,2012;Oladejo,2013;Ogujiuba,Fadila,andStiegler).Orodje(2012)claimedthatMFIs only specialized in providing petty credits to poor persons and low income group indevelopingcountries.MicrofinanceInstitutions’clientswereoftenlivingalongthepoverty,whichwas often characterized with tiny and small enterprises which consisted of petty retail shops,smallkiosks,streetvendors,artisans,blacksmiting,carpentry,vulcanizing,hairdressingsalonandwelding.Micro-creditscustomersmostofthetimeacceptedmicroloanstostartbusinessesasclaimedinthese studies, (Wanjohi &Mugure, 2008;Wellen andMulder, 2008; andWakaba, 2014). Somestudies(Oladejo,2013;Wakaba,2014)acclaimedthatMFIsclientsspentonlyhalfofthetotalloanproceeds on business. It was believed that the accessed credits were spent on differenthouseholds’needssuchasexpensesoneducation,shelter,clothing,foodandpossiblyhealth–allthesewerecontrarytothepurposeofthecredit.Evidencesfromtheendogenousliteratureshave

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

197URL:http://dx.doi.org/10.14738/assrj.83.9723

shownthatmicrofinanceinstitutions(MFIs)remainedoneofthefinancialinstitutionsnexttothepeopleinthegrassroots(Oladejo,2013).MicrofinanceInstitutions(MFIs)PerformanceIndicatorsi.CreditUsageCredit was the money receipt exchanged for not immediate repayment of the principal, plusinterestbutinthenearestfuture.Mostoftentheprincipalcouldbethelargeramountborrowed,andthe interestmightbetheamount(i.e.smallercomparedtoprincipal);chargedforreceivingthe credit. But diversion of credits from itsprimary purpose could endanger the sustenance offirms (Wellen & Mulder, 2008). Ojo (2009) corroborated with the claim that the borrower’spurposeforthecreditmustbejustifiedandsatisfactorytothelender.Lenderssometimetookriskthatborrowersmightnotrepaythecredit,butcreditsaverswouldexpectedlyneedtooffsetthatriskbychargingafee,whichotherwiseknownasinterest.Theborrower’sabilitytousecreditaspromisedbybanksbuiltconfidenceinthecreditrepaymentprocessbythecredituser.According to Orodje (2012), credit usage was just a term that depicted the main reason anapplicantwasseekingaloanorcredit.Theobjectiveofthecreditwasusedbythelendertomakedecisionsontheriskandmightevenimpacttheinterestrateoffered.Creditusageremainedveryimportant to the process of accessing business loans because it was connected with a typicalbusinessactivities; to theextent that thereasonforobtainingcreditwouldautomaticallynotbecontrarytoitsprimaryandexpectedintentions.ii.LoanDisbursementLoandisbursementconstitutedtheactofpayingoutordisbursingmoney,butsuchmoneycouldeitherbepaidouttorunabusinessortheamountsthatmighthavetobepaidoutonbehalfofaperson's in connectionwith a transaction; and such that interest ratewould be chargedon thefunddisbursed(PearsonandGreef,2006).Furthermore,accordingtoOgujiuba,etal,(2013),oneofthefundamentalobjectivesofMFIswasabilitytoabsolutelydisburseloanswithminimumrisk,whichreliedheavilyonMFIs’creditpolicies.Consequently,Oni,PaikoandOrmin,(2012)assertedthatloandisbursementwasacashoutfloworpaymentofmoneyprocesstosettledebtobligationssuchas interestpaymentson loansandaccounts receivables to completebusinessactivitiesviatheuseofelectronicpaymentsystem(plasticmoney,electronicfundtransfers)andothersourcesof debt settlement. Slight contrast,Warue (2012) believed that therewas need to abreastwithprocess associated with loan disbursement. He started by carefully evaluating the credit-worthiness of the customer vis-a-vis the business viability and feasibility. Thiswas particularlyimportantifthecompanychoosestoextendsometypeofcreditlineorrevolvingcredittocertaincustomers.Moreso,loandisbursementrequiredsettingeitherspecificcriteriaorstandard,whicha customer of bankmust satisfy before receiving the proposed credit arrangement; and creditlineswouldbeextendedtoloandefault-lesscustomers(Shabbir,2016).In view of the aforementioned, there was need for MFI management to thoroughly supervisecreditofficersbyproperlyassessingrisksassociatedwiththecreditdisbursement.iii.LoansizeTheprocessoflendingofmoneyfromoneentitytoanother,suchthatthedisbursementapproachvariedcouldberegardedas loansize(Odongo,2014).AccordingtoRosenberg(2009), financial

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)institutions most especially banks preferred to disburse large credit to borrowers due to thereduction in administrative costs, which was directly proportionate to the loan size. Studies(Makorere,2014;Laetitia,ShuklaandLuvanda,2015)reflectedthatMSEsconsideredmicroandsmallloansamounttomeetimmediateneeds,sincehandlingoflargesumsoffundscouldleadtomismanagementtherebycausingbusinesscollapse.OneofMFIs conditions forproviding creditsdependedon the saving capacityof the customersandtendencyofnotbeingacreditdefaulter.Theloansextendedtocustomersreliedonpaymentflexibilityandcollectionconvenience.TraderMoniandotherSocialInvestmentSchemesTraderMoniTraderMoniwasacreditprogrammeofNigerianGovernment,establishedmainlyforpettytradersandartisansalloverthecountry.Thefederalgovernmentclaimedthattheschemewasapartofthe Government Enterprise and Empowerment Programme (GEEP) implemented with theassistanceofBankof Industry (BOI).The schemeproved that interestedparticipantswhowerepotentialpettytraderswouldenjoyperiodofmoratoriumrangingfrom₦10,000to₦100,000aslongastheparticipantsdidnotdefault.Participantswereexpectedtoreceive₦10,000asthefirstcredit.Atmaturityborrowers,whodidnotdefaultinrepayingthefirstloan,suchborrowerwouldautomatically qualify to receive next credit of₦15,000 in sequence till the borrower received₦100,000.Therefore,theinflowofcreditswouldserveasacontinuoussourceoffundingforthepurposeofgrowingmicro,pettyandsmallbusinessesinNigeria(www.tradermoni.com.ng).Theauthorshoweverbelievedthattheaverageof₦55,000wasexpectedtobepaidtobeneficiary,thepaymentprocesswouldhavebeendistortedseriouslyduetoeffectofvirusoutbreak–COVID-19,exchange rate volatility and reduction in the price of crude oil on the economy, since majorrevenueofgovernmentwascrudeoil.Therefore,someoftheborrowersmightfounditextremelydifficult topayback the capital, therebydisqualifyingpotentialborrowers tohaveaccess to thenextphaseoftheloan.Meanwhile,governmentdoesnothavebusiness inbusinessbut tocreateenablingenvironmentfor institutions to thrive, (Osinbajo, 2020). Ayogu, Abasi and Ecoma (2019) and Arikewuyo &Akanbi(2020)arguedthattradermonicreditschemewasmeanttotargetminitradersanddidnotrequire collateral/ securitybefore creditdisbursement to thepoorNigerians.They commendedthe government on the social investment initiatives but concluded that tradermoni creditinitiativesmight ameliorate the problemof the petty traders.Murtala, (2016) and Ayogu et al,(2019) and Odiase (2020) have explained that tradermoni was an empowerment scheme toprovide credits forpetty tradersandsmallbusinessowners inorder tobecomeself –employedand be moved-out from abject poverty. More so, the intervention of tradermoni as socialinvestment fund, would continue to improve the potential of accessing credits despite zero-collateral/securitybyborrowers inordertobecomeself-employedaswellas towardspovertyalleviation(Osibajo,2019;Ifeanyi,2019;Afolabi,2019;Arikewuyo&Akanbi,2020).Theauthorswereof theviewthatgovernmenthasprovidedpalliativestocitizenstoserveasacushion to the effect of pandemic. Some of the incentives were reduction in pump price ofpetroleum motor spirit (PMS), providing millions of Nigerians with prepaid meters, recent

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

199URL:http://dx.doi.org/10.14738/assrj.83.9723

increaseinsalariesandwagesofworkersparticularlyteachers,conversionofsomevehiclesusingpetroltoelectricinordertoreducecostoftransportation,non-increaseinelectricitytariffetc.SomeRecentSocialInvestmentSchemesbyGovernmentThereweremanysocialinvestmentschemestofinanciallyassistthelowincomeearners,poorestof thepoorpeople,microandsmall entrepreneurs,managersandpetty traders.Theseschemesincludedbutnotlimitedto;i. Micro Credit Scheme: It was introduced by government to capture more than one millionartisans that comprised of carpentering, vulcanizing, painting and market traders. Thegovernmenthoweverearmarkedthesumofsixtybillionnairafortheproject.Underthescheme,the sum of five hundred thousand naira creditswere provided by Bank of Industry tomarkettraders.ii.N-Power:ItinvolvedbothTeachNigeriaScheme(TNS)andYouthEmploymentAgency(YEA).The former scheme occurred where Federal Government specifically engaged in direct labourwhere at least five hundred thousand university graduates were directly hired, trained anddeployed as primary and secondary schools teachers in order to improve the standard ofeducationinNigeria;whilethelatterschemecapturedaveragenumberoffourhundredthousandofungraduatedNigerianyouthstogothroughskillacquisitionandvocational training foraboutfewmonthsandstipendswouldbepaidduringthetraining.iii.ConditionalCashTransfer(CCT):Itwasanotherprogrammeofthegovernment.TheschemeensuredthatthesumoffivethousandnairaonlywasdirectlypaidtoonemillionextremelypoorpeopleinNigeria;sincepoorpeople’schildrenandwardswereenrolledinpublicschools.iv.NigeriaYouthInvestmentFund.Thiswasanothersocial investmentschemeintroducedbyfederal government via Central Bank of Nigeria. The total of seventy-five billionaire nairawasearmarked for the scheme, to target five hundred thousand youths annually. Furthermore, thestart-up sum for the remaining financial year of 2020 would be twelve billion, five hundredthousandnaira.v.Micro,SmallandMediumEnterprises(MSME)SurvivalFundandSupportInitiatives.Thisscheme has also earmarked the sum of seventy-five billionaire naira to fund different scalecategories of enterprises (Micro, Small and Medium) and help to reduce poverty level. Theseventy-five billion naira was part of two trillion and three billion naira stimulus package ofNigerianEconomicSustainabilityPlan(NESP).Some of the reasons for the failure of previous schemes of government included the poor andweak credit administration strategies used by government agencies and unduly politicalinterferenceonthepartofgovernmentonthescheme.

MicroandSmallEnterprises(MSEs)andMicroCreditEnterprisesdifferedwithsizes,capitalization,assets,networth,profit, returnsandemploymentcategorization.Studies(BoltonCommittee,1971;CBN,2003;IFC,2012;SMEDAN,2013)believedthattherewasnospecificdefinitionforenterprises.Enterprisehassincebeenmovingalongthecommonspectrumofascale,whichwasknownaseither,micro,smallormedium.Thespectrumscalehaspersistentlybeenidentifiedtobeinformalsystemwithgeneraleffectonwellbeingofthepeople and society. The informality phenomenon was associated with absence of thoroughregulationofthesectorcomparedtotheformalsector.Though,theMicroandSmallEnterprises

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)(MSEs) formed the large number of businesses majorly in emerging markets and could beregardedas‘life–wire’ofmostnations’economies.AccordingtoOgunrinolaandAlege(2007)andTaiwo,Onasanya,AgwuandBenson,(2015),microcreditsrangedindifferentsizesandcouldbeusedtofundmini-enterprisessuchashairdressingsalon, tailoring, food vending and small level of agro-allied activities. Studies (Oni et al, 2012;SMEDAN,2013;UgochukwuandOnochie,2017)believedthatmicrocreditswerefinancialcreditsprovidedtomicroandsmallscaleenterprisesincludingcottageindustries,minibusinessowners,farmers (i.e. fishing, citrus plantation,piggeryetc.,), petty traders and all other artisans tohelpcreatewealth,tocreateemploymentandmitigatepoverty.The dynamism of fundingMSEs in Nigeria through different government schemes was a goodsustainability initiativebut lessattentionhassincebeengivingtoprudentcreditadministrationapproachtobehandledbyfinancialinstitution(MFIs)saddledwithresponsibilitiesofefficientlymanagingfundsandfinancialintermediationstatutoryfunctions.ThiswasbecausecountriesthatformedBRICS(Brazil,Russia,India,ChinaandSouthAfrica)knewthatthesourceofanyemergingmarket would be the transformation of the industrial sector with informal sector constitutinglargerproportion.EnterpriseSurvivalAnalysisAccordingtoColeman,CoteiandFarhat,(2010)andBabajide(2012),microandsmallenterpriseswereexpectedtoplayacrucialroleinthedevelopmentprocessofacountrythroughemploymentcreation, increasing income and poverty alleviation.However, if the growth and survival of thenewlyestablished firmswerenotensured, theexpectedpositive results couldbe replacedwithnegativeoutcomesofunemployment,wastageofresourcesandtimeinthepartoftheownerandeconomiclossingeneral.Empiricalliteratureshaveshownthatthereweredeterminingfactorstotheemergenceandsuccessofenterprises.According to studies (Storey, 1994; Disney, Haskel and Heden, 2003; Dayanandan, 2012) haveshown that owner and firm related characteristicswere the basic factors that determined thesuccess of a firm, this assertion was further supported by these studies (Coleman et al. 2010;Fadahunsi,2012;YuCao,2012).MataandPortugal(2002)analyzedthesurvivalofnewdomesticand foreign owned firms. Moreover, Pérez, Amparo and Juan, (2004) concluded that a newlyestablishedfirmsurvivalwasmorelikelytodependoninitialfinancialendowment,theirhumancapital, risk aversion, the wish for independence, and the support of their social and familynetworks.Studies(Dada&Salisu,2006;Colemanetal,2010;YuCao,2012)focusedondevelopingeconomiesandemergingmarketsconsistentlyhighlighted,imperfectioninthecreditandfinancialmarkets, a non-transparent regulatory environment, lack of infrastructure, and bureaucracyburden as the pervasive challenges to enhance an improvement and survival of small firms inemergingmarkets.The survival ofMSEs could be affected by economic recession, high inflation rate, high cost offunds, cash crunch, financialmarket uncertainties, virus outbreak / COVID-19, dwindling stockprices, exchange rate volatility, weak regulatory policy; others were porous infrastructuredevelopment, education, entrepreneurial skill, training and experience, size of the firm,informationtechnology.

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

201URL:http://dx.doi.org/10.14738/assrj.83.9723

FactorsthatInfluencetheSurvivalofFirmsSalesGrowthSales growth could be explained as the amount of the average sales volume of a company'sproducts that has increased tremendously from a particular period to another, that is, yearly.HansenandMowen (2012)argued that salesgrowthwasan increase in sales fromaparticularyear to another. Companies with increase in sales growth volume would require additionalinvestmentinthedifferentcompositionofassetsthatis,fixedorcurrentasset.Though,thesalesgrowthcouldeasilyassistthecompanytopredicttheexpectedprofitinthefuture.Venkatramanand Ramanujam (1987) examined the extent of convergence among techniques measuringbusiness performance and concluded that profit growth and sales growth, remained differentmeasuresofdimensionsofbusinessenterpriseperformance.Salesgrowthwouldberepresentedbythepercentagechangeinsalesforeachcompanyinthesampleoverasingleyear,adjustedfortheindustryaverage.ProfitabilityProfitability could be regarded as the degree at which a business realized financial gain.Furthermore, a strong financial sector could be attained via increase in banks profitabilityperformance, availability of funds and ensuring quality service delivery to customers (Saona,2011). It was also a special difference between the amount earned and the amount spent inproducinganddistributinggoodsandservices.Profitabilityreferredtotheoperatingefficiencyoftheenterprise;andbetterstill,couldbedescribedastheabilityoftheenterprisetomakeprofitonsales. One of the objectives of MFI was to achieve profitability in order to achieve a stableeconomicgrowth.MicrofinanceandMSE’sPerformanceThemicrofinancepractice couldbe traced to1970s,butyet toattain thedesired levelof globalbestpracticeandperformance.Thismightbeasa resultof lackof accessof creditby theMSEsoperators, large discrepancies between themode of operation by financial institutions and theeconomic characteristics and financing needs of low-income households. Therefore, it wasbelieved that Microfinance Institutions (MFIs) worldwide have shown that micro enterprisesloans were profitable for borrowers and lenders alike, making microfinance one of the mosteffectivepovertyreducingstrategiesandprovidingplatformtobecomingself-employed.Despitetherevocationexerciseofoperatinglicensesof224MFIsaftertheTargetExaminationconductedon820MFIs in2010byCentralBankofNigeria(CBN); two-thirdof itwasskewedmoretotheSouth-West(CBN,2011&2014).PerformanceofMFIshasimprovedsignificantlyasaresultofthegrowth in deposits generated over the period of evaluation by petty traders, micro and smallbusinessoperatorswhooperatedaccountswiththebanks(Abraham&Balogun,2012).Thestudyattributeddepositgrowthtoimprovedfinancialinclusionapproach-grassrootbankinghabit,increaseinnumberofborrowersandsavers.Thisfurtherunderscoredtheneedtoincreasethe credit service delivery capacity of theseMFIs amid the enormous potentials in themarket.However,toimprovetheperformanceofMFIstowardsthesurvivalofMSEs,itwasexpedienttoreducecosts,increaseoutreach,andboostoverallprofitability.

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)TheoreticalLiteratureMicrofinanceDevelopmentTheoryThe theory of microfinance development was propounded in 1976 in Bangladesh throughestablishment of Grameen Bank by Mohammad Yunus. During the period, mini credits weredisbursed to low income earners in order toassist the people to become self-employed and toreduce poverty among the people particularly without the provision of security / collateralfacilities in the rural areas.The creationofGrameenbankcreatedplatform formicroandsmallbusinessestoeasilysourceformicrocreditsfromfinancialinstitutionsothatbusinessandsocio–economic lives of the rural people could be meaningfully empowered and developed. To thisextent, financial institutional frameworkwasadoptedandacceptedtoprovidemicrocredits forthedevelopmentof investmentopportunities tobeenjoyedbethepeople.Mostof thecountriesadoptingmicrofinance development theorywasmore common inAfrica, part of Asia andLatinAmerica. This was because these developing economies could be associated with poverty,malnutritionandunavailabilityofcredits,highunemploymentandpoor institutionalstructures.In addition, the theory corroborated the needs for regulatory agencies to ensure conduciveenvironmenttothriveandprovisionofloanstosmallbusinessoperatorsandowners.EmpiricalLiteratureAccording to Gumel (2012) in the studies of evaluation of credit availability in MicrofinanceInstitutions (MFIs): Evidence from Northern Nigeria; the study revealed that micro-financingcovered more than just providing credits to low income business operators and earners butneededtoassistmore in insuranceandpaymenttransfers.ThestudyconcludedthatMFIshavecontinuously played a significant role in providing credits to business enterprises to survive.Babajide(2012)studiedtheeffectsofmicro financingonmicroandsmallenterprises(MSEs) inSouth-West Nigeria adopting Diagnostic Test Kaplan-Meier Estimate and Multiple RegressionAnalysis.ThestudyrevealedthatmicrofinancepromotedsurvivalofsmallbusinessinSouthWestNigeria;andconcludedthatmicrofinancedidnotenhancegrowthandexpansioncapacityofMSEsin Nigeria. Some studies (Ojo, 2009; Ogujiuba, Fadila and Stiegler, 2013) in the field ofmicrofinancehaveapproved the importanceofnon-financial serviceson the clients’householdsandtheirmicroandsmallenterprises’performance.Theimportanceofnon-financialservices(e.g.entrepreneurial training and business development) provided peoplewith business knowledge.Ojo, (2009) andOgujiuba et al, (2013) further opined that the entrepreneurship training has apotential to enhance the capacity ofmicro and small enterprises for jobs creation and growth.Theyalsoassertedthattheentrepreneurialtrainingscouldbemoreeffectivewhencombinedwithmicrocreditservice.ArikewuyoandAkanbi(2020)studiedontheassessmentof ‘tradermoni’empowermentschemeinNigeriafromtheIslamicperspective;withacasestudyofwomenbeneficiariesattheMandatemarket,Ilorin.Findingsfromtheirstudyrevealedthattradermonischemeempoweredthepettytradersandmicrobusinessactors.Butthestudyfocusedonlyononestateandfailedtocapturethe relevance between MFIs and provision of micro credits. Ayogu et al, (2019) examinedtradermoni micro-credit scheme and poverty reduction in Nigeria. They claimed that theintroductionoftradermonischemewastiming,amidstthehighrateofpovertyamongthecitizens.They concluded that tradermoni could also fail like previous schemes due to weak loanadministrationprocess,poorrecordsofbeneficiariesofpreviousschemesandlackofinstitutional

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

203URL:http://dx.doi.org/10.14738/assrj.83.9723

structuresandframeworks.Butthestudyfailedtoexaminein-depthfinancialrolesandeffectivecreditadministrationperformanceofMFIs.Thispaperwas the first toempiricallyassess theextentof influenceofMFIsvariablesonMSEssurvivalinSouth-westNigeriafromtradermonischemeperspective.Thestudywasabletoaffirmthat the introduction of social empowerment scheme like tradermoni was timing to createemploymentandtoalleviatepovertyamongloweranddailyincomeearners.ButemphasizedthatthedisbursementofcreditstobeneficiariesofvariousschemesofgovernmentshouldbemanagedbyMFIs(i.e.withsoleresponsibilityoffinancialintermediation).TheappointmentofMFIswouldbe by government via CBNnot via individuals or group of people,whomightmismanaged thefundsforthescheme.TheexclusionofMFIsincreditsdisbursement,managementandcontrolhasarguablyledtothecollapseofsomeschemesinthepastinNigeria.ConceptualFrameworkDependentVariablesIndependentVariables

Source:AdaptedfromGoldbergandWhite,(1999)Fig1:Conceptualmodel

DATAANDMETHODOLOGY

DataThesecondarydatawassourcedfromannualfinancialreportsofMFIs.TheMSEsownerswouldhavebeenoperatingbankaccountswithMFIs,mighthavebeenabeneficiaryofvariousschemesof government including tradermoni schemeandcouldalsoprovide financial records.TheMFIsandMSEsmanagerswerepurposivelysampledduetotheabilitytoaccesstheirannualfinancialreportsandtransactionrecordsrespectively.

MSEsSurvival

MicrofinanceInstitutions(MFIs)

CreditDisbursement

LoanSize

CreditUsageProfit Sales

Growth

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)TheoreticalFrameworkThestudyemployedTedeschimodel(2006)ontheabilityofborrowerstorepayloansconsideringproportionofavailableincentivesinordertopreventcreditdefault.Though,therewasnohighlydevelopedmicrolendingfinancetheoryunlikethemodernMathematicalFinancetheorysuchasCapital Asset Pricing Model (Diener, Diener & Khodar, 2009). In the Tedeschi model, everyborrowerhasthepotentialofseekingcreditofaunitataparticularperiodoftime,t.Duringthistimet,theborrowerwasexpectedtorepayaunitincludinginterest(1+r).rwastheinterestratechargedduringtheperiodoftimet.Thecapitalstronglydependedoninterestrate,randperiodofttime.Similarly,theborrowerwouldbeexpectedtoinvestinafeasiblebusinesswithanamountO for a period of time t. SupposeO> (1 + r), the borrower would be able to meet its debtobligationsandcouldbesaidtobeasuccess. Consequently,therewasanassumptionthatfixedprobabilityP was associated with a successful borrower. Therefore, the probability Q that theprojectwouldsucceedinaperiodoftimetandfailwithprobability1-P.Thefailurecouldbeasaresult of economic recession, dwindling oil prices, exchange rate volatility, virus outbreak /COVID-19etc.However,theborrowerwouldneedtopay1+rtothelenderandwouldenjoythebenefit(certainty)ofnewloanofaunitaslongastheborrowerdoesnotdefault.Inasituationwheretheborrowerdefaulted,hewouldnotbeabletobenefitfromthenewloanatanotherperiodoftimet(creditexclusionstage).Theborrowerwouldonlybeallowedtoapplyforanewloanafterexpirationofcreditexclusionphaseconsideringsomefactorssuchasnumberofqualified borrowers, size of loan portfolios, liquidity position of the lenders, new policiesassociatedwithloansbyregulatorsetc.Duringthisfirstperiodoftimet,theborrowercouldonlybecome beneficiary with probability R after the expiration of credit exclusion stage and non-beneficiaryofloanwithprobability1–R.Theprobability1–Rexplainedinabilityofborrowertoobtainloanandwouldneedtowaitforanotheroneperiodoftimettoeitherbecomeabeneficiaryornot.Therefore, to either become a beneficiary or not in order to access loan, could easily besummarizedinMarkovchain(Xt)t∈N=Xt∈S; E:={B,ET,ET-1,…,E1}---------------------(i)B is the state of a beneficiary, E1 was the state of an applicant with chances of becoming abeneficiaryforthenextperiodoftime;whileEiwasi=2,…,T,thestatetobeincreditexclusionstagefortheupcomingiperiods.Thesetstateinequation(i)hasbeenadjustedtoaccommodatethetransitionmatrixofMarkovchain,whichwasprovidedas P1-P00⋯00 0010⋯00P= ⋮⋮⋱⋮……..(ii) 0000⋯10 0000…01 R000…01 − RItmustbenotedthatMarkovchainemphasizedthatXt+1dependedmoreonXtbutnotonXt-1becauserecentvaluesinatrajectory,automaticallyinfluencednextoccurrence.Hence,Y(Xt+1=E⎸Xt=E)=P(abeneficiarythatwassuccessful)

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

205URL:http://dx.doi.org/10.14738/assrj.83.9723

Y(Xt+1=E1⎸Xt=E)=1 − P(anunsuccessfulbeneficiarytherebyleadingtocreditexclusion).Y(Xt+1=ET-1⎸Xt=ET)=1,i=2,…,T(beginningofcreditexclusionperiod)Y(Xt+1=B⎸Xt=ET=R(loanwasobtainedbyanapplicant)Y(Xt+1=ET⎸Xt=ET=1 − R(anapplicantwasunabletoobtainloan).Everypotentialborrowerwasexpectedtoobtainloanaslongassuchpersonwouldmakeprofitfromthebusinesspropositionsasindicatedinequation(iii).1 + Z<⍵------------------(iii)Therateofinterestrchargedontheloanamountobtainedbytheborrowermustbereasonableinordertoachievethepurposeofprofitmaximizationinequation(iv).1 + [ ≤ R(1+r)------------(iv).WherecwaslendingcostassociatedwithadministrativecostandoperatingcostTheborrowerofloanshouldbeencouragedtorepay,butwheretheborrowerfailed;punishmentorsanctionmeltedtohim/hermustbegreaterthangain(s)derivedfromdefaultingasdepictedinequation(v).[O − (1 + Z)] + ^_`(a) ≥ O + ^_`(ET)---------------(v).Wherec∈ (0,1)wasthe fixeddiscount factorinaparticularperiod._` (d)wastheaggregateexpectedreturnsonborrower’sbusinesspropositionatastateofdattimeframev(Cinlar,1975;Dieneretal,2009).ModelSpecificationThe analytic panel models were divided into pooled regression model; fixed effect model andrandom effectmodel. Panel regression combined both cross-section and time series data, withsamedatabehavioroverthespecifiedperiods.PooledregressionmodelwassimilartoOLS,whichadoptedconstantcoefficients;interceptsandslopesasshowninequation(vi):Yit=λ1+λ2Xit+uit---------(vi)Whereiwastheithsubjectandtwasthetimeperiodforthevariablesλ1wastheintercept;λ2wasthecoefficient;Xwastheregressorvariableuisdisturbanceorerrorterm;YwasdependentvariableWhereTwastimeperiods(t=1,2,3,4,...,12),Nwasthenumberofindividuals(i=1,2,3,4,...,18).Therefore,totalobservationunitswouldbeNxT.Thepooledregressionmodelassumedthatregressorvariableswerenon-stochasticinnature,butwhereitoccurredasstochastic,thismeantthatthevariableswereuncorrelatedwithdisturbanceorerrorterm,uit.Thisfurtherexplainedthaterrorterm,uit⁓iid(0,σ2u)wasindependentlyandidenticallydistributedwithzeromeanandconstantvariance(Gujarati,2013).Secondly, the fixed effect model (FEM) assumed that differences that might have occurredbetween individuals (cross section) could be accommodated from various intercepts, but also

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)employedOLS.FEM’sassumptionof amodelallowedconstant intercept forevery crosssectionwithanunrealistictime.Thefixedeffectsmodelwasstatedthus:

Yit=λ1i+λ2Xit+uit---------(vii)Theequation(vii)explainedthatthe‘fixedeffect’wasaresultofdifferencesininterceptsacrosssubjects, however, each of these entities did not vary over time (λ1i is time invariant).Furthermore, equation (vii) assumed that coefficients of the explanatory variables did not varyacrosssubjectsorovertime(Greene,2008;Gujarati,2013).Lastly,RandomEffectModel(REM)allowedthedifferenceamonginterceptstobeaccommodatedbydisturbanceorerrortermsofeachsubjects.OneofthebenefitsofadoptingREMwastheabilitytoeliminateheteroscedasticity.Therandomeffectmodelwas:

Yit=λ1i+λ2Xit+uit---------(viii)Fromequation(viii),λ1iwouldnotbetreatedasfixedbuttobeassumedasrandomvariablewithmean value of λ1 (without subscript i). Therefore, an intercept value for each ofMFI could beillustratedas

λ1i=λ1+ԑi-----------------(ix)AccordingtoGujarati(2013),ԑiwasrandomerrortermwiththevalueofmeantobezero(0)andvarianceofσ2ԑ.TheeighteenMFIsinthesamplewereadrawingfromlargerpopulationofMFIsin thebanking sub-sectorwith commonvalueof the interceptof λ1. Itmustalsobenoted thatindividuality differences as regards values associated with the intercept of each MFIs wereindicated inthedisturbanceorerrorterm(ԑi).Tosubstituteequation(ix) inequation(viii);weobtained

Yit=λ1+λ2Xit+ԑi+uit---------------------------(x)Equation(x)couldfurtherbewrittenas

Yit=λ1+λ2Xit+⍵it---------------------------(xi)But ⍵it=ԑi+uit-------------------------------(xii)Where⍵itwascompositeerrortermthatconsistedofԑianduit.ԑi was cross-section or error component; while uit was the combination of cross section errorcomponents and time series having varied over subjects and time. The random effect modelshowedthatcompositedisturbancetermconsistedof;ԑi∼N(0,σ2ԑ)uit∼N(0,σ2u)---------------------------(xiii)E(ԑiuit)=0;E(ԑiԑij)=0;(i≠j) E(uiuis)=E(uijujs)=E(uituis)=0;(i≠j;t≠s)Equation(xiii)explainedthat individualspecificerrorcomponentswereuncorrelatedwitheachotherandwerenotauto-correlatedbetweentimeseriesandcross-sectionunits.Hence,⍵itwasnotcorrelatedwithanyoftheregressorvariablesinthemodel.Ifthisindeedoccurred,thereforeREMresultwouldremainaninconsistentestimationtechniqueofregressioncoefficients.ButwiththeadoptionofHausmantest in thisstudy, thetestwouldhelpto findout if⍵itwascorrelated

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

207URL:http://dx.doi.org/10.14738/assrj.83.9723

with the independent variables (that is, to determinewhether REMwas appropriate). In REM,interceptsrepresentedvalueofmeanofeverycrosssectionalinterceptsanderrorcomponentthatindicatedrandomdeviationofinterceptfromvalueofthemean.Recall,errortermcomponentwasnotdirectlyobserved.Therefore,tohaveconsideredtheassumptioninequation(xiii),itcouldbestatedthatE(⍵it)=0------------------------------(xiv)var(⍵it)=σ2ԑ+σ2u------------------(xv)Suppose σ2ԑ = 0, thismeans that therewas similarity between equation (vi) and equation (x).Therefore, all cross sectional and time series observations would be pooled and run withregressionasindicatedinequation(vi).Thesimilaritysituationshowedthattherewasnosubjectspecificandallindependentvariableswerecaptured.Theerrortermwashomoscedasticinnatureasexpressedinequation(xv).The explanatory variables were measured in terms of loan size, loan disbursement and creditusage, that influencedthecriterionvariablesmeasuredbyMSEssurvival(profitabilityandsalesgrowth).TheOLSmodelusedinthestudywasrestatedas;Yit=λ1+λ2Xit+uit----------------------------------.(vi)Where,MSES=Criterionvariable(MicrosmallenterprisesSurvival)x1,…, xn were slopes / independent variables; Credit Usage, CU; Loan Disbursement, LD; andLoanSize,LS).Thereforetheequation(ii)wasnewlywrittenas;MSESit=λ1+λ2LSit+λ3LDit+λ4CUit+µit.-----------------------------------(xvi)MeasurementofVariablesAllvariablesidentifiedinthemodelcouldeasilybemeasuredas:DependentVariable:MSEssurvivalwasthecriterionvariablefromthemodel.TheMSEssurvivalwasmeasured by profitability and sales growth. Profitabilitywas the financial gain realized bybusiness enterprise at a particular period and while sales growth was an increment in thebusinessturnoverratefromaperiodtoanother(HansenandMowen,2012).IndependentVariable:Theseweretheregressorvariablesasindicatedinthemodel.ThesewereMFIsvariablessuchasloansize,loandisbursementandcreditusage.Loansizewastheproportionofloanthatacustomerwasentitledto;loandisbursementwaspercentageofloanthatwasmadeavailabletocustomers,whichdependedoneachbank’screditpolicy;andcreditusagewasmoneyreceiptinexchangewhoserepaymentwouldbeinfuture,thatconsistedofprincipalandinterest.Aprioriexpectationwasthatestimationcoefficientsofvariableswouldbeλ2˃0;λ3˃0;λ4˂0.Bothλ2˃0andλ3˃0havepositiveinfluenceandλ4˂0hasnegativeinfluence.Summarily,therewasamixedinfluence.EstimationProcedureThis paper adopted pooledOLS, FixedEffectModel (FEM) andRandomEffectModel (RAM) asestimation technique procedures to analyze cross-section and time series data. These models

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)helped to examine the extent of influence of predictor variables on criterion variables; and toreconciletheshort-runandlong-rundynamismthatcouldoccurinthebehaviorofvariables.

RESULTSANDDISCUSSIONS

DescriptiveStatisticsofStudyVariablesThiswasdisplayedintable4.1showingbrieflythedescriptivestatisticsofMFIsvariables,proxybyloansize,creditusage,loandisbursementandtheirinfluenceonMSEs’survivalproxybysalesgrowthandprofit.The table4.1 showed thesummaryof thedescriptive statistics forvariables.The mean for loan size, credit usage, loan disbursement, sales growth and profitability were1265404.0,16.37025,189,13.49and10.05respectively.Thisshowedthatthevariablesexhibitedinsignificantvariation intermsofmagnitude, implyingthatestimation in levelsmight introducesomebiasintheresults.TheJarqueBerastatisticsforthevariableswerenottoohighandassuch,theserieswerenormallydistributed.ThisthereforesuggestedtheuseofnormalpoolOLSorfixedeffectestimationintheanalysis.

Table4.1:DescriptiveStatistics

Variables LoanSize CreditUsage LoanDisbursement SalesGrowth Profit

Mean 1265404. 16.37025 189.0000 13.48719 10.05769Median 56891.00 16.25000 205.0000 14.05540 9.903488

Maximum 9095801. 19.50000 205.0000 15.42224 14.50866Minimum 9871.000 12.25000 165.0000 11.60824 7.600902

Std.Dev. 2161494. 1.745810 19.71955 1.224375 2.003325

Skewness 1.901860 -0.262434 -0.408248 -0.150264 0.865686Kurtosis 5.818045 2.304664 1.166667 1.369136 3.438265Jarque-Bera 73.76517 2.498301 13.42593 9.166779 10.49951

Probability 0.000000 0.286748 0.001215 0.000220 0.005249

Sum 99966902 1293.250 15120.00 1078.975 794.5579

SumSq.Dev. 3.64E+14 237.7326 30720.00 118.4285 313.0384

Observations 216 216 216 216 216

Crosssections 18 18 18 18 18 Source:Researchers’Compilation,2021MFIsinfluenceonMSEs’Profitability.ThissectionexplainedtheinfluenceofMFIspredictorvariablesonMSEs’profitabilitybehaviour.The displayed result in table 4.2 reflected the panel regression of the variables depicting thedegreeofinfluenceofloansize,loandisbursementandcreditusageonprofitabilityperformanceofMSEs.ThepooledOLSresultdepictedapositiveimpactofloan-sizeandloandisbursementwith

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

209URL:http://dx.doi.org/10.14738/assrj.83.9723

coefficientvaluesof7.24and0.38respectively.Butcreditusagehadanegative(-5.19)influenceonprofitability.ThismeansthatforeverycreditthatwasprovidedbyMFIs,7.24profitswouldbegeneratedtoMSEsowners/managersforbusinesssustainability.Alsoforeveryloandisbursed,the profit would increase by 0.4 to micro and small enterprises. The negative influence (-5.2)mightbeduetoabilityofMSEsownerstohavedivertedthemajorpurposeoftheloanthatis,notusingthecreditforthepurposeitwasmeantfororiginally,therebyreducingtheexpectedprofitfrom the business enterprises. Variables (loan size, loan disbursement and credit usage)werestatisticallysignificantat(p<0.05).Thevariablescombinedaccountedfor0.630411(63%)ofthevariationintheprofitabilityasshownbytheR2value.WhilethevalueofadjustedR2resultedto0.622985 (62%). This resultwas in tandemwithWakaba (2014) andNguta andGuyo, (2018),they claimed that borrowers often divert primary objective of obtaining credits and clients ofbanks involved in credits repayment default as a result of inability to realize targeted profit asexpected as at when the loan was disbursed. The fixed effect model in column two showedexplanatoryvariableswithpositivecoefficientvalues,loan-size(7.29),loandisbursement(0.133)andcreditusagealsohadanegativecoefficientvalue(-0.073).Loansizeandloandisbursementwerestatisticallysignificant(p<0.05),butcreditusagewasstatisticallysignificant(p<0.1).57.4%ofthevariationexperiencedinthevalueofprofitwasaccountedforbytheMFIsvariables.

Table4.2:MFIsinfluenceonMSEs’Profitability. ALL ALL PLS FELOANSIZE

7.24E-08***

7.29E-04**

(1.82E-04) (1.21E-07)LOAN 0.382213** 0.132917**DISBURSEMENT (0.012592) (0.035239)CREDITUSAGE -5.194043*** -0.072912*(0.368469) (0.064861)CONSTANT…………… 13.18136R2 0.630411 0.573931OBSERVATION 215 215N 18 18

Source:Authors’Compilation,2021Note: All explanatory variables were differenced to ensure stationarity and thereby avoidingspuriousregressionwhile thecriterionvariableswere in log form.The levelofsignificancewasdenotedas*P<0.1,**P<0.05and***P<0.01.Figuresintheparentheseswere(standarderror).MFIsinfluenceonMSEs’SalesGrowth.TheMFIsvariables’influenceonMSEs’survivaladoptingsalesgrowthasproxy.Table4.3depictedthepooledOLSwithpositivecoefficientvaluesofloan-size,4.76(p<0.1)andloandisbursement,0.18(p<0.05)onsalesgrowth.Butcreditusagecameoutnegative,-2.12(p<0.05).Thismeansthat for every credit provided by MFIs, 4.76 sales increase would be generated to businessentrepreneurs.Alsoforeveryloandisbursed,thesaleswouldfurthergrowby0.18.Thenegative(-2.12)influenceautomaticallydecreasedthelevelofsalessincelittleproportionofthecreditwasusedfor thebusiness.Thismeansthatproblemofcreditdiversionand loanmismanagementon

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)the part of MSEs owners in the informal market needs urgent attention from regulators. Thecombinedvariablesaccountedfor0.551347(55%)of thevariation insalesgrowthperformanceasdepictedbyR2.ThevalueofadjustedR2was0.544351(54%).Randomeffectmodelinsecondcolumnshowedloan-size,5.42(p>0.05)andloandisbursement,1.23(p>0.1)positivelyinfluencedsales growth. In contrast, credit usage was negative, -0.27 (p>0.05). 58% of the variationexperiencedinthevalueofsalesgrowthonlyaccountedforbyMFIsvariables.

Table4.3:MFIsinfluenceonMSEs’SalesGrowth ALL ALL PLS RELOANSIZE

4.76E-02*

5.42E-06**

(1.02E-03) (1.62E-06)LOAN 0.181271** 1.232611*DISBURSEMENT (0.052529) (0.043231)CREDITUSAGE -2.120384** -0.272418** (1.845011) (0.162883)CONSTANT…………… 11.282344R2 0.551347 0.578059OBSERVATION 215 215N 18 18

Source:Authors’Compilation,2021Note: All explanatory variables were differenced to ensure stationarity and thereby avoidingspuriousregressionwhile thecriterionvariableswere in log form.The levelofsignificancewasdenotedas*P<0.1,**P<0.05and***P<0.01.Figuresintheparentheseswere(standarderror).UnitRootTestTheunitrootresultwasdisplayedintable4.4.Table4.4depictedtheunitroottestvariablesthatwere examined having adopted Levin, Lin & chu and Lm, Pesaran, test. The result had shownvariables I(0)andI(1) thatwerestationaryat firstdifferenceonlywiththeexceptionof creditusagewhichwasatlevels.

Table4.4:UnitRootTestVARIABLES StatisticsValues Sig Conclusion Salesgrowth Levin,Lin&chu -9.3180 0.0000 I(1)

Lm,Pesaran, -3.6223 0.0001Profitability Levin,Lin&chu -12.8926 0.0000 I(1)

Lm,Pesaran, -6.8647 0.0000Loan-size Levin,Lin&chu -2.7733 0.0028 I(1)

Lm,Pesaran, -0.4183 0.3379LoanDisbursement Levin,Lin&chu -5.37121 0.0000 I(1)

Lm,Pesaran, -0.34627 0.3650CreditUsage Levin,Lin&chu -5.60239 0.0000 (0)

Lm,Pesaran, 0.19243 0.5763 Source:Authors’Compilation,2021

Adamolekun, W., Obadeyi, J. A., Ogbeide, S. O., & Akande, A. A. (2021). Microfinance Institution (MFIs) and Survival of Micro and Small Enterprises (MSEs): Empirical Evidence of TraderMoni Scheme Beneficiaries in South-Western Nigeria. Advances in Social Sciences Research Journal, 8(3) 195-215.

211URL:http://dx.doi.org/10.14738/assrj.83.9723

FINDINGSFindingsshowedthatMFIshadaninfluenceonMSEs’survivalinSouth-West,Nigeria.Itdepictedapositive impactof loan-size(7.24)and loandisbursement(0.38),whilecreditusage(-5.19)hadnegative impact on profitabilityofMSEs operation. Each loan provided byMFIs considering itssize,7.24profits realizedwouldassist the sustainabilityofMSEsbusiness.Each loandisbursedcouldfurtherincreaseprofitabilityby0.4tomicroandsmallbusinessownersandoperators.Thegains could decline by -5.2 due to misappropriation of credits by these group of businessoperators / owners. Approximately 63% showed that variations in the profitability wereexplainedbyMFIsvariablesandallthevariableswerestatisticallysignificant(0.05>p<0.1).Findingsalsoshowedthatloan-size(4.76)andloandisbursement(0.18)positivelyimpactedsalesgrowth,while creditusagenegatively (-2.12)affected salesgrowth.Findingsshowed thateveryloan size could generate 4.8 sales increase forMSEsmanagers. Also for every credit disbursedenjoyedby theMSEsoperators,0.18of sales increasewouldbeattained, butproblemof creditmisappropriation could compel decrease in the volume of sales growth. Findings from theOLSshowedthat55.13%accountedforthevariationsinsalesgrowthbyMFIsvariables.Findings from the literature showed that tradermoni scheme helped people to become self-employed,createempowermentandreducepoverty,butitsrelevancecouldonlybeintheshort-runduetopoorcreditadministrationsystemadoptedbysomegovernmentagenciesduringloandisbursementtobeneficiariesunderanyscheme.Thisfactormighthavebeenresponsibleforthefailure of other previous schemes introduced by government, despite the fact that governmentmeantwellforhercitizens.Theweakcreditadministrationapproachadoptedbytheministriesandagenciesofgovernmenthasledtotheincreaseinthenumberofdefaulters.

CONCLUSIONANDPOLICYRECOMMENDATIONSConclusionThestudyassessedtheimpactofMFIsonthesurvivalofMSEsinSouth-WestNigeria:Tradermonianalternative? Inthisstudy,pettyandsmall traders,andothermicro,smallenterpriseowners,managers and operators in the South-West, Nigeriawere beneficiaries of different governmentschemes, particularly tradermoni as one of the schemes under the Government EnterpriseEmpowermentProgramme(GEEP).GEEPhassuccessfullyassistedtraderstoaccesssoftloanstoinvestintheirpettybusinessesbutnotforaverylongtime,duetoporouscreditsadministrationprocess associatedwith the scheme. Also, therewas amixed impactofMFIson the survival ofMSEsinSouth-WestNigeria.However,tradermonicouldonlyachieveitsobjectivesintheshort-run, while in the long-run it could be difficult due to poor credit administration techniquesadopted under different government schemes; except policy makers and regulators reviewexisting institutional frameworks guiding operations in informal sector andMFIs banking sub-sector.PolicyRecommendationsThegovernmentshouldreviewitsregulatorypoliciessuchthatwhendisbursingloantocitizensunderanyscheme,a financial institution(MFIs)shouldbeappointedtoadministerandmanagethecredits(i.e.todeterminethenumberofindividualcitizenthathasbenefitedfromthescheme,

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Vol.8,Issue3,March-2021AdvancesinSocialSciencesResearchJournal(ASSRJ)numberofdefaulterandpeoplewhohavesuccessfullyrepaidtheloan).Bythis,transparencyandaccountabilityofthecreditsdisbursedundertheempowermentschemecouldbeeffectivelyandefficientlymanagedforfuturedecisionmakingprocess.Government needed to create a sustainable structures and policy frameworks to protect thetradermonischemesothatitwouldnotendlikepreviousschemes.LimitationofStudyThereweremany restrictionssuchasproblemof funding, insufficient timeandmostespeciallylackofco-operationonsomeoftheMFIsandMSEstoprovideannualreportsandfinancialrecordsrespectively. The MSEs claimed that their financial records were genuinely audited by anaccountant.Butourconcernedwastowardstheoriginalityanddegreeofprofessionalismof theaccountant,whoauditedtheirrecords.ReferencesAbraham,H.,&Balogun,I.O.(2012).PerformanceofmicrofinanceinstitutionsinNigeria:Anappraisalofself-reportinginstitutionstomixmarket.InternationalJournalofHumanities andSocialScience,2(15),32-38.

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