Impact of Financial Incentives on Development of Small and Medium Scale Enterprises in Federal Capital Territory

Abstract

This study titled Impact of Financial incentives on development of small and medium scale enterprises in Federal Capital Territory, Abuja Nigeria is written to examine how short and medium term loans have been released by Bank of Industry to small and medium scale enterprises in the Federal Capital Territory and to examine the impact of these facilities on market share and customers retention of SMEs in the Federal Capital Territory. The study adopted a research survey design with a population of 37,883 respondents which is the total number of small and medium scale enterprises in the federal capital territory. However, considering the fact that it will be difficult if not impossible to reach the entire population the study used the Godden sample size formula to reach a sample of 384. The research instrument used to elicit data from respondents is a 12 items structured questionnaire and the hypotheses were tested using simple linear regression. Findings revealed that there is a significant positive relationship between financial incentive and performance of small and medium scale enterprises in the FCT. Again, increased accessibility to both short and medium term loan facilities enhances the potentials of SMEs thereby leading to increased market share and customers retention. Based on the findings, the study recommends that funds allocated to SMEs in the FCT should not be tied to stringent conditions which at the end remain un-accessed and thereby remaining dormant and not adding value to the economy. The Federal Government should review its policies when it comes to duplication of regulatory institutions handling the affairs of SMEs in the FCT for proper coordination and supervision especially as it relates to release of funds and its utilization.