Microfinance Banks (MFBs) was majorly established in Nigeria to empower and provide financial services to the poor and Small Scale Enterprises (SSEs) in the rural and urban areas. Yet the contribution of the SSEs to the Nigerian economy is meagre, this is simply because MFBs is hijack by the money bags in the society. The study therefore, examined the impact of microfinance banks on financing small scale enterprises (SSEs) in Abuja, Nigeria. The specific objectives of the study were to: (i) evaluate the impact of micro loans on SSEs financing in Abuja, Nigeria; (ii) assess the influence of micro savings on SSEs financing in Abuja, Nigeria. The research design used for the study was survey research design. The population of the study comprises of 57 MFBs and 2,794 SSEs in Abuja, Nigeria. A sample of 349 SSEs and 26 MFBs were selected through stratified random sampling techniques. Copies of questionnaires were distributed to the selected sample. The data was analyse through simple percentages and order logit regression. The finding of the study revealed that: (i) an increase in the amount of loan given by microfinance banks increase the growth of small scale enterprises; (ii) an increase in micro savings of small scale enterprises lead to an increase in small scale enterprises financing by microfinance banks. Based on the findings, the study therefore concluded that MFBs impact positively on financing SSEs in Abuja, Nigeria. The study recommends that MFBs should increase the supply of micro loans to SSEs, this will help in a long way to expand their business and create more employment opportunities to the country. The study also stated that more programmes and policies should be put in place that will create an enabling environment for small businesses to operate optimally in Abuja, and other part of Nigeria.
Keywords: microfinance banks; small scale enterprises; microloan; micro savings; financing.
