Innovative Financing for Small Businesses: A Study of Rotating Credit Associations Among Entrepreneurs in Cross River State

This study examines rotating savings and credit associations as innovative informal financing instruments for small business entrepreneurs in Cross River State, South South Nigeria, exploring how these community-based financial mechanisms serve the capital needs of businesses excluded from formal banking credit. Rotating credit associations, known by various names including esusu in Yoruba-speaking areas and oha in Cross River communities, represent one of Africa's most enduring financial innovations, providing lump-sum capital to members through collective periodic contributions. Despite their widespread use, their specific business financing functions and limitations for small enterprise growth in the Cross River context have not been quantitatively studied. The study employs a descriptive survey design, recruiting 180 small business operators who are active members of rotating credit associations in Calabar, Ikom, and Ogoja Local Government Areas. A structured questionnaire captured contribution amounts, frequency of payout receipt, business investment made with received capital, and perceived business growth attributable to rotating credit financing. Data were analysed using descriptive statistics and Pearson correlation. Findings indicate that 86 percent of respondents have used rotating credit payouts for business investment, with stock replenishment, equipment purchase, and market expansion being the most common uses. Payout sizes in the majority of associations are insufficient for larger capital investments such as premises acquisition or machinery purchase. Social trust and community enforcement mechanisms are identified as the primary reasons for high repayment compliance. Recommendations include the formal registration and partial subsidisation of these associations by Cross River State's cooperative department. Keywords: rotating credit association, informal finance, small business, Cross River State, entrepreneurial capital.