Microfinance Bank Operations and SME Growth in Awka, Anambra State: A Post-Pandemic Assessment

Microfinance banks serve as critical financial intermediaries for small and medium-sized enterprises (SMEs) that are excluded from the formal commercial banking system, particularly in the aftermath of economic disruptions such as the COVID-19 pandemic. This study assesses the impact of microfinance bank operations on SME growth in Awka, Anambra State, focusing on the period from 2020 to 2024. The study is grounded in the Financial Systems Theory, which holds that the depth and efficiency of a financial system determine the pace of enterprise development and economic growth. A cross-sectional survey research design was employed, targeting SME owners who had accessed microfinance credit in Awka. From an estimated population of 3,100 eligible SMEs, a sample of 341 respondents was selected through stratified random sampling. Structured questionnaires and audited financial records of participating microfinance banks constituted the data instruments. Multiple regression analysis was applied to determine the effect of credit access on SME revenue, employment, and asset growth. Findings reveal that microfinance credit access significantly predicted SME revenue growth, with a positive coefficient indicating that a one percent increase in credit utilization corresponded to a 0.67 percent growth in firm revenue. However, high interest rates, rigid repayment schedules, and limited loan tenors constrained full SME potential. The study concludes that microfinance banks are vital but imperfectly calibrated drivers of SME growth in Awka. It is recommended that microfinance institutions redesign loan products to align with the cash flow cycles of local SMEs.

Keywords: Microfinance, SME growth, financial systems, Awka, credit access