Crowdfunding and traditional finance: the prospects and challenges for SMEs in Nigeria

Oyerinmade R. Oladejo, Adekunle I. Ogunsade, Seun Kolade and Victor Atiase

Chapter 6 in Entrepreneurial Financial Resilience and Financial Innovation in a Turbulent Era, 2023, pp 85-105 from Edward Elgar Publishing

Abstract: Small businesses are key players in the global economy and remain the backbone of economic development. Yet, lack of access to finance continues to challenge their survival and growth in developing economies like Nigeria. Traditionally, SMEs relied on family, friends, and banks for capital. However, the rise of digital financial services like crowdfunding offers a more affordable and sustainable funding model. In particular, the adoption of crowdfunding as a financial model has been posited to democratize entrepreneurial finance. Nevertheless, the question remains whether crowdfunding can solely address the unmet needs of SMEs without cooperating with traditional financial institutions. We provide an integrated view of the challenges within the SME financing ecosystem in Nigeria and offer an integrated and collaborative SME framework for addressing the funding challenges within the ecosystem. The study submits that an enabling institutional environment may enhance the relationship between crowdfunding and traditional financial providers to improve SME financing.

Keywords: Business and Management; Economics and Finance; Innovations and Technology (search for similar items in EconPapers)
Date: 2023
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