ABSTRACT 

This  research  work  investigated the effects of micro-financing on Micro and Small  Enterprises (MSEs)  in South-west Nigeria. The study  examined how micro-finance and  non-financial micro-financing activities and features such as group membership, pre-loan training, cross guaranteeship, loan size, technical and managerial training, among others, impact on  the  survival, growth, productivity and performance of Micro and Small Enterprises in Southwest Nigeria. The hypotheses formulated were developed around the theories of  financial growth model, pecking order theory, and contract theory. Variables were  used to evolve  a detailed analysis of  the survival and growth models.  The theoretical  models  were  used in developing four  different hypotheses  that were investigated through the survey of  four hundred and forty three (443) micro enterprises and one hundred and eighty (180) small enterprises which were randomly selected using multi-stage random sampling technique. Copies of well-structured  questionnaire were administered to entrepreneurs sampled. The validity and reliability of the instrument were measured using Cronbachs alpha  which gave a result of 0.72, while predictive form validity was 0.84. Four hypotheses were raised and tested at 0.05 significant levels. The findings revealed that micro finance and micro-financing enhance survival of Micro and Small Enterprises (MSEs) but not sufficient for growth and expansion of such Micro and Small  Enterprises. The result also revealed that microfinance has positive effects on productivity and performance of local entrepreneurs.  The  findings from the interview sessions revealed that micro financing is not effective and substantially being practiced in Nigeria as many MFBs  grant  more  individual loans  than group based loans, thereby increasing their running cost and putting their portfolio at risk. We therefore recommend a collective and cooperative support as a critical microfinance strategy in the form of solidarity groups at the local level; and at the national and regional level, a networking of groups  among operators of MFBs. We also recommend  that  enterprises  supported by MFBs should be linked up with larger financing window like the SMEEIS fund  or Strategic Partners for expansion and growth funding after survival.