Relevance of Islamic Financial Instruments in Financing Micro and Small Enterprises in Gombe State, Nigeria

Authors

  • Hamza Abubakar Hussaini Department of Religious Studies, Faculty of Humanities, Federal University of Kashere, Gombe State, Nigeria
  • Yakubu Tahir Maigari Department of Religious Studies, Faculty of Humanities, Federal University of Kashere, Gombe State, Nigeria
  • Adamu Abubakar Muhammad Department of Religious Studies, Faculty of Humanities, Federal University of Kashere, Gombe State, Nigeria

Abstract

This paper aimed to investigate the role of Islamic financial instruments in providing financial support to micro and small enterprises in Nigeria at large and Gombe state in particular. Despite the opportunities presented by the micro and small enterprise sector for economic growth and investment as well as job opportunities, the sector is largely underdeveloped due to lack of direct access to capital and poor managerial experience by many entrepreneurs. This research paper uses a unique combination of qualitative and quantitative research methods to understand the existing financing structures, challenges and identify the potential of Islamic financial instruments as a source of capital for micro and small enterprises in Gombe state Nigeria. The research adopts a series of semi-structured interviews, document analysis, and a survey of various micro and small enterprises within Kashere town and Gombe metropolis for sampling. The findings of the research suggest that the majority of micro and small enterprises are unaware of or having no access to Islamic financial instruments for funding businesses and there is need for better education and awareness regarding these instruments. Additionally, the research paper concludes with recommendations for policymakers, institutions and practitioners on how to increase the use of Islamic financial instruments in Gombe state Nigeria and proper awareness to promote micro and small enterprises for economic growth and development within the study area. Keywords: Islamic Financial Instruments, Micro-Enterprises, Nigeria

References

Adamu A. M. & Ikilima A. S. (2022). The Role of Zakat and Waqf for the Development of Micro and Small Enterprises (MSEs) in Gombe State Nigeria International Journal of Small and Medium Enterprises and Business Sustainability. ISSN 2242-9368 (Online), Vol. 7, No. 3,

November 2022. Pp. 102-129.

Adamu, A.M, Rohana, S.R, Adam, M.A & Nabeela, U.E (2023). Achieving the Sustainable Development Goals of Water and Sanitation through Islamic Models of Zakat and Waqf: A Case Study of Gombe State Nigeria. Journal Transformation Of Knowledge (JTK). ISSN 2987-2375 (media online) https://ojs.yptransteknologi.sch.id/index.php/jtk Vol. 01, No. 02, July 2023.

Abay, H. H., Tessema, F. G., & Gebreegziabher, A. H. (2014). External factors affecting the growth of micro and small enterprises (MSEs) in Ethiopia: A Case Study in Shire Indasselassie Town, Tigray. European Journal of Business and Management, 6(34), 134–145.

Adem, M., Worku, H., & Beyene, D. (2014). Constraints and growth potentials of micro and small enterprises: case from Mekelle City. International Journal of Scientific and Research Publications, 4(12), 1–7.

Aynadis, Z., & Mohammednur, M. (2014). Determinants of growth of micro and small enterprises in Ethiopia (a case of MSEs in

Alemayehu, D., & Gecho, Y. (2016). Determinants of micro and small enterprises growth: the case of Durame Town, Kembata

Adelaja, M. 2007. Microfinance as a tool for building and enhancing capacities in the informal/SME sectors of the economy. Paper presented at the Workshop Organised by Poultry Association of Nigeria, Lagos Chapter, at the Events Centre, Alausa, Lagos, Nov. 2007.

Alozie, C. E., Ideh, A. O., & Ifelunini, I. (2020). Coronavirus (COVID-19) pandemic, economic consequences and strategies for ameliorating macroeconomic shocks in Nigeria's economy. Economic Consequences and Strategies for Ameliorating Macroeconomic Shocks in Nigeria's Economy (21 September, 2020).

Abdelhamid, D., & El Mahdi, A. (2003). The small business informality challenge: lessons learned from country experiences and the road ahead of Egypt. Paper presented at the Economic Research Forum Working Papers.

Adamu, B. I. (2009). Financing gap for small and medium enterprises in post consolidated banking sector in Nigeria. Bullion, Central Bank of Nigeria. 33.3. July-September: 38-53.

Babajide, A. A. (2012). Effects of microfinance on micro and small enterprises (MSEs) growth in Nigeria. Asian Economic and Financial Review, 2(3), 463-477. Retrieved from https://www. semanticscholar.org/paper/ Effects-of-Microfinance-on-Micro- and-Small-(MSEs)-Babajide/c0aab8aebbfbece95c6b8c124e24c-720f364aa76

Cernat, L., López , A. N., & T-Figueras, A. D. (2014). SMEs are more important than you think! Challenges and opportunities for EU exporting SMEs. Chief Economist Note, vol 3. Brussels: European Commission. Available From http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152792.p df.

Central Bank of Nigeria, 2006 - 2014. Central Bank of Nigeria annual report and statement of accounts for year ended 31st December, 2006 -2014. Abuja: CBN.

Christine Lagarde (2015). Unlocking the Promise of Islamic Finance, Speech by Christine Lagarde, Managing Director, International Monetary Fund at the Islamic Finance Conference, Kuwait City, Kuwait; November 11, 2015.At: https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp111115

Chapra, M. U. (2011). The global financial crisis: Some suggestions for reform of the global financial architecture in the light of Islamic finance. Thunderbird International Business Review, 53(5), 565-579.

Debelo, B. K., Teshome, A., & Minalu, T. (2015). Factors affecting developments of micro and small enterprises. International Journal of Scientific and Research Publications, 5(1), 1–10.

Doran, J., McCarthy, N., and O’Connor, M. (2018), “The role of entrepreneurship in stimulating economic growth indeveloped and developing countries”, Cogent Economics & Finance, 6(1): 1–14 (https:// doi. org/ 10. 1080/ 23322 039. 2018. 14420 93).

Elasrag, Hussein (2016). Islamic Finance for SMEs. SSRN. https://ssrn.com/abstract=2842160. https://doi.org/10.2139/ssrn.2842160. doi:10.2139/ssrn.2842160.

Ejiogu, A., Okechukwu, O. and Ejiogu, C. (2020). Nigerian budgetary response to the COVID-19 pandemic and its shrinking fiscal space: financial sustainability, employment, social inequality and business implications. Journal of Public Budgeting, Accounting & Financial Management. Doi.org/10.1108/JPBAFM-07-2020-0101

Ejiogu, A., Ejiogu, C., & Ambituuni, A. (2019). The dark side of transparency: Does the Nigeria extractive industries transparency initiative help or hinder accountability and corruption control?. The British Accounting Review, 51(5), 100811.

Esubalew, A. A., & Raghurama, A. (2017). Micro, small and medium enterprises (MSMEs) development strategies in Ethiopia: Retrospective and Prospective Analysis. International Journal of Commerce, Business and Management, 6(1), 11–20.

Fajri, M. Z. N. ., Rofiqo, A., Rizqon, A. L. ., & Hasan, R. . (2023). The Impact of MSMEs Financing in Islamic Bank on Unemployment in Indonesia. Jurnal Ekonomi Syariah Teori Dan Terapan, 10(5), 443–454. https://doi.org/10.20473/vol10iss20235pp443-454

Fissiha, Y. (2016). Determinants of the growth of MSEs in Ethiopia: the case study of Bahir Dar City Administration. The International Journal Of Business & Management, (7), 75–96.

Hulme and Mosley (1996), Journal of International Development (Vol. 8, No. 2)

Ibraheem Alani AbdulKareem, AbdulFattah AbdulGaniyy, Mohd Sadad Mahmud (2022). Role of Islamic Finance in Supporting Economic Recovery in Nigeria Post-Covid-19 Pandemic. Li Falah-Jurnal Studi Ekonomi Dan Bisnis Islam Volume 7 (No.1 2022) 1-16 P-ISSN: 2541-6545, E-ISSN: 2549-6085

Igharo, E. A., Osabohien, R., Onyemariechi, G., & Ibidapo, D. T. (2020). Monetary policy transmission mechanism, innovative banking system and economic growth dynamics in Nigeria. International Journal of Business Innovation and Research, 21(1), 1-22. https://doi.org/10.1504/IJBIR.2020.104032

ITC (2019), SME competitiveness outlook : Big money for small business—Financing the sustainable development goals, International Trade Centre, Geneva.

Ja¬ar Jassim & Maham Khawar(2018) DEFINING MICRO, VERY SMALL & SMALL ENTERPRISES: MOVING TOWARDS A STANDARD DEFINITIONCONTINUUM. Pakistan Microfinance Network, Occasional Paper, No. 34.

Loewe, M., Al-Ayouty, I., Altpeter, A., Borbein, L., Chantelauze, M., Kern, M., et al. (2013). Which factors determine the upgrading of small and medium-sized enterprises (SMEs)? The case of Egypt. German Development Institute in cooperation with the Egyptian Center for Economic Studies (ECES).

Leza, T., Rajan, S., & Kuma, B. (2016). Determinants of employment growth of micro and small enterprises in Wolaita Zone, Ethiopia. International Journal of Current Research, 8(12), 43177–43186.

Mekelle City, Tigray). International Journal of Advance Research in Computer Science and Management Studies, 2(6), 149–157.

Nganda, J. W., Wanyonyi, K. W., & Kitili, E. M. (2014). Determinants of growth of small and medium enterprises in Kakamega central sub-county, Kenya. Journal of Business Administration and Management Sciences Research, 3(3), 022–031

Nigerian Association of Small and Medium Enterprises (NASME), 2003. The small and medium enterprises: prospects and perspectives, Handbook/Directory. . Ikeja, Lagos: Amanda Communications Ltd. March.

Oseni, U.A. (2011) Corporate Justice and Dispute Management in Islamic Banks and Financial Institutions. In M. Youssef, & S.A. Anwar (Ed.), 5th QM and Excellence: A Framework for Managing Governance and Corporate Social Responsibility (pp. 187-198)Dubai, uAE: Hamdan Bin Mohammed e-University.

Seyoum, A., Aragie, M., & Tadesse, D. (2016). Growth of micro and small enterprises in Addis Ababa City Administration: a study on selected micro and small enterprise in Bole Sub City. International Journal of Scientific and Research Publications, 6(1), 581–592.

Tefera, H., Gebremichael, A., & Abera, N. (2013). Growth determinants of micro and small enterprises: evidence from Northern Ethiopia. Journal of Economics and Sustainable Development, 4(9), 127–134.

Tembaro Zone, Southern Nations and Nationalities and Peoples Region, Ethiopia, 2016. International Journal of Business and Economics Research, 5(5), 161–175.

Tarfasa, S., Ferede, T., Kebede, S., & Behailu, D. (2016). Determinants of growth of micro and small enterprises: empirical evidence from Ethiopia.

Umar, U.H., AbuBakar, M., Baita, A.J., Kademi, T.T. and Haron, M.H. (2021), "Do academic and professional institutions promote the awareness and knowledge of Islamic banking and finance in Nigeria?", Journal of Islamic Accounting and Business Research, 12(3), 401-417. Doi.org/10.1108/JIABR-05-2020-0171

World Bank (1978), Employment and Development of Small Enterprises, Sector Policy Paper, Washington DC: World Bank.

World Bank (2020). Nigeria releases new report on poverty and inequality in country. retrieved from https://www.worldbank.org/en/programs/lsms/brief/nigeria-releases-new-report-on-poverty-and-inequality-in-country

Yousri, Abdel Rahman Ahmad (1995), Small Industries in Developing Countries: Development and Problems of Financing from Conventional and Islamic Perspectives, (in Arabic), Visiting Scholars Research Series No. 1, Jeddah: Islamic Research and Training Institute/Islamic Development Bank.

Zauro, N.A., Saad, R.A.J., Ahmi, A. and Mohd Hussin, M.Y. (2020). Integration of Waqf towards enhancing financial inclusion and socioeconomic justice in Nigeria. International Journal of Ethics and Systems, 36(4), 491-505. Doi.org/10.1108/IJOES-04-2020-0054

Zhou, H., & de Wit, G. (2009). Determinants and dimensions of firm growth. SCALES EIM Research Reports (H200903) https://doi.org/10.2139/ssrn.1443897.

Downloads

Published

2024-03-16

How to Cite

Hamza Abubakar Hussaini, Yakubu Tahir Maigari, & Adamu Abubakar Muhammad. (2024). Relevance of Islamic Financial Instruments in Financing Micro and Small Enterprises in Gombe State, Nigeria. Proceedings of Femfest International Conference on Economics, Management, and Business, 2, 479–490. Retrieved from https://ejournal.unida.gontor.ac.id/index.php/FICCOMSS/article/view/11798

Issue

Vol. 2 (2024): Proceedings of Femfest International Conference on Economics, Management, and Business

Section

Articles