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

In: Entrepreneurial Financial Resilience and Financial Innovation in a Turbulent Era

Author

Listed:
  • Oyerinmade R. Oladejo
  • Adekunle I. Ogunsade
  • Seun Kolade
  • Victor Atiase

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.

Suggested Citation

  • Oyerinmade R. Oladejo & Adekunle I. Ogunsade & Seun Kolade & Victor Atiase, 2023. "Crowdfunding and traditional finance: the prospects and challenges for SMEs in Nigeria," Chapters, in: Javed G. Hussain & Samuel Salia & Jonathan M. Scott (ed.), Entrepreneurial Financial Resilience and Financial Innovation in a Turbulent Era, chapter 6, pages 85-105, Edward Elgar Publishing.
    • Handle: RePEc:elg:eechap:21113_6
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    File URL: https://www.elgaronline.com/doi/10.4337/9781802203929.00013
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