EVALUATING THE INFLUENCE OF TAX INCENTIVES ON MICRO-CREDIT INSTITUTIONS AND THEIR IMPACT ON SME FINANCING INILORIN, KWARA STATE

Abstract

The study examined the influence of tax incentives on micro-credit institutions and
their impact on SME financing in Ilorin, Kwara State. A descriptive survey and
documentary research design was adopted, targeting management staff of licensed
microfinance banks and registered SME owners operating within the study area.
From an estimated population of 3,262 respondents, a sample size of 400 was
determined using the Taro Yamane technique, while simple random sampling ensured
adequate representation. Data were obtained from both primary and secondary
sources, with structured questionnaires capturing information on tax incentive
policies, institutional performance, and SME access to finance, complemented by
official documents, government publications, and relevant academic literature.
Quantitative data were analysed using descriptive statistics such as frequencies and
percentages, alongside regression analysis to test the study hypotheses. The findings
revealed that tax incentives exert a statistically significant and positive effect on the
performance of micro-credit institutions, and that improved institutional performance
significantly enhances access to financing for SMEs in Ilorin. The study therefore
concludes that well-designed tax incentive policies constitute an effective instrument
for strengthening micro-credit institutions and expanding sustainable financing
opportunities for SMEs.