Impact of Entrepreneurship Financing on Economic Growth in Nigeria (1996-2023)

This research investigates the impact of entrepreneurship financing on economic growth in Nigeria from 1996 to 2023. The study is premised on the increasing recognition of entrepreneurship as a catalyst for economic development, job creation, and innovation. The objectives are to examine the impact of credit to the private sector and SMEs on Nigeria’s economic growth, assess the relationship between inflation and growth, and determine the effect of interest rates on growth. In this study, entrepreneurship is defined as the provision of financial credit to private sector actors, particularly SMEs, which serve as the engine of entrepreneurial activity and innovation in Nigeria. The study adopts an ex-post facto research design, using annual time series data obtained from the Central Bank of Nigeria (CBN) Statistical Bulletin. Real Gross Domestic Product is used as a proxy for economic growth, while credit to the private sector, credit to SMEs, inflation rate, and interest rate serve as the explanatory variables. The data is analyzed using the Autoregressive Distributed Lag (ARDL) model to estimate both short-run and long-run dynamics. The findings reveal that credit to SMEs significantly and positively impacts economic growth, while credit to the private sector shows a negative effect. Interest rates exhibit a strong negative relationship with growth, and inflation has mixed but generally negative effects. The study concludes that entrepreneurship, particularly through SME development, plays a vital role in Nigeria’s economic performance. It recommends improving credit access for SMEs, enhancing credit efficiency in the private sector, implementing inflation control policies, and lowering interest rates to create a more enabling environment for entrepreneurship and sustainable economic growth.