The Entrepreneur and Financing Dilemma: The Formal and Informal Sectors in Nigeria

Abstract

The aim of this study is to investigate the entrepreneur and financing dilemma in the formal and informal sectors in Nigeria, focusing on how access to financial resources, regulatory environments, entrepreneurial backgrounds, social networks, and interest rates influence the success of entrepreneurs. A quantitative research methodology was employed, utilizing a structured questionnaire administered to 384 small and medium-sized enterprise (SME) owners across Nigeria. The questionnaire featured Likert scale items designed to measure the impact of specific variables on business success, and data were analyzed using descriptive statistics and Ordinary Least Squares (OLS) regression. The findings reveal that access to financial resources and a supportive regulatory environment significantly enhance entrepreneurial success. A robust entrepreneurial background and effective social networks positively correlate with business performance. In contrast, high interest rates negatively impact business success, indicating a critical area for economic and financial policy intervention. The study concludes that improving access to financial resources and reforming regulatory frameworks are crucial for fostering entrepreneurial success in Nigeria.