Analysis of the Effect of Crowdfunding Platforms in Enhancing the Sources of Finance for Micro, Small and Medium Enterprises (MSMEs) in Nigeria

The Micro, Small and Medium Enterprises (MSMEs) sub-sector plays a strategic role in the economic development of Nigeria, providing job opportunities, improving the standard of living, and promoting regional development. However, MSMEs in Nigeria faced a financial exclusion, which resulted in a shortage of finances for their businesses. This prevents many from sustaining and growing their businesses. Crowdfunding is an innovative Fintech aimed at closing the financial gap faced by MSMEs through raising funds from the crowd using the internet. This research examines the effect of crowdfunding platforms in enhancing the sources of finance for MSMEs in Nigeria. The idea behind this study is to examine the effect of crowdfunding platforms in enhancing sources of financing for MSMEs and analyse the financial gap and challenges faced by MSMEs. Descriptive-survey research design was adopted using a structured questionnaire as a data collection instrument. The data collected was analysed using descriptive analysis, Pearson correlation and multiple regression. Findings revealed a significant relationship exists between reward-based and debt-based funding and MSME financing. But donation-based and equity-based have no significance. Furthermore, the finding revealed that MSMEs in the study are faced with challenges in using crowdfunding platforms. Also, the study has realised that there is a financial gap among MSMEs in the study area. Conclusively, findings also confirmed the validity of the crowdfunding model in the context of Nigeria. Policymakers should also ensure that the necessary infrastructure of the Fintech industry is publicly accessible in order to facilitate new crowdfunding platforms and other financing tools and for the purpose of raising awareness about the significance of crowdfunding for MSMEs. Future researchers should consider using different states or zones within the country.