Government-Assisted Financing Guarantee Credit Programs on Employment Generation through SMEs: Evidence from Nigeria
Keywords:
Government-Assisted Financing Guarantee; SMEs; Employment Generation; NigeriaAbstract
Objectives: This study investigates how Government-Assisted Financing Guarantee (GFG) programs influence employment creation among Small and Medium-sized Enterprises (SMEs) in Nigeria. Prior Work: Existing literature highlights the role of credit access in SME growth, yet firm-level evidence on credit guarantee schemes in developing economies remains limited and inconclusive. Approach: Using firm-level panel data from 2016–2022, a fixed-effects econometric model is applied to assess the impact of GFG participation on employment. Robustness is tested through propensity score matching. Results: Findings show that GFG participation significantly increases SME employment, with stronger effects among privately owned firms. The mechanism operates mainly through reduced financial constraints and improved revenues. Robustness checks confirm the results, though with slightly smaller effect sizes. Implications: Expanding GFG programs can enhance job creation, alleviate financing barriers, and contribute to poverty reduction in Nigeria. Value: This study provides original firm-level evidence on the effectiveness of credit guarantee schemes in a developing economy, offering policy-relevant insights for strengthening SME financing strategies.
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Copyright (c) 2026 Samuel Oluwapelumi Olofinlade, Adeshola Nurudeen Haliru, Ogunwole Cecelia Oluwakemi Aina, Grace Oyefunke Ajagbe
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