Institutional Distrust as a Determinant of Approach towards Government Credit Facilities among SMEs in Africa

Small and Medium Enterprises (SMEs) in Nigeria, West Africa have several challenges while attempting to get credit facilities, as evidenced by the numerous studies carried out over the years. Conversely, little is identified about the relationship between institutional distrust and SMEs’ approach towards government credit programs. This study examined the variations in small and medium business practitioners' approach to government credit facilities based on institutional distrust. The Study adopted a quantitative methodology. 225 (two hundred and twenty five) SME owners from different localities in Abia and Imo States, South Eastern Nigeria were conveniently assembled to participate in the survey. Questionnaire was used for data collection. The Ordinary Linear Regression analysis was adopted. Results revealed that institutional distrust significantly determined SMEs approach towards government credit programs. R.Square = .894 (89%) variation in the dependent variable is explained by the independent variable. P<0.05 (Alpha). Implication of the study reveals that Institutional distrust plays a major role in determining how fairly credit facilities are distributed in South Eastern Nigeria. The study is constrained by variance problem with self-report measures and complexity of sampling method for generalization. Thus, the result is in consonance with the expected outcome of the study which states that institutional distrust determines SME’s approach towards government lending programs. Further study is suggested to access how distrust can be prevented from spreading to structured height.