Even though facing obstacles in accessing external finances, SMEs still can source finances from internally-generated funds. Certainly, finances from financial institutions will help an economy to develop to further height.

According to the World Bank Investment Climate Survey for China, SMEs thin China face important credit constraints, and have limited access to private finance compared to other Asian countries included in the survey. SMEs in China obtain only 12 percent of their working capital from bank loans, while SMEs obtain 21 percent in Malaysia, 24 percent in Indonesia, 28 percent in the Philippines and 26 percent in Korea and Thailand .  The Project Group of Research in Chinese Private Enterprises organized by China Industrial and Commercial Union and Research Commission of Chinese Private Business showed in a survey that self-accumulated money was the major source for starting up firms (approximately 55 percent), complemented by money borrowed privately (31.6 percent) and bank and Rural Credit Corporation loans (23.4 percent).

Reference: Dollar, D., Hallward-Driemeier, M., Shi, A., Wallsten, S., Wang, S. & Xu, L. C. (2003). Improving the Investment Climate in China. Investment climate assessment, World Bank and International Finance Corporation.

It was found that most Malaysian SMEs (55.9%) sourced their finance from internally-generated funds or from shareholders to finance their operations (Economic Census 2011 Census).

Reference: Economic Census (2011), Profile of Small and Medium Enterprises. Department of Statistics, Malaysia.

These links can be of great help to you

http://areas.kenan-flagler.unc.edu/Entrepreneurship/faculty/chavisl/Documents/Institutions,%20External%20Financing,%20and%20Growth%20around%20the%20World.pdf

http://www.eib.org/attachments/dalberg_sme-briefing-paper.pdf

Most of SME investment comes from internal sources of finance. Among others., SMEs use family and friends borrowings to finance their investment needs.

You might want to check experiences of savings and micro finance in Latin America and the Caribbean. Examples are "mutuas" in Uruguay (mutual aid practices), the Rural Savings and Loan Funds in Peru (Caro 2003), "cajas rurales" in Honduras (Torres 2012), and mutual aid funds in México.   Check also the experience of Chile integrating subsidies with production and financial development programs through INDAP.   

Caro, JC. 2003. La dimensión de las microfinanzas rurales en América Latina: un análisis comparativo de cuatro países. Santiago, CL. Available at http://bit.ly/1g644LW

Torres Calderón, M. 2012. Estudio de casos: Honduras, Las cajas rurales, mecanismos sociales de contingencia y apoyo económico. FAO. Available at: http://bit.ly/1g62v0i

http://bit.ly/1g62v0i

http://bit.ly/1g644LW

SMEs in developing countries of Africa and Nigeria in particular do not directly have relationship with external finances. The out sourcing power of SMEs depend heavily on government effort to attract foreign investment or finance. If the government do not provide the lead for out sourcing of foreign investment or finance, SMEs cannot but rely only on internal or domestic financing. This because most SMEs are locally production based.

In Mozambique, there are different ways in which SME finance themselves: 1) Customer credit - those SMEs with supply contracts for large firms (for example, for engineering, cleaning or other services provided to multinationals) my benefit, because of their formal contracts with large firms, from credit by firms that supply them with their inputs, and from advances on their orders by the large firms they supply. If these SMEs loose they contracts with large firms, they loose this sort of credit; 2) Speculative activities - SMEs that may hold shares in financial, commercial or other firms, or hold other productive assets (such as land and some concession of mineral resources) often speculate it their shares or assets in order to raise finance for a core productive activity. The Ministry of Energy and Mineral resources has estimated that as many as 90% of Mozambican entrepreneurs who obtain mineral concessions from the state negotiate them with foreign investment within 4 months of obtaining the concession, in order to raise finance for other activities. 3) Public private partnerships - SMEs whose owners can mobilize partnerships with the state can benefit from contracts and finance, often through non competitive mechanisms, in order to start, get a market and raise finance. 4) rent-seeking market - SMEs may raise funds by lending their national status to foreign investors (being Mozambican becomes a brand, a rent seeking advantage), in order to facilitate access to resources and business opportunities. Often these firms do nothing or little else other than renting their nationality in exchange for finance or shares. Of course firms also obtain credits from the banks, but these are too expensive, and from foreign investors only through some sort of partnership. There are also informal sources of finance and micro finance, but the amounts are too small and too expensive for most of productive SMEs. Family money is also available, but that money is often the result of points 1 to 4, mentioned above.

You can be interested into the attached articles.

Regards,

MV

Hi Enver,

The attached article may offer some insights:

https://www.researchgate.net/publication/299747565_Towards_a_talent-driven_outward-oriented_globally-competitive_SME_framework_Discussion_Paper

Technical Report Towards a talent-driven outward-oriented globally-competitiv...