Understanding Financial Constraints: Causes, Effects, and Strategies for Overcoming Economic Limitations

Aleke Jude Uchechukwu

Faculty of Economics and Management Kampala International University, Uganda

Email: Jude.aleke@kiu.ac.ug https://orcid.org/0009-0009-6807-9484

ABSTRACT

In developing countries like Nigeria, the development and sustainability of people, companies, and economies were greatly impeded by economic and financial limitations. The main causes of these constraints included the limited availability of financial resources, high interest rates, rigorous regulatory regimes, and volatile economic situations. The most severe obstacles were encountered by small and medium-sized firms (SMEs) and marginalised people, who frequently struggle to get the required funds for growth and development. The ramifications of financial limitations were extensive, resulting in less investment, hindered economic expansion, more joblessness, and worsened wealth disparity. These constraints may also sustain societal instability, thereby further eroding economic resilience. Successfully managing financial limitations requires a holistic strategy that addresses both the supply and demand dimensions of money. A crucial aspect of the supply side was enhancing loan accessibility by creating novel financial products and services specifically designed for small and medium-sized enterprises (SMEs) and marginalised groups. Both microfinance organisations and fintech solutions have shown potential for offering alternative financial methods, especially in rural regions. By improving financial literacy, people and companies may make well-informed financial choices and efficiently allocate resources on the demand side. Government actions, such as implementing regulatory changes and stabilising macroeconomic factors, are crucial for establishing a more favourable financial climate. This research aimed to acquire knowledge on the factors, consequences, and approaches for surmounting financial limitations in Nigeria. Therefore, it emphasised the need for customised solutions that took into account the distinct economic, social, and cultural circumstances of the area. By conducting a comprehensive examination of peer-reviewed literature and empirical research, this study identified significant obstacles and suggested practical suggestions to improve financial accessibility, stimulate economic growth, and guarantee sustainable development. The results emphasised the importance of implementing targeted policies and regularly assessing current methods to tackle the changing financial environment in Nigeria.

Keywords: Economic limitations, Financial limitations, Developing countries, Sustainability, Small and medium-sized enterprises (SMEs).

Aleke Jude Uchechukwu (2024). Understanding Financial Constraints: Causes, Effects, and Strategies for Overcoming Economic Limitations. NEWPORT INTERNATIONAL JOURNAL OF CURRENT ISSUES IN ARTS AND MANAGEMENT,5(1):1-6. https://doi.org/10.59298/NIJCIAM/2024/5.1.16000