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The purpose of this paper is to examine the effects of access to credit through micro‐credit institutions on entrepreneurial performance and assesses the loan performance of public credit schemes in Nigeria in order to determine the sustainability of such schemes.

The study employed qualitative approach and exploratory perspective, using primary and secondary data obtained at beneficiary and institutional levels.

The loan repayment rates were generally low for many of the schemes, and this confirms the problems of public sector lending, with implications for the sustainability of the schemes. Many reasons were given for the low repayment rates, among which were poor credit culture of the schemes managed by public sector and the attitudinal nature of Nigerians towards public funds.

There is a need for policy makers, researchers and entrepreneurs to improve on the designing of micro‐credit schemes in order to be sustainable.

This paper makes a first step towards comparing the performance of public and private micro‐credit schemes in Nigeria.