This article evaluate the impacts of small scale businesses (SMEs) on the economic growth and development of Nigeria.
The pursuit of economic growth and development has been a major goal of many developing nations of the world.
Developing countries are confronted with several problems such as high rate of poverty and unemployment which have continued to hinder the attainment of economic growth socio-economic development.
Small scale businesses (SMEs) has therefore proved to be a major tool adopted by the developed nations to attain economic growth and socio-economic development.
In recent time, small scale industrial sector is considered to be the backbone of modern day economy.
Historical facts show that prior to the late 19th century, cottage industries, mostly small and medium-scale enterprises controlled the economy of Europe while Industrial Revolution changed the status quo and introduced mass production, leading to economic growth.
Consequently, small and medium scale enterprises contributions to economic growth and development have been recognized globally, Nigeria inclusive.
Small and medium scale enterprises are the main driving forces of economic growth and job creation that have special importance, not only in developed countries but also in developing and emerging economies.
Impact of Small Scale Businesses (SMEs) on Economic Growth in Nigeria
Small and medium scale enterprises are the panacea for the economic development of Nigeria and the interest in small and medium scale enterprises would contribute to the creation of jobs, reduction in income disparity, production of goods and services in the economy, as well as providing a fertile ground for skill development and acquisition, and a vehicle for technological innovation and development.
Moreover, data from the federal office of statistics in Nigeria affirmed this importance when it revealed that about 90 percent of the entire enterprises in the country are SMEs and they employed an average of 50% of the working population as well as contributing to 50 percent of the country industrial output.
SMEs in Nigeria are not only catalyst of economic growth and development, but are also the bedrock of the nation. Although small business activities had existed since the period of independence in Nigeria, however, conscious effort on SMEs as instrument of economic and national development started in 1970-1979 when Nigeria adopted the policy of indigenization through its national development plan programme.
The development plan articulated the need for the Nigerian economy to be self-reliant through industrialization, entrepreneurial development, employment generation, and development through increasing export trade.
Nevertheless, despite the efforts and contributions of past and present governments towards promoting SMEs in Nigeria, the contribution of this sector to the economy still remain relatively small in terms of its impact on Gross Domestic Product (GDP), unemployment, and poverty reduction.
The rate of unemployment in this state is still high and the majority of the population still lives in poverty (Opafunso and Adepoju, 2014). Aremu (2010) among others attributed the lack of credit as one the major constraint to the realization of the benefits of SMEs. In the light of the above, this study seeks to examine the impact of SMEs on the economic growth in Nigeria.
Problems and Challenges Facing SMEs in Nigeria
Despite these significant contributions of Small Scale Businesses (SMEs) to the Nigerian economy, SMEs still face a lot of challenges.
The major challenges facing SMEs are:
- Inadequate Funds and Low Capital: This is due to the fact that many SMEs are unable to raise enough capital to kick-start their operations while high-interest rate being charged by banks when SMEs resort to obtaining loans is not encouraging.
- Poor Management Practice
- Lack of Information
- Low Industrialization Capacity
- Inadequate Infrastructural Base in the Country
- Poor Support from Financial Institutions
- Poor Entrepreneurial or Technical Know-How
- Inadequacy of Raw Materials
- Absence of Proper and Accurate Database
- Inconsistent Government Policies
- High Level of Insecurity of the Business Climate in the Country.
Moreover, the performance and effectiveness of SMEs as an instrument of economic growth and development in Nigeria has long been under scrutiny. This intense scrutiny has been against the backdrop of the low performance and inefficiency that characterized SMEs particularly in assessing its role on economic growth and development.
Despite government institutions and policies support to enhancing the capacity of SMEs, SMEs in Nigeria has fallen short of expectations. This has generated serious concern and skepticism on whether they can bring about economic growth and national developments in Nigeria.
The concern is even more disturbing when comparing SMEs in Nigeria with that of other countries particularly where SMEs have become a harbinger of economic reconstruction and transformation.
Other Publications of SMEs in Nigeria
The objective of this conceptual paper is to review the financial literacy and financial performance of SMEs in Nigeria.
The specific objectives of the study include:
- To ascertain the financial literacy of SME business owners in Nigeria.
- To ascertain the financial performance of SMEs in Nigeria.
- To evaluate the effect on economic development.
This study was intended to examine the effect of cashless policy on Small and medium businesses in Edo State. This study was guided by the following objectives; To determine the characteristics of small and medium businesses in Edo State, To analyze the challenges that have hindered the adoption of the cashless policy by small and medium businesses in Edo State.
The study employed the explanatory/survey design; questionnaires in addition to library research were applied to collect data. Primary and secondary data sources were used and data were analyzed using the Chi-square statistical tool at a 5% level of significance which was presented in frequency tables and percentages. The respondents under the study were 50 small scale business owners in Benin City, Edo State. The study findings revealed that the effect of cashless policy on small and medium businesses in Edo state makes payment convenient for businessmen; reduces the cost of a transaction; ensures the security of the SMEs; helps SMEs control reckless spending, though it will lead to the high-interest rate.
The outcome of this study will educate the managers of small and medium businesses and the general public on the effect of cashless policy on SMEs recommending coping strategies to ensure profitability with the use of modern technology.
This study examined entrepreneurship as a tool for economic development in Awka South Local Government Area. Entrepreneurship is seen as a process which involves the effort of an individual (or individuals) in identifying viable business opportunities in an environment and obtaining and managing the resources needed to exploit those opportunities. A sample of 394 respondents was selected from the population of of entrepreneurship units cutting across all sectors in Awka south Local Government in Anambra State using simple random sampling. Data was collected from both primary and secondary sources presented in tables and analyzed using percentages and frequencies. Hypotheses were formulated and tested using Chi square analysis method. It was observed that entrepreneurship will have a positive effect on the economic development of Awka South Local Government Area; it was also observed that there are factors discouraging and hindering job creation in Awka South Local Government Area, and there are measures required in encouraging job creation in Awka South Local Government Area. Following the above findings, the researcher has recommended There should be an enabling environment that would make entrepreneurship activities thrive and encourage youths to go into entrepreneurship activities. Efforts should be made to make provision for infrastructure and other social amenities such as constant electric power supply, good road network, etc. Also loans and credit facilities should be made available for youths and graduates that want to start up their own business.
The main purpose of this study is to investigate the problems associated with the internal control system as it affects the growth of small scale businesses in Nigeria. Other specific objectives include:
- To identify the role of technology as an internal control factor influencing the growth of small scale business in Port Harcourt.
- To critical examine the role of human resources practices as an internal control factor influencing the growth of small scale businesses in Port Harcourt.
- To identify the role of entrepreneurial skills as an internal control factor influencing the growth of small scale businesses in Port Harcourt
- To evaluate the role of managerial skills as an internal control factor influencing the growth of small scale businesses in Port Harcourt.
The main purpose of this research is to determine the influence of digital marketing on sales improvement of small scale enterprises in Port Harcourt. Specific objectives include, to:
- To determine the relationship between social media marketing and sales growth of small scale enterprises in Port Harcourt.
- To access the relationship between social media marketing market share of small scale enterprises in Port Harcourt.
- To determine the relationship between email marketing and sales growth of small scale enterprises in Port Harcourt.
- To determine the relationship between email marketing and market share of small scale enterprises in Port Harcourt.
