THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES ON ECONOMIC GROWTH IN NIGERIA 1982 – 2012
ABSTRACT
This research work is on the impact of small and medium scale enterprises on economic growth in Nigeria. The main objective of this study is to empirically examine the impact of small and medium scale enterprises on economic growth in Nigeria. This research work made use of secondary data which were obtained from the Central bank of Nigeria Statistical Bulletin (2012). The data were collected for a period of thirty one years (i.e. 1982-2012). The Ordinary Least Square Regression
Technique was employed in the analysis of the data. It was found among other things that Based on the empirical
analysis, it is concluded that small and medium scale enterprises has significant relationship with economic growth in
Nigeria.SME developments cuts across sectors, involves multiple stakeholders and necessitate concerted action by
the public and private sectors, therefore, SME development should be mainstreamed into the national development
framework. Building up markets institution should be accompanied by capacity building of appropriate institutional
structures. It is recommended that, the Federal government should enact favourable fiscal and monetary policies that
will encourage foreign investors that want to invest in the economy,also government should ensure that the
productiveness in the domestic sector of the economy is increased as this would encourage infant industries to produce capital goods for exportation.
CHAPTER ONE
INTRODUCTION
The role of Small and Medium-Scale Enterprises (SMEs) in the national economy cannot be underestimated. These
enterprises are being given increasing policy attention in recent years, particularly in third world countries partly
because of growing disappointment with results of development strategies focusing on large scale capital intensive
and high import dependent industrial plants. The impact of SMEs is felt in the following ways: Greater utilization of
local raw materials, employment generation, encouragement of rural development, development of entrepreneurship,
mobilization of local savings, linkages with bigger industries, provision of regional balance by spreading investments
more evenly, provision of avenue for self-employment and provision of opportunity for training managers and semiskilled workers. The vast majority of developed and developing countries rely on dynamism, resourcefulness and risk
tasking of small and medium enterprises to trigger and sustain process of economic growth. In overall economic
development, a critical important role is played by the small and medium enterprises. Small and medium scale
enterprises advocates firstly, its endurance competition and entrepreneurship promotion and hence have external
benefits on economic and productivity growth. At this level, perspectives are directed towards government support
and involvement in exploiting countries social benefits from greater completion and entrepreneurship.
Secondly, proponents of SMEs support frequent claim that SMEs are generally more productive than large
firms,financial market and other institutions, direct government financial support to SMEs can boost economic growth
and development.Some argued that SMEs expansion boosts employment more than large firm growth because
SMEs are more labour intensive thereby subsidizing SMEs may represent a poverty alleviation tool, by promoting
SMEs,individual countries and the international community at large can make progress towards the main goal of
halfing poverty level by year 2020 i.e. to reduce poverty by half and becoming among 20 largest World Economies
(Nigeria Vision 20:20). Entrepreneurial development is therefore important in the Nigerian economy which is
characterized by the following heavy dependence on oil, low agricultural production, and high unemployment, low
utilization of industrial capacity, high inflation rate, and lack of industrial infrastructural base. These constraints limit the rate of growth of entrepreneurial activities in Nigeria. Hence, this paper seeks to investigate small and medium enterprises as a veritable tool in economic growth.
THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES ON ECONOMIC GROWTH IN NIGERIA 1982 – 2012