Small and medium scale enterprises development in Nigeria : constraints and policy options

Ekwem, Ijeoma (2011-12)

Thesis (MDF)--Stellenbosch University, 2011.


This study was undertaken to find out how the SME sector in Nigeria has developed over time and to what extent it has performed its critical role of driving the country’s industrial transformation and development as it has done in other developed countries. This study has explained in detail, the development of SMEs in Nigeria and identified the economic potential of SMEs, their major problems, challenges and constraints, which have hindered them from playing the vital role in the Nigerian economic growth and development as well as made appropriate recommendations for redressing, reducing and/or eliminating them so that they could occupy their pride of place in the Nigerian economy. It also considered the various programmes implemented by various governments, to support and promote SMEs’ growth and development as well as the roles played by the government and the financial institutions towards promoting the development and growth of SMEs in Nigeria. The study employed primary date via questionnaires which were administered to the sampled financial institutions and SMEs’ operators, and the emanating data was analysed using simple percentages, charts and mean ranking. The Chi-square analytical technique was employed and the empirical analysis indicates that there has not been any significant contribution of government support towards developing SMEs, and also that there is a relationship between the sizes of SMEs and their modes of financing. The study determined, among others, that with the exclusion of lack of finance, the major constraints or challenges of SMEs ranked in descending order are inadequate managerial/board expertise, poor infrastructural facilities, inconsistencies in government policies, lack of financial records, multiple taxes and levies, etc. It also determined that lack of finance is a function of multiple problems and that the major sources of credit available for the financing SMEs in Nigeria are personal savings, family/friend support and commercial banks. The study recommended, among others, SME partnership and equity participation by financiers, loan guarantees, interest rate concession, fiscal incentives, and adequate training for SMEs as the factors that will drive the rapid transformations and development of the SME sector in Nigeria.

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