Determinants of small and medium scale enterprises, poverty and economic growth: A case study of Nigeria
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Jun 21, 2022
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Abstract
Small and Medium-sized Enterprises (SMEs) have been the subject of increasing attention by policymakers in national governments and international institutions in both developed and developing countries. This article focuses on the determinant of small and medium scale enterprises, poverty and economic growth in Nigeria. Secondary data were tested for unit root. Correlation analysis, Autoregressive Distributed Lag model were adopted to test for the objectives of this study.
Results of analyses indicated that the major significant determinants of the growth rate of SMEs in Nigeria were bank loan to SMEs at two previous years, government expenditure to SMEs at previous year and three years after for interest rate. The findings also indicated that bank loan to SME, government expenditure and interest rate were also the determinants of real gross domestic product growth (RGDPG) with respect to the years under study. Results of ARDL also showed that SMEs contribution to gross domestic growth, bank loan to SMEs and government expenditure were all significant and exerted dominant impact on poverty level. Furthermore, results revealed a unidirectional causality between economic growth and poverty, between SME growth and poverty, and between SME growth and economic growth.
The study therefore recommends the setting up of enterprise development agencies in every state of the federation to serve as coordinating unit that will help business enterprises as well as reduce unemployment, poverty and its attendant effect on economic growth.
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Keywords
SME growth ratePoverty indexEconomic GrowthARDLNigeria
References
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• Gungbemi, W. F, (2001). Transitional issues in moving from an entrepreneurial to professionally managed firm. Lagos: Debis Press Ltd.
• Orugun, J. (2016). “Poverty Issue and the Entrepreneurial Engagement of Small Scale Enterprises in Nigeria: An Empirical Study” p 26
• Oshewolo, Segun. (2010). Galloping poverty in Nigeria: an appraisal of government interventionist policies. Journal of Sustainable Development in Africa, 12(6), 264-274.
• Tambunan, T, (2008). “SME Development, Economic Growth, and Government Intervention in a Developing Country: The Indonesian Story”. Journal of International Entrepreneurship. 6(1): 147-167.
• Thornhill, S and Amit, R (2003). Learning about Failure: Bankruptcy, Firm Age and the Resource Based View. Organisation Science. 14, 497-509
• Sagagi, M. S (2006). Entrepreneurship development policy: A renewed perspective for achieving economic development in Nigeria. Nigerian Academy of Management Journal, 1 (1), 179-192.
• Small and Medium Enterprises and Development [SMEDAN] (2012). National Survey of Micro, Small and Medium Enterprises 2012.
• Thornhill, S., and R. Amit. (2003). “Learning about failure: Bankruptcy, firm age and the resource-based view.” Organization Science 14(5): 497-509.
• World Bank, (2011). ‘Nigeria’s poverty in the midst of plenty: The challenge of Growth with inclusion.’ World Bank Papers, Washington DC.
• Yusuf, S. A, (2008). Assessment of Poverty among Urban Farmers in Ibadan Metropolis, Nigeria. Journal of Humanities. 24(3): 201-207.
• Umogbai, M., Diaka, H., &Ekeh, L, (2016).Small Scale Industries and Poverty Reduction in Benue State, Nigeria. Department of Business Management, 2(8).
• USAID. (2011, September). USAID Policy Framework, 2011-2015
• Usaini, M., & Elijah, S. (2020). The Role of Small Business in Economic Growth and Poverty Alleviation in Northwest Nigeria. International Journal of Accounting and Finance Studies, 3(1), 53-66. https://doi.org/10.22158/ijafs.v3n1p53
• Akingunola, R. O, (2011). Small and Medium Scale Enterprises and Economic Growth in Nigeria: An Assessment of Financing Options. Pakistan Journal of Business and Economic Review, 2(1): 78 –97.
• Akpomuvie, Orhioghene Benedict. (2010). Poverty, Access to Health Care Services and Human Capital Development in Nigeria. African Research Review, 4(3).
• Amit, R., and P.J.H. Schoemaker. (1993). “Strategic assets and organizational rent.” Strategic Management Journal 14(1): 33-46.
• Aremu, M. A. and Adeyemi, S. L, (2011). Small and Medium Scale Enterprises as a Survival Strategy for Employment Generation in Nigeria. Journal of Sustainable Development, 4(1): 200 – 206.
• Ariyo, D (2008). “Small Firms are the backbone of the Nigerian Economy”. African Economic Analysis, Academy Management Journal. Vol 1, No 1.
• Bakare, Ibrahim AO, & Edozie, KV. (2015). The Poverty-Economic Growth Nexus in Nigeria (1981-2012). International Journal of Research in Arts and Social Sciences. Vol 8, (No.1).
• Barnes, H. (2010). Child Poverty in South Africa: A Socially Perceived Necessities Approach, Measures of Child Poverty Project Key Report 2, Pretoria: Department of Social Development, Republic of South Africa.
• Ben-Caleb, E., O. Faboyede, and A. Fakile, (2013). “Empowering Small and Medium Scale Enterprises in Nigeria: A Key Poverty Alleviation Strategy”. International Journal of Business and Management Invention. 2(5):6-12.
• Beck, T., Demirguc-Kunt, A., & Levine, R. (2005). SMEs, Growth, and Poverty. Journal of Economic Growth, 10(3), 199–229. http://www.nber.org/papers/w11224
• Blackburn, R.A., Hart, M. and T. Wainwright. (2013). “Small business performance: business, strategy and owner-manager characteristics.” Journal of Small Business and Enterprise Development 20(1): 8-27.
• Chambers, R (2006). Vulnerability, Coping and Policy. IDS Bulletin, Volume 37, Issue 4:33-40.
• Dimoji, F.A. and L. Onwuneme, (2016). “Small and Medium Scale Enterprises and Sustainable Economic Development in Nigeria”. Proceedings of 33rd International Business Research Conference. Available at: http://www.wbiworldconpro.com/uploads/dubai-conference-2016/economics/1451450751.pdf. Retrieved on 28/11/2016
• Emordi, E. (2008). Nigerian Economy under the Military 1985-1999: Implications for National Security' Paper Presented at the 53rd Annual Congress of the Historical Society of Nigeria, Gombe State University, Gombe, 13th -15th October, 2008
• Essien, P. and Udofia, A. (2006). Evolving a National Framework for the Emergence of a Strong and Virile Small and Medium Scale Industry Sub-Sector in Nigeria. A Seminar Paper Presented at MAN House, November 5th, p3.
• Gebremariam, T.G, Gebremeskel, H. and Randall, W.J (2004). The role of small business in economic Growth and poverty alleviation in West Virginia and empirical analysis. Selected paper presented at the American agricultural Economics Association Annual meeting, enver, Colorado, August, 1-4.
• Hall, G. (1995). “Surviving and prospering in the small firm sector.” Thomson Learning Emea.
• Hannan, M. T. (1997). “Inertia, density and the structure of organizational populations: Entries in European automobile industries, 1886-1981.” Organization Studies 18(2): 193-228.
• Hannan, M.T and Freeman, J (1988). Structural Inertia and Organizational Change. American Sociological Review. Vol 49.149.164.
• Hussaini, Mustapha. (2014). Poverty Alleviation Programs in Nigeria: Issues and Challenges. International Journal of Development Research Vol. 4, (3,), 717-720.
• Jibril, Ibrahim Usman, (2009). Squatter Resettlement/Relocation Programme in Abuja, Nigeria and the Issue of Land Title Security. FIG Working Week, Eilat, Israel, 3-8 May, pp. 1 – 15.
• Jovanovic, B. (1982). Selection and the Evolution of Industry. Econometrica, 50, 649-670.
• Kadiri, I.B, (2012). Small and medium scale enterprises and employment generation in Nigeria: The role of finance. Journal of Business and Management Review, 1(9), p.79.
• Kareem, R.O, (2015). Impact of Entrepreneurship on Poverty Alleviation. Journal of Business Administration and Education ISSN 2201-2958 Volume 7, Number 1, pg1-16
• Leitch, C., Hill, F., and H. Neergaard. (2010). “Entrepreneurial and business growth and the quest for a “comprehensive theory”: Tilting at windmills?” Entrepreneurship Theory and Practice 34(2): 249-260.
• Oba, U.O and Unuoha, B.C (2013). The Role of Small and Medium Scale Enterprises in Poverty Reduction in Nigeria. An International Multidisciplinary Journal, Ethiopia Vol. 7 (4), Serial No. 31, September, 2013:1-25
• OECD (2016), Fostering Markets for SME finance: matching business and investor needs, OECD Working Party on SMEs and Entrepreneurship, CFE/SME (2016)4/REV1
• Onakoya, A. B. O, Fasanya, I. O. and Abdulrahman, H. D, (2013). Small and Medium Scale Enterprises Financing and Economic Growth in Nigeria. European Journal of Business and Management, 5(4): 130 – 136.
• Gungbemi, W. F, (2001). Transitional issues in moving from an entrepreneurial to professionally managed firm. Lagos: Debis Press Ltd.
• Orugun, J. (2016). “Poverty Issue and the Entrepreneurial Engagement of Small Scale Enterprises in Nigeria: An Empirical Study” p 26
• Oshewolo, Segun. (2010). Galloping poverty in Nigeria: an appraisal of government interventionist policies. Journal of Sustainable Development in Africa, 12(6), 264-274.
• Tambunan, T, (2008). “SME Development, Economic Growth, and Government Intervention in a Developing Country: The Indonesian Story”. Journal of International Entrepreneurship. 6(1): 147-167.
• Thornhill, S and Amit, R (2003). Learning about Failure: Bankruptcy, Firm Age and the Resource Based View. Organisation Science. 14, 497-509
• Sagagi, M. S (2006). Entrepreneurship development policy: A renewed perspective for achieving economic development in Nigeria. Nigerian Academy of Management Journal, 1 (1), 179-192.
• Small and Medium Enterprises and Development [SMEDAN] (2012). National Survey of Micro, Small and Medium Enterprises 2012.
• Thornhill, S., and R. Amit. (2003). “Learning about failure: Bankruptcy, firm age and the resource-based view.” Organization Science 14(5): 497-509.
• World Bank, (2011). ‘Nigeria’s poverty in the midst of plenty: The challenge of Growth with inclusion.’ World Bank Papers, Washington DC.
• Yusuf, S. A, (2008). Assessment of Poverty among Urban Farmers in Ibadan Metropolis, Nigeria. Journal of Humanities. 24(3): 201-207.
• Umogbai, M., Diaka, H., &Ekeh, L, (2016).Small Scale Industries and Poverty Reduction in Benue State, Nigeria. Department of Business Management, 2(8).
• USAID. (2011, September). USAID Policy Framework, 2011-2015
• Usaini, M., & Elijah, S. (2020). The Role of Small Business in Economic Growth and Poverty Alleviation in Northwest Nigeria. International Journal of Accounting and Finance Studies, 3(1), 53-66. https://doi.org/10.22158/ijafs.v3n1p53
How to Cite
R.O, Kareem, Isiaka M.A., Raheem K.A., and Avovome H.Y. 2022. “Determinants of Small and Medium Scale Enterprises, Poverty and Economic Growth: A Case Study of Nigeria”. Studies in Business and Economics 25 (1):51-72. https://doi.org/10.29117/sbe.2022.0135.
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Articles