Impact Of Small And Medium Scale Enterprise On Economic Development In Nigeria

Impact Of Small And Medium Scale Enterprise On Economic Development In Nigeria.

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 (2016). The data were collected for a period of thirty years (1986-2016). The Ordinary Least Square Regression Technique was employed in the analysis of the data.

It was found that small and medium scale enterprises have a significant impact on economic growth in Nigeria also commercial bank loan has a significant impact on SME. It is recommended that The Nigerian government should organize a national enterprise forum, which would focus on the contributions of SMEs to national development objectives.

Commercial banks should be strongly encouraged to assist small and medium scale enterprises by providing cheap sources of finance and making their requirements for soft loans to be easier and more reasonable.

Introduction

Small and medium scale enterprises (SMEs) have been generally acknowledged as the bedrock of the industrial development of any country. Apart from the numerous goods and services, they provide a veritable means of large-scale employment as they are usually labor-intensive. (Yerima,2010).

In developing countries, Nigeria has since the 1980‟s shown increased interest in the financing and promoting of Small and Medium-scale Enterprises for three main reasons. According to Owuallah, (2014), these reasons are:

1. Transformation of traditional or indigenous industry
2. Increase in job creation.

They also provide training grounds, for entrepreneurs even as they generally rely more on the use of local materials. Osaba, (2008) says that the distribution of goods has continued to be the only viable and reliable option for the development, growth, and survival of any economy.

The work explores the role and contribution, constraints, and prospects of SMEs as they contribute to the growth and development of the Nigerian economy. The pursuit of economic development has been a major goal of many developing nations of the world.

Developing countries are confronted with several problems such as a high rate of poverty and unemployment which have continued to hinder the attainment of socio-economic development. For any nation to attain development, industrialization; gainful and meaningful employment are important indices used as a measurement of economic development.

This is often depicted by income per capita, equitable distribution of income, the welfare and quality of life enjoyed by the citizens of that nation. Small and Medium Scale Enterprise (SME) has proved to be a major tool adopted by the developed nations to attain socio-economic development.

In recent times, the small-scale industrial sector is considered to be the backbone of the modern-day economy. Historical facts show that prior to the late 19th century, cottage industries, mostly small and medium scale businesses controlled the economy of Europe.

The Industrial Revolution changed the status quo and introduced mass production (Thomas, 2011). The twin oil shocks during the 1970s undermined the mass production model, which triggered the unexpected reappraisal of the role and importance of small and medium-sized enterprises in the global economy (Wendrell, 2003).

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