Small And Medium Scale Financing And Unemployment Reduction In Nigeria

Small And Medium Scale Financing And Unemployment Reduction In Nigeria.

Abstract

The study investigated the impact of small and medium-scale financing and unemployment reduction in Nigeria using time series data from 1992 to 2015. The study emphasized deposit money banks credit to SMEs in Nigeria.

Having analyzed the dataset using multiple regression analysis and Johansen cointegration tests, it was found that a long-run relationship exists between the unemployment rate and measure of deposit money banks credit to SMEs in Nigeria.

Also, it was found that deposit money banks credits to SMEs have not impacted significantly on unemployment reduction in Nigeria. Based on the findings, it was recommended among other things that Nigerian banks, insurance companies, and all tiers of government should collaborate to develop Business Parks in all the states of the country for SMEs.

Introduction

• 1.1     Background to the Study

The issue of unemployment has been receiving an increasing global focus and the challenges are becoming more daunting. It is, however, encouraging to note that research findings and empirical evidence have shown that significant unemployment reductions are possible and have, indeed, occurred in many developing countries (Owenvbiugie and Igbenedion, 2015; Abdulahi, Aliyu, Umar, Umar, Sabiu, Naisa, Khalid and Abubakar, 2015; Hussain, Bhuiyan and Bakar, 2014; Makinde, 2013).

In particular, it has been established that growth, poverty, and unemployment reduction go hand-in-hand.  For example, studies have revealed that the absolute number of people living in poverty and unemployed has dropped in all the developing countries that have experienced sustained economic growth over the past few decades (Eze and Okpala, 2015). The relevant question is, what type of policies can influence full employment in an economy?

The rate of unemployment in Nigeria is one of the highest in the world which is at 24 percent and over 50 percent of the youths in the urban areas are unemployed (Chiwenuba and Okpala, 2015; Agboola, 2013).

Consequently, the situation has assumed a worrisome dimension of economic and social crises as there has arisen a relationship between rising criminality and unemployment (Oregwu and Chima, 2013).

This is the more reason why those at the leadership positions in the country should urgently take steps towards accelerating the support for Small and Medium Scale Enterprises (SMEs) and business start-up through capacity building and funding as finance is very vital to the SMEs.

In Nigeria, the small and medium enterprises are found wanting probably because most of them cannot access loans for their operations and growth.

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StudentsandScholarship Team.