SMALL AND MEDIUM ENTERPRISES (SMEs) IN NIGERIA: PROBLEMS AND PROSPECTS

This study, Small and Medium Scale Enterprises (SMEs) in Nigeria: Problems
and Prospects, was undertaken to find out if the SME sub-sector in Nigeria has
performed its critical role of driving the country’s industrial transformation and
development as it has done in other developed countries; and if not, why, and
also to identify remedial measures.
The study thus investigated
the performance of the Small and Medium
Enterprises sub-sector of the Nigerian economy, its problems and prospects
and recommended measures to make the sub-sector virile and vibrant in order
to play the crucial role it is expected to play.
A total of 300 SMEs were randomly selected from a cross section of a
population of 1,500 SMEs spread among all the states of Nigeria including
Abuja and covering virtually all forms (Sole Proprietorship, Partnership, Private
and Public Limited Companies etc) and kinds (Services, Manufacturing,
Processing, Oil & Gas, Educational etc) of business took part in the study.
Eleven banks were also selected for the study. Participants were selected
through a simple random sampling process. Two sets of questionnaires were
constructed, one set for the SMEs and the other for the Banks and
administered on the participants. The responses to the questionnaires were
complemented with personal interviews of the key operators by the researcher.
The responses of the participants were analyzed using the statistical package
for social sciences (SPSS), which generated the frequency distributions,
means, standard deviations, variances, standard errors, chi-square statistics,
correlations, analyses of variance, t-statistics, etc of the responses
The main hypotheses of this research which were tested at 0.05 level of
significance using chi-square statistics hinged on identifying the greatest
problem which SMEs face in Nigeria, the identification and ranking of the top
ten problems or challenges of SMEs in Nigeria and the relationship between the
form and nature of the business enterprise and its sources of funding for its
operations.
The major findings of this study include the following:
SMEs have played and continue to play significant roles in the growth,
development and industrialization of many economies the world over. In the
case of Nigeria, SMEs have performed below expectation due to a combination
of problems which ranges from attitude and habits of SMEs themselves through
environmental related factors, instability of governments and frequent
government policy changes and somersaults.
The top ten problem areas of SMEs in Nigeria in decreasing order of
intensity include: management, access to finance, infrastructure, government
policy inconsistencies and bureaucracy, environmental factors, multiple taxes
and levies, access to modern technology, unfair competition, marketing
problems and non-availability of raw materials locally. Thus managerial
problems represent the greatest problem facing SMEs in Nigeria while nonavailability
of raw materials locally is the least problem.
The potentials and opportunities for SMEs in Nigeria to rebound and play
the crucial role of engine of growth, development and industrialization, wealth
creation, poverty reduction and employment creation are enormous. The
realization of this requires a paradigm shift from paying lip service to a practical
radical approach and focus on this all-important sector of the economy by the
government realistically addressing the identified problems. While SMEs
themselves need to change their attitude and habits relating to
entrepreneurship development, the governments (Local, State and Federal)
need to involve the SMEs in policy formulation and execution for maximum
effect. There is also the dire need to introduce entrepreneurial studies in our
Universities in addition to emphasizing science, practical and technological
studies at all levels of our educational system.
Promoters of SMEs should thus ensure the availability or possession of
managerial capacity and acumen before pursuing financial resources for the
development of the respective enterprise.BY BASIL ANTHONY NGWU ONUGU (FIMC, FICA)