Factors constraining the growth and survival of SMEs in Nigeria

Abstract

PurposeThe purpose of this paper is to investigate the factors that hinder the growth and survival of small businesses in Nigeria.Design/methodology/approachA survey method was used to gather data from 211 small business owners and managers located in selected cities in Nigeria. Several statistical analyses were conducted to identify the factors constraining the growth and survival of SMEs in Nigeria.FindingsThe results of the study reveal that the most common constraints hindering small business growth and survival in Nigeria are lack of financial support, poor management, corruption, lack of training and experience, poor infrastructure, insufficient profits, and low demand for product and services.Research limitations/implicationsThe instruments used for this study need to be subjected to more statistical tests in order to establish a more robust validity and reliability. Based on what we have learned, the instruments could be further refined to more closely capture each of the problem areas identified in the literature. Replication of this study using larger samples and a broader geographic base is suggested for cross‐validation purposes.Practical implicationsUnderstanding the factors hindering the growth and survival of SMEs in Nigeria will help policy makers – governments (federal, state, and local), NGOs, and other stakeholders – to design targeted policies and programs that will actively stimulate innovation, as well as helping those policy makers to support, encourage, and promote SMEs for poverty alleviation in Nigeria. For SMEs, this study offers alternative models to counteract the problem of collateral and lending issues. Strategic alternatives on how to address issues such as poor management, poor infrastructure, and corruption are discussed.Originality/valueThe significance of this study stems from the fact that very few studies have explored the issue of factors constraining the growth and survival of SMEs for poverty alleviation in Nigeria. The results provide additional insights into operations of SMEs in Nigeria, a sub‐Saharan African country. Sub‐Saharan Africa has been negated and, therefore, has been less researched. Also, the insights gained from this study to contribute the future development of this line of research, particularly in a non‐Western context.