Government Tariff Intervention and Exportation Activities of SMEs in South West Nigeria

Abstract

The advancement of Small and Medium Enterprises (SMEs) plays a crucial role in the industrialization of developing nations. Yet, the success and longevity of these SMEs heavily rely on a strong trade policy and an effective tariff system. Unfortunately, the trade policy of the Nigerian Government, particularly concerning SMEs, has not yet supported substantial growth and development due to inadequate tariffs and a lack of openness in import and export duties. This situation has resulted in low output and productivity for SMEs. This research focused on exploring how government tariff interventions impact the export activities of SMEs in Nigeria's South-west geopolitical zone. The study used a cross-sectional research design and targeted the 20,801 registered SMEs in the manufacturing sector of the South-west region. A sample of 393 respondents was selected using the Guilford and Fruchter (1973) formula, employing a multi-stage sampling technique. Primary data was collected through a survey questionnaire, utilizing a 5-point Likert scale adapted from Saragih (2011) to measure responses. Descriptive statistics were used for the analysis, supplemented by inferential analysis using R-Studio version 11. The findings indicated that reducing tariffs from 10 percent to zero percent resulted in an increase in the participation of medium-sized firms (those with 100–249 employees) from 11.5 percent to 14.2 percent, but this change did not significantly affect smaller firms. The study concluded that government tariff interventions promote the export activities of SMEs and facilitate their entry into the export market. As a recommendation, the study suggested that the government should lower custom tariffs for SMEs to enable them to achieve larger-scale production and thrive in the global market.