Impact of Government Policy and Insecurity Factors on Small and Medium Enterprises (SMEs) Productivity in Nigeria

Abstract

The subject of SMEs roles in an economy has received considerable attention in the literature both for the developed and developing economies. However, the differences in economic policy and social environments in these economies have not been adequately situated or dissipated in the discus. This gap is what this study partly addressed in the literature. This study examined the impact of government policy/programmes and the insecurity situation on productivity of SMEs in Nigeria. The study was based on a nationwide survey conducted in the year 2020 within a design of 590 SMEs respondents with which the hypotheses were tested. The multinomial logistic regression result indicated that government policy of multiple taxation caused cost to rise for SMEs as indicated by the variable (Hikes in product price) taking on X2= 6.163, p<0.05 and thus has had an adverse significant impact on SMEs productivity. Moreover, none of the government programmes for SMEs growth had wald statistics with p-value less than 0.05 indicating that they have not been significantly effective in promoting SMEs productivity in the country. In addition, none of the insecurity variables had p-value less than 0.05, thus insecurity has had no significant adverse impact on SMEs productivity in Nigeria. This study thus posits that multiple taxation is detrimental to SMEs productivity and thus needs to be harmonised to mitigate cost for SMEs in the country. Also, other policy initiatives need to be better crafted for greater effectiveness while the current insecurity situation in the country requires to be given closer attention with a view to curtailing it from degenerating into a worse state.