Abstract
Orientation: The paper investigates the situation facing SME’s in Nigeria, who have to function in an environment with depleted infrastructure.Research purpose: To examine the effects of infrastructure deficiency on the performance of manufacturing small and medium sized enterprises in Nigeria.Motivation for the study: Low budgetary allocation by the Nigerian government toward investment and rehabilitation of infrastructure in favor of attempts to conform to the tenets of trade liberalisation, has created a situation where basic infrastructure provision is a huge challenge in the creation of SME’s.Research design, approach and method: A longitudinal approach was followed, where a survey was conducted amongst 500 SME’s in Nigeria. To complement this, semi-structured interviews were conducted in 2007 and 2011 respectively. Main findings: The deficiency in infrastructure negatively impacts the profitability and performance of SMEs, due to the high cost incurred by SMEs in the self-provision of infrastructure and distribution of finished goods. Furthermore, despite the successful privatisation of electricity production in November 2013, there is still no significant improvement in the power supply in Nigeria. However, the government has embarked on road rehabilitation to ease the transportation of goods and services.Practical/managerial implications: The study uncovers the practical realities of the challenges faced by SME’s operating in an environment with insufficient infrastructure, which is typical of much of the developing world.Contribution/value add: The study highlights the necessity of sound infrastructure provision as a key factor to the development of SME’s.
Highlights
This is a cross-sectional study that examined the effects of infrastructure deficiency on manufacturing small- and medium-sized enterprises’ (SMEs) performance in Nigeria
This is on the backdrop of decades of persistent budget cuts for investment and rehabilitation of infrastructure by the Nigerian government in an attempt to conform to the tenets of economic liberalisation following a series of reforms that commenced in the late 1980s (Lee & Anas 1992; Ogidan 2015)
The gap in the availability of infrastructure in Nigeria has greatly impacted on the production processes in the manufacturing sector, especially the ability of the SMEs to compete in the global market
Summary
This is a cross-sectional study that examined the effects of infrastructure deficiency on manufacturing small- and medium-sized enterprises’ (SMEs) performance in Nigeria. Infrastructure is one of the most critical factors for economic development because it interacts with the economy through the production processes and changes in the quality of infrastructure available for production will greatly impact the production and performance of an organisation’s levels of output, income, profits and employment creation in the economy. This is because of its direct link with the productivity (Adenikinju 2005; Kessides 1993). The gap in the availability of infrastructure in Nigeria has greatly impacted on the production processes in the manufacturing sector, especially the ability of the SMEs to compete in the global market
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