Socio-Economic Determinants of Survival and Transition Rate of Micro, Small and Medium Scale Enterprises in South West Nigeria

Abstract

The paper investigates the socio-economic factors that influence the rate of transition among Micro, Small, and Medium Enterprises (MSMEs) in Nigeria. Data used for the analysis was obtained from a sample of 1100 micro, small, and medium enterprises (MSMEs) located in two states of southwest Nigeria. This was achieved by employing mobile phone-enabled data collection ODK (open data kit) software to administer structured questionnaires. The transition rate was simulated utilising the analytical model of Kaplan survival. Over 90% of the surveyed MSMEs were micro-businesses, with only eight per cent and two per cent initially classified as small and medium-sized enterprises, respectively. However, after five years, 41% of small to medium-sized businesses and 30% of microenterprises have expanded to small scale. While the gender disparity continues to be a significant issue in Osun, its impact is comparatively lesser in Oyo state. Conversely, it is more probable that Osun SMEs will generate employment, expand, and develop more rapidly than Oyo's enterprise. Commerce, technical service provision, support services, and manufacturing predominate over MSMEs, which contribute little to the economy and primarily facilitate product distribution. Additionally, the study revealed that enterprises led or owned by women have a 1.2-fold greater likelihood of expanding and hiring more personnel at a quicker rate than those led by men. Employee recruitment and career advancement within MSMEs are both influenced by the prevailing business climate. In contrast to the notion that higher education plays a substantial role in determining corporate survivability, it is technical and management education that exclusively impacts business performance. The findings indicate that government intervention efforts should prioritise small businesses over micro or medium-sized enterprises (MSMEs) due to their greater capacity to generate income and employment.