The Determinants of Small and Medium-sized Enterprises Performance in Nigeria

Idris Isyaku Abdullahi,Chindo Sulaiman

doi:10.13189/aeb.2015.030504

Abstract

This study aimed at examining the determinants of small and medium-sized enterprises (SMEs) performance in Nigeria. An autoregressive distributed lag approach to cointegration was applied to sample from 1981 to 2010 to achieve the set objective. The results revealed that both in the short-and long-run, interest rate and net export have had a negative impact on SMEs performance. At the same time, other determinants such as government spending, political instability and level of education were found to have insignificant impact during the studied period. Therefore, maintenance of low interest rate will undoubtedly assist to boost the performance of SMEs in Nigeria. As such, monetary authorities need to play a very important role toward achieving the target.

Highlights

Small and medium-sized enterprises (SMEs) play critical role in the development of private sector of every nation
This model is a modified production function and this is complimented by a series of selected variables usually introduced in the growth models, the growth of the small scale industry is specified to depend on government spending on SMEs, political instability, interest rate, net export, level of educational development and so on
+η5 ln LEDt +ψ t where SGDP is small and medium scale enterprises share of GDP, INT is the interest rate, PI is political instability proxied by a dummy, GOV is government spending on SMEs, NEX is net export, LED is level of education proxied by adult literacy and ψ t is the error term

Summary

Introduction

Small and medium-sized enterprises (SMEs) play critical role in the development of private sector of every nation. With increased globalization, SMEs have an important role to play as their products are opened to the international market. They compete with foreign multi-national corporations as competitors in the domestic markets. The study examines the determinants of SMEs performance capturing both domestic and global markets. These determinants include: the interest rate, political instability, government spending on SMEs, net export and level of education. The SMEs performance will be captured using share of SMEs contribution to GDP

Objectives

Methods

Results

Conclusion