CONTRIBUTION OF SMALL AND MEDIUM SCALE ENTERPRISES TO ECONOMIC DEVELOPMENT OF NIGERIA

Abstract

Nigeria’s economic challenges have been attributed to excessive reliance on crude oil and as a result of the government's concentration of large-scale industries at the expense of Small and Medium-sized Enterprises (SMEs). In this study, we investigate the effect of electricity power supply on the productivity of SMEs as well as to which these Small and Medium scale Enterprises SMEs contribute to the economic development of Nigeria. Secondary data were extracted from CBN Statistical Bulletins covering the period between 1997 and 2020. Multiple Econometric Method was used to analyse the data, and the results were tested at a 0.05 significance level. The findings from the analyses of the study showed that SMEs’ productivity (SMEP), employment generation by SMEs (EG), electricity power supply and credit available to SMEs have significant positive effects on the economic development of Nigeria. Based on the findings, it was recommended that the government should ensure that SMEs’ productivity is improved by ensuring adequate credit availability to SMEs at reasonable interest rates, adopting macroeconomic policies that will reduce the level of inflation rate, ensuring regular and affordable electricity power to SMEs by allowing state independent power generation and supply. We believe that improving the SME's operational base will provide the needed catalyst for Nigeria's economic growth and development.