Project Materials

ECONOMIC DATA USAGE AND THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA

ABSTRACT

The study looked at how economic data utilisation affects the performance of Nigerian SMEs. More specifically, the study aimed to assess the impact of selected macroeconomic indicators such as the exchange rate, inflation rate, employment rate, gross fixed capital formation, domestic credit to the private sector, and economic growth rate on SMEs’ performance in Nigeria between 2001 and 2015. To estimate the model, the study used the Ordinary Least Squares technique combined with multivariate regression analysis. The study’s findings found that the currency rate, employment rate, gross fixed capital formation, and economic growth rate all had a favourable but minor impact on the performance of SMEs in Nigeria. Domestic lending to the private sector was found to have a favourable and significant impact on the performance of SMEs in Nigeria, but inflation and interest rates hampered their success. To this purpose, the report recommends that the government and monetary authorities develop fiscal and monetary policies that are beneficial to the business environment.

Chapter one

INTRODUCTION

Small and medium-sized companies (SMEs) are businesses with a workforce that is less than the size specified by a country’s global or national trading arm. The abbreviation “SME” is used by reputable international institutions such as the European Union (EU), International Monetary Fund (IMF), United Nations (UN), Economic Community of West African States (ECOWAS), African Development Bank (AfDB), United Nations Conference on Trade and Development (UNCTAD), and World Trade Organisation (WTO), among others. Small and medium-sized businesses have proliferated more than huge and multinational corporations, employing many more people (Wikipedia Encyclopaedia).

The Central Bank of Nigeria defines small and medium-sized firms in Nigeria using criteria such as asset size and labour size. A small and medium enterprise is defined by the CBN as one with an asset size of less than or equal to 5 million naira and a workforce size of no more than 100 people.

Small and medium-sized firms make significant contributions to economic growth, particularly in developing countries. Thus, they serve as both an engine and a catalyst for long-term, inclusive growth.

SMEs are drivers of innovation and competition in key sectors of the economy; they create jobs, promote technological and industrial advancement, strengthen the use of local resources and technologies, and increase capacity utilisation (Fabayo, 2009; Adisa et al., 2014).