IMPACTS OF SMALL AND MEDIUM ENTERPRISES ON ECONOMIC GROWTH INNIGERIA.

Abstract

This study examined the impact of small and medium enterprises on economic growth in Nigeria. Ex- post facto design served as the research design. Secondary data sourced from CBN statistical bulletin were used for analysis of data. The study applied both descriptive and quantitative techniques to evaluate the impacts of small and medium enterprises on economic growth in Nigeria. Specifically, the study used error correction mechanism (ECM) model for evaluation. The results revealed a positive and significant impact on small and medium enterprises on economic growth in Nigeria. Also, the result showed a uni-directional causality relationship between small and medium enterprises and real gross domestic product (RGDP) in Nigeria flowing from commercial bank loan to SMEs (BLS) to real gross domestic product (RGDP). The study concluded that small and medium enterprises play significant role in stimulating economic growth in Nigeria. The study therefore recommends that the adequate infrastructure should be provided to ensure better output production and transported at lower costs as well as generating jobs and other positive externalities by the small and medium scale enterprises. The government can enhance employment opportunities by increasing her spending in providing good roads, electricity and other necessary social amenities. More so the
government (both federal and states) should adopt policies towards maintaining a favourably low commercial and micro-finance banks’ lending rate to SMEs as this will help improve the level of investments in SMEs, which is expected on the long run, to improve the aggregate asset base and aggregate capitalization of SMEs, and this in turn, will have significant positive effect on the GDP of the country.