This paper, utilizing the narrative textual case study approach sought to ascertain the role of SMEs in the economic development of Nigeria. The study established that in all economies – underdeveloped, developing and developed – SMEs are in the forefront of job creation, wealth creation, innovation and poverty alleviation. The study also established that the challenges facing them transcend international boundaries but with infrastructural deficiencies, poor policy implementation and corruption ranking higher in transiting countries like Nigeria. In addition to these disruptive factors common amongst transiting countries, the study identified the following mitigating factors peculiar to the country: lack of access to affordable credit, multiple taxation and levies by all tiers of government, insecurity of lives and property, preference for imported goods by the citizenry, poor management, lack of skilled workforce etc- disruptive forces that result from not only the inefficiencies in the political/economical system but also myopic tendencies of the promoters of the SMEs themselves. Against the backdrop of these challenges militating against the optimal performance of SMEs in the country, this paper still adopts the position that the government of the country does not have any other option if it wants to engender economic growth and development than to provide an environment conducive for SMEs to thrive. And that the feat achieved in the banking, telecommunication, entertainment, and cement sectors of the economy of the country can still be replicated in other sectors.
Economic development occurs when there is an increase in the value of goods and services produced by an economy as may be reflected in the percentage rate of increase in the Gross Domestic Product (GDP) of such a country (Organization for European Cooperation & Development (OECD), 2004; Oyelola, Ajibosun, Raimi, Raheem & Igwe, 2013). This assertion having been accepted as a truism, the argument that has been raging is whether the path to economic growth and development lies with SMEs or large-sized firms.
With regards to the debate, the OECD takes the position that SMEs play very key roles in the economic development of both transition and developing countries, typically accounting for more than 90% of all firms outside the agricultural sector (OECD, 2014). The World Bank is also observed to share the same opinions with the OECD on the subject matter as the international body is credited to have provided targeted assistance worth about $12billion to SMEs in developing economies in the period 1998 -2013 (Beck, Demirguc-Kunt & Levine, 2002). Before now, the practice in Nigeria has been for the government to support and promote the establishment of large-sized firms in seeming belief that the path to economic development lies with such establishments. The failure of such enterprises such as Ajaokuta Steel Complex, Aluminum Smelting Company of Nigeria, Volkswagen of Nigeria, Anambra Motor Manufacturing Company, to mention just a few out of scores, may have however forced the country to change course in terms of the route to economic development and adopt the OECD and World Bank model. The launch in 2014 by the Federal Government of Nigeria of the Micro, Small and Medium Enterprises Fund (MSMEF) under which the sum of ₦220 billion domiciled at the Central Bank of Nigeria was to be made available to SMEs at very favourable interest rate to enhance their contribution to the economic development of the country provides the major evidence of this change in approach.
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