Climate Change Risk Management Strategies: The Case of Small and Medium Scale Enterprises in Southwest Nigeria

Abstract

The study determined the critical variables inducing the choice of mitigation and adaptation methods adopted by the Small and Medium Scale Enterprises (SMEs) against the effect of climate change on their enterprises in Southwest Nigeria. A multistage sampling procedure was employed to choose 200 SMEs Managers/Chief Executive Officers (100 mitigating climate change and 100 not mitigating) as respondents for the study. Descriptive statistics and a multinomial regression model were employed to investigate the data collected. The findings show that the mean age of Managers/CEOs mitigating climate change was 41.8 years, and the level of education of climate change mitigating Managers/CEOs (80.0%) was significantly different from the non-mitigating (50.0%). The net profit margin ratio for the mitigating SMEs was 32.04%, and 17.83% for the non-mitigating SMEs. The multinomial logit model showed that income, enterprise experience, access to credit, enterprise size, and enterprise type significantly induced the choice of climate change mitigation approaches used by the SMEs in the study area. The study suggested that government and Non-Governmental Organizations (NGOs) should assist SMEs by enhancing their income-generating ability to ameliorate the impact of climate alteration over the years on their enterprises.