Selected Economic Policies on the Growth of Small and Medium Enterprises in Nigeria

Abstract

In Nigeria, economic policy should set the parameters in the economic system of the country, which should constitute the key part of the economic practice thereby creating an environment affecting the development and functioning of either collective or individual Small and Medium Enterprises (SMEs) operators and thus logically affecting the sector(s) of the economy. This work examines the effect of selected economic policies on the growth of SMEs in Nigeria. Notwithstanding the attention placed on monetary, fiscal and trade policies, in the overseeing of the economy, the SMEs sector all encompassing, Nigerian economy particularly SMEs are up until the present time of this study not growing as expected. The time frame was from 1986 to 2017, a thirty-two-year study. Research design employed was ex-post facto and a population of seventy-two thousand eight hundred and thirty-eight (72,838) SMEs in Nigeria were used. The sample size was the entire 72,838 SMEs of which the study relied on reports from Central Bank Statistical Bulletin and SMEDAN, thereby employing the Error Correction Mechanism (ECM) tool of analysis to analyze the time series data. The study found that economic policy (proxies: monetary policy, fiscal policy and trade policy) had no positive significant effect on the growth of SMEs in Nigeria. Therefore, the study recommends that economic policy should be design and formulated in such a way that the goals the SMEs want to achieve through monetary, fiscal and trade policies should be realistic and feasible in terms of growth.