IMPACT OF SMALL AND MEDIUM ENTERPRISES DEVELOPMENT AGENCY OF NIGERIA (SMEDAN) PROGRAMS ON THE GROWTH OF MSMES IN NIGERIA (SELECTED BUSINESSES IN UYO METROPOLIS)

CHAPTER ONE

INTRODUCTION

1.1 Background to The Study

The International Labor Organization (ILO, 1999) defines microenterprises as those with 1–10 employees and small enterprises with 11–50 employees, without considering market distribution or capital base. The National Council on Industry (2001) defined micro, small and medium enterprises (MSMEs) based on asset value and staff size, with micro enterprises having assets of up to ₦1.5 million and 10 or fewer employees and small industries with assets between 1.5 and 50 million pounds and a workforce of between 11 and 100. The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) defined Micro-enterprises further as companies with 1 to 9 employees and capital between 1 and 5 million pounds, small companies with 10 to 49 employees and capital between 5 and 50 million pounds and medium-sized enterprises with 50-199 employees and capital between 50 and 500 million pounds. Companies with capital and employee numbers outside these ranges are considered large companies or multinational companies (Ebitu et al., 2016).

 

Micro, small and medium-sized enterprises (MSMEs) account for a large share of overall employment growth in many countries. In such countries, MSMEs generate a significant share of their growth in gross domestic product (GDP), while the contributions of larger companies tend to remain stable (ADB, 2002).

 

For example, MSMEs and micro-enterprises in OECD economies account for over 95% of enterprises, 60-70% of employment and 55% of GDP and create the lion's share of new jobs. In the case of developing countries, the situation is not much different. In Morocco, for example, 93% of companies are MSMEs and they account for 38% of production, 33% of investment, 30% of exports and 46% of employment. In Bangladesh, companies with fewer than 100 employees also account for 99% of all companies and 58% of employees. Also in Ecuador, 99% of all private companies employ fewer than 50 people and account for 55% of employment (Etuk et al., 2014). In the case of Nigeria, well-managed and healthy MSMEs represent important sources of employment opportunities and wealth creation (Okon, 2018).

 

The growth of micro, small and medium enterprises (MSMEs) is critical to economic development, particularly in Nigeria, where these companies account for over 90% of businesses and approximately 70% of the country's employment (National Bureau of Statistics)., 2021). The Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) plays a crucial role in promoting the growth of MSMEs through various programs aimed at improving their capacities, access to finance and market opportunities. Understanding the impact of these initiatives is critical to assessing their effectiveness and identifying areas for improvement.

 

SMEDAN's interventions include training programs, access to finance and the promotion of entrepreneurship. For example, the Agency has implemented numerous capacity building initiatives aimed at equipping entrepreneurs with essential skills and knowledge. According to Ihuah and Igbokwe (2022), these training programs have resulted in significant improvements in the operational capabilities of MSMEs and ultimately contributed to their sustainability and growth.

 

Additionally, SMEDAN's provision of credit facilities and grants has been instrumental in easing the financial constraints of small businesses and enabling them to scale their operations and drive innovation. Another crucial aspect of SMEDAN's impact is its focus on improving market access for MSMEs. The agency organizes trade fairs and exhibitions that facilitate networking and collaboration between entrepreneurs (Adebayo & Akinyemi, 2023). These events not only help MSMEs showcase their products but also connect them with potential investors and customers.

 

Research by Ojo et al. (2021) highlights that such initiatives have resulted in increased visibility and sales for many MSMEs, highlighting the importance of market access in driving growth. Furthermore, the impact of SMEDAN's programs extends beyond individual companies; They contribute to general economic development. By promoting entrepreneurship and supporting MSMEs, SMEDAN plays a crucial role in job creation and poverty alleviation (Umeh & Ogwueleka, 2022).

According to the World Bank (2020), improving the skills of MSMEs can significantly reduce the unemployment rate and strengthen economic resilience in Nigeria. As the country continues to grapple with various economic challenges, SMEDAN's role in supporting MSMEs remains crucial to promote sustainable growth and development.

 

1.2 Statement of The Problem

Despite the significant role that Micro, Small, and Medium Enterprises (MSMEs) play in Nigeria's economy, challenges persist in their growth and sustainability. While the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) has implemented various programs aimed at supporting MSMEs, there is limited empirical evidence on the effectiveness of these interventions in addressing the unique challenges faced by these businesses. Many MSMEs struggle with inadequate access to finance, insufficient market knowledge, and limited entrepreneurial skills, which hinder their growth potential (Obi & Adebayo, 2022). This lack of clarity regarding the impact of SMEDAN programs complicates the formulation of effective policies to support these enterprises further.

Additionally, the dynamic nature of the Nigerian economy presents ongoing challenges for MSMEs, including fluctuating market conditions and regulatory constraints. While SMEDAN's initiatives are designed to enhance the operational capacities of MSMEs, their actual impact on job creation, business expansion, and overall economic contribution remains inadequately assessed. Research by Ihuah and Igbokwe (2022) indicates that without a thorough evaluation of SMEDAN's programs, it is difficult to ascertain their true effectiveness and identify necessary adjustments to maximize their benefits for MSMEs. Addressing these gaps is crucial for developing targeted strategies that can facilitate sustainable growth and resilience among Nigeria's MSMEs.Top of Form

 

1.3 Objectives of The Study

The main objective of the study is to examine impact of smedan programs on the growth of MSMEs in Nigeria. Specific objectives of the study are:

1. To assess the Effectiveness of SMEDAN Programs in Enhancing Financial Access for MSMEs
2. To evaluate the Impact of SMEDAN Programs on the Business Development Capacity of MSMEs
3. To analyze the Role of SMEDAN Programs in Promoting Innovation and Entrepreneurship among MSMEs

1.4 Research Questions

To guide the study and achieve the objectives of the study, the following research questions were formulated:

1. To what extent have SMEDAN programs improved access to credit and other financial resources for MSMEs in Nigeria?
2. Have SMEDAN's training and capacity-building programs effectively equipped MSME owners and managers with the skills and knowledge necessary for sustainable growth?
3. 3.  Analyze the Role of SMEDAN Programs in Promoting Innovation and Entrepreneurship among MSMEs.

1.5 Research Hypothesis

The following research hypothesis was developed and tested for the study:

Ho: SMEDAN programs do not have a significant impact on the growth of Micro, Small, and Medium Enterprises (MSMEs) in Nigeria.

1.6 Significance of The Study

The study is important for many reasons. The following are the major stakeholders this paper through its practical and theoretical implications and findings will be of great significance:

Firstly, the paper will benefit major stakeholders and policy makers in the Bus admin sector. The various analysis, findings and discussions outlined in this paper will serve as a guide in enabling major positive changes in the industry and sub-sectors.

Secondly, the paper is also beneficial to the organizations used for the research. Since first hand data was gotten and analyzed from the organization, they stand a chance to benefit directly from the findings of the study in respect to their various organizations. These findings will fast track growth and enable productivity in the organizations used as a case study.

Finally, the paper will serve as a guide to other researchers willing to research further into the subject matter. Through the conclusions, limitations and gaps identified in the subject matter, other student and independent researchers can have a well laid foundation to conduct further studies.

 

1.7 Scope of The Study

The study is delimited to Selected Businesses in Uyo Metropolis. Findings and recommendations from the study reflects the views and opinions of respondents sampled in the area. It may not reflect the entire picture in the population.

1.8 Limitations of The Study

The major limitations of the research study are time, financial constraints and delays from respondents. The researcher had difficulties combining lectures with field work. Financial constraints in form of getting adequate funds and sponsors to print questionnaires, hold Focus group discussions and logistics was recorded. Finally, respondents were a bit reluctant in filling questionnaires and submitting them on time. This delayed the project work a bit.

1.9 Organization of The Study

The study is made up of five (5) Chapters. Chapter one of the study gives a general introduction to the subject matter, background to the problem as well as a detailed problem statement of the research. This chapter also sets the objectives of the paper in motion detailing out the significance and scope of the paper.

Chapter Two of the paper entails the review of related literature with regards to corporate governance and integrated reporting. This chapter outlines the conceptual reviews, theoretical reviews and empirical reviews of the study.

Chapter Three centers on the methodologies applied in the study. A more detailed explanation of the research design, population of the study, sample size and technique, data collection method and analysis are discussed in this chapter.

Chapter Four highlights’ data analysis and interpretation giving the readers a thorough room for the discussion of the practical and theoretical implications of data analyzed in the study.

Chapter Five outlines the findings, conclusions and recommendations of the study. Based on objectives set out, the researcher concludes the paper by answering all research questions set out in the study.

 

1.10 Definition of Terms

1.  SMEDAN (Small and Medium Enterprises Development Agency of Nigeria)

A government agency established to promote the growth and development of small and medium enterprises (SMEs) in Nigeria, providing support through funding, training, and policy advocacy.

2.  MSMEs (Micro, Small, and Medium Enterprises)

 Enterprises categorized based on their size, typically defined by the number of employees and annual turnover. In Nigeria, MSMEs are crucial for economic growth, job creation, and poverty reduction.

3.  Entrepreneurship Development

 A process aimed at enhancing the skills and knowledge of individuals to enable them to successfully start and manage their own businesses, often supported by SMEDAN programs through training and mentorship.

4.  Access to Finance

The ability of MSMEs to secure funding from financial institutions or government programs. SMEDAN initiatives often focus on improving MSMEs' access to loans, grants, and investment opportunities.

5.  Capacity Building

 Programs designed to improve the skills, knowledge, and resources of MSMEs, enhancing their operational efficiency and competitiveness. SMEDAN offers workshops and training sessions to achieve this.

6.  Market Access

 The ability of MSMEs to reach customers and sell their products or services. SMEDAN supports market access through initiatives like trade fairs, networking events, and partnerships.

7.  Policy Advocacy

Efforts by SMEDAN to influence government policies that affect MSMEs, ensuring that the regulatory environment is conducive to their growth and sustainability.

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