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SMALL AND MEDIUM SCALE ENTERPRISES AS A CORRELATE OF ECONOMIC GROWTH IN NIGERIA: 1981-2022

Olawumi, Ojo Rufus (PhD), Olufayo, Mary Bosede, Olufemi Olufunke Bosede, Adesanmi Oriola Oyewole

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ABSTRACT

The study investigated small and medium scale enterprises as a correlate of economic growth in Nigeria. To achieve the study objective, multiple regression model was formulated and Stationarity tests were conducted on all the series before the estimation to ensure the absence of stochastic processes. The study due to the strong evidence of long run relationship among the variables, conducted ARDL model to be able to determine the nature of the relationship between the variables. The evaluation of all the variables became stationary after first difference and the result of the Johansen co-integration test shows that the trace statistics indicate two (2) co-integrating equations

The study revealed that there is a long run relationship between small and medium scale enterprises and economic growth in Nigeria. The study revealed that inflation rate is positively correlated with economic growth through small and medium scale enterprises in Nigeria. Based on the findings and conclusion, the study recommended among others that; the government should adopt policy measures to maintain an affordable low commercial banking lending rate as this will accelerate high investment in Small, Medium and large-scale businesses and in the long-run contribute significantly to economic growth, government should set-up a Small and Medium Industrial Development Bank (SMIDB) to finance SME ventures in manufacturing sector and government should adopt both demand-driven as well as supply driven approaches to SMEs growth and development towards contributing to economic growth in the long-run.

 

Keywords: SMEs, ARDL, Economic Growth, Nigeria