ABSTRACT
This study, the role of small and medium sized enterprises for economic growth, was undertaken to find out how SME sub-sector in Nigeria has performed and its impact on the economic growth of the country.
Small and Medium Scale Enterprises (SMEs) is accepted globally as a tool for empowering the citizenry and economic growth. It has been associated with the rapid economic growth of countries in Asia and North America. In Nigeria efforts have been made by successive governments to reduce poverty and accelerate economic growth by increasing foreign direct investment, diversifying the economy, enacting policy frameworks which favour small business ownership and sometimes initiating employment and entrepreneurship programmes.
Specifically this study tends to figure out: how profitable SME business is; whether infrastructural development could be attributed to the presence of SMEs; if significant number of people are employed within the SME sector; whether the SME market has attracted banks and financial institutions with increase in loans and incentives; whether there is increase in information Technology related businesses due to presence of SMEs and if there is need for the government to encourage and develop more opportunities for SMEs.
A total of 200 SMEs were randomly selected from Matori, a city in Lagos state Nigeria. A questionnaire was constructed and distributed to the selected SMEs. The responses were collated and analyzed using Statistical Package for Social Sciences (SPSS) analytical tool.
The study reveals that while SME businesses are profitable problems of policy inconsistency and poor infrastructural development continuously undermine the potentials of the market. Though the presence of SMEs has attracted infrastructural development, such developments in most cases are community effort or privately driven which limits the amount of developments achieved. For example their efforts could be limited to patching and maintaining existing bad road networks but not expanding or creating new road networks.
The study also revealed that financial institutions like banks are attracted to areas where SMEs are established but getting funds through these institutions via loans has not been easy due to high interest rates and harsh conditions like types of collateral to present.
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