An Exploratory Study of the Impact of Government Policies on the Development of Small and Medium Enterprises in Developing Countries: The Case of Nigeria

An Exploratory Study of the Impact of Government Policies on the Development of Small and Medium Enterprises in Developing Countries: The Case of Nigeria

Olusegun Dosumu (Birmingham City University and Newman University, Birmingham, UK), Javed Hussain (Birmingham City University, Birmingham City Business School, Birmingham, UK) and Hatem El-Gohary (Birmingham City University, Birmingham City Business School, Birmingham, UK)
DOI: 10.4018/IJCRMM.2017100104
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Abstract

This paper explores the effects of government policies on the development of Small and Medium Enterprises in developing countries through the examination of the case of Nigeria. Many research studies reported that SMEs in Nigeria have not benefited from the policies formulated by the government. This paper investigates the impediments to manufacturing SMEs growth and the needed pre-requisite environment for SMEs to benefit from government specific policies. The study adopted a qualitative methodology depending on face to face interviews with 20 SME owners and/or managers in five of the six geographical arears of Nigeria, 20 bank managers in the capital city of Lagos and 20 government officials located in the federal capital city of Abuja. The study unveils unique contextually novel insights, including particularly the distinctive processes and different relationships related to lenders decision. The research findings are consistent with those reported by other scholars in the field, and confirm that government policies and support in the areas of technology, infrastructure and finance affects the performance of SMEs to a great extent in Nigeria.
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Literature Review

Small and medium enterprises (SMEs) play a very vital role in every economy both in successful developed countries and developing countries (El-Gohary & El-Gohary, 2016; Khan & Khalique, 2014; El-Gohary et al., 2013; El-Gohary, 2012a, 2012b, 2011, 2010a, 2010b, 2009; El-Gohary et al., 2009a, 2009b, 2009c; Ariyo, 2008; Wiklund & Shepherd, 2005; Wong & Aspinwall, 2004). They perform some important roles like job creation (Farouk & Saleh, 2011; Deakins et al., 2001; Stanworth & Purdy, 2004), wealth creation which increases the economy size (Birch et al., 1993). Furthermore, SMEs utilises their limited resources efficiently and develop entrepreneurial skills (Karmel & Bryon, 2002; NIPC, 2003; Hussain, Millman, & Matlay, 2006; Poutziouris, 2003; Deakins, Logan, & Steel, 2001). Studies carried out by various authors, see Matlay and Westhead, (2005); Porter, (2006); Hussain, Millman, and Matlay, (2006); Harvic and Lee, (2002), suggests that SMEs contribute significantly to the social-economy and political infrastructure of developing and developed countries. However, the Nigeria government has been according little attention to this all-important sector for so long despite its numerous benefits (Adjebeng-Asem, 1998).

In the last decade, this trend has changes as the Nigerian government within its capacity is now according all necessary attention to the development of SMEs for accelerated economic growth and empowering its citizen for entrepreneurship and technology innovation (Oyelola, 2013). The major reason for the inadequate attention as suggested by SMEDAN (2011) emanated from the unavailability and paucity of credible and reliable database. This has fraught the major stakeholders to eve sustainable intervention strategies for the development of SMEs in Nigeria (SMEDAN, 2011). As a result of this, it has constrained the government and the policy makers to set an entrenched policy and have a baseline for meaningful comparison (Toby, 2007). This was corroborated by Brevoort and Hannan (2006) in their study that without comprehensive information on SMEs, very little will be known about their contribution to the economy.

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