Impact of Government Policy on the Growth of Small and Medium Enterprises in Nigeria

  • Oparah Promise Chika Department of Marketing, Nnamdi Azikiwe University, Awka, Nigeria
  • Nwagbala Stella Chinelo Department of Business Administration, Nnamdi Azikiwe University (NAU), Awka, Nigeria
  • Iloanya Kenneth Okechukwu Department of Public Administration, Nnamdi Azikiwe University (NAU), Awka, Nigeria
Keywords: Government Policy, Small and Medium Enterprises, government expenditure, Unemployment rate, Gross Domestic Product, commercial Banks Credit, Interest rate

Abstract

This study examines the impact of government policy on the growth of small and medium enterprises in Nigeria from 1999 -2022 using Ordinary least Square (OLS) technique method. All data used were secondary data obtained from the statistical bulletin of Central Bank of Nigeria. In executing the study, the OLS technique was applied after determining stationarity of our variables using the ADF Statistic, as well as the cointegration of variables using the Johansen approach. It was discovered that the variables are stationary and have a long term relationship among the variables in the model. From the result of the OLS, it was observed that gross domestic product, government expenditure and commercial banks’ credit to SMEs have positive relationships with SMEs growth and development in Nigeria respectively. On the other hand, unemployment and interest rate have negative relationships with SMEs. Apart from government expenditure and unemployment rate which are not significant, Gross Domestic Product (GDP), Commercial Banks Credit to SMEs and Interest Rate have significant effect on small and medium industry output. Based on the above findings, the study recommends that the government should improve on the real GDP. This is important because it gives information about the size of the economy and how an economy is performing. The growth rate of real GDP is often used as an indicator of the general health of the economy which includes the SMEs industrial growth. The government should set up a supervised skill acquisition programme that will help improve SMEs growth and business development. The Central Bank of Nigeria should through the government-run development financing institutions provide adequate funding for SMEs in Nigeria. The government-run development financing institutions should ensure that SMEs borrow at cheap interest rates.

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Published
2023-09-10
How to Cite
Oparah Promise Chika, Nwagbala Stella Chinelo, & Iloanya Kenneth Okechukwu. (2023). Impact of Government Policy on the Growth of Small and Medium Enterprises in Nigeria. Central Asian Journal of Innovations on Tourism Management and Finance, 4(9), 63-74. Retrieved from https://cajitmf.centralasianstudies.org/index.php/CAJITMF/article/view/596
Issue
Vol 4 No 9 (2023): September 2023
Section
Articles

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