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Wednesday, 23 December 2015

Factors affecting the contributions of SME's to the Nigerian economy.


When we say small businesses are important to a nation's economy, just how important do we think they are? and in what ways do we think they serve this importance?

In a Nation where the Government does not pay attention to small businesses and produce few policies that will help protect and build its small businesses the small businesses in that country will end up contributing less to the nation's economy, why?

Poor policy making: SME's are supposed to bring about substantial local capital formation, they are supposed bring about an increase in rural and urban development but in the situation wereby a nation keep introducing policies that are inimical to the growth and development of its Small Businesses, that nation's small businesses will suffer and they will end up contributing less to the nation's economy.

Poor SME supporting infrastructures:In a place like Nigeria where most small businesses rely on private generators for electricity, the contributions of small businesses to the nations economy in the area of electricity revenue will be substantially reduced, SME's are supposed to be among the top customers of electric power distribution companies but due to poor electricity the distribution companies are being neglected by some businesses who would rather run on generators. If there is a good system of transportation in the country e.g railway, waterway and cheap air travel fairs, small businesses will greaty utilize them instead on relying on private transport to move goods and services around the country, this will not only increase the contribution of small businesses to the nations economy it will also help small business owners to carry out their business in an atmosphere of affordable comfort.

Access to low interest loans and other business grants: access to loan and other forms of funds is also one of the factors that would help small businesses perform better putting them in a better position to contribute to the nation's economy.


Illegal business practices: SME's operating outside the nations economy and legal structure will do little for the nations economy e.g SME's operating on banned products and services, tax evasion e.t.c this Businesses will do more harm than good to the nation.

Poor Taxation system: If a nation is unable to come up with an effective taxation system for the effective taxation of businesses within its borders, then it should be ready to accept less contribution from businesses within it to it's economy.

Indifference to changing trends: When small businesses in a country refuse to structure their business in such a way that it would reflect compliance to changing global and domestic trends, trends and mode of operation that would suit the national economy, such businesses may end up contributing less to the nation's economic growth.