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JORIND 15(1)June, 2017. ISSN 1596-8303. www.transcampus.org/journal; www.ajol.info/journals/jorind

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EFFECT OF SMALL AND MEDIUM SCALE ENTERPRISES ON ECONOMIC GROWTH IN NIGERIA

Omonigho Tonia Okhankhuele Department of Business Administration, Federal University of Technology, Akure, Nigeria

E-mail: [email protected] +234-806-2824-074 Abstract This paper recognised SMEs as source of economic growth in Nigeria. The paper identified SMEs’ contribution to Nigeria’s Gross Domestic Product (GDP) from 1982 to 2012, and carried out analysis on the effect of SMEs on economic growth in Nigeria, within the same period. Secondary data were collected from CBN Statistical Bulletin (2002, 2013, 2015), Central Bank of Nigeria, Annual Report and Statement of Accounts (2011; 2012), and National Bureau of Statistics –Job Creation and Employment Surveys (2012). Data were analyzed using Pearson Product-Moment Correlation Coefficient (PPMCC). The study disclosed that there is a significant and positive relationship between SME’s contribution to Nigeria’s Gross Domestic Product (GDP) and Nigeria’s GDP from 1982 to 2012. The paper recommended that Government should make good policies and carry out concerted effort towards the development of SMEs in order to make them serve as the source of economic growth in Nigeria. Keywords: SMEs, economy, growth, effect Introduction There is a general consensus by several authors that Small and Medium Scale Enterprises (SMEs) are cornerstones for growth, industrialization and development in numerous countries around the globe. The importance of SMEs to nations is overwhelming. SMEs have been identified as the source of development for the developed nations, especially the newly industrialized countries like, Thailand, China, Taiwan, Indonesia, Malaysia, South Korea, Singapore, among others. They make up the major percentage of businesses in the globe and play extraordinary roles in delivery of goods and services, generating employment, enhancing standard of living, and significantly contribute to the Gross Domestic Products (GDPs) of several countries (Organization for Economic Cooperation and Development (OECD), 2000). Ofoegbu, Akanbi and Joseph (2013) affirmed that SMEs are the solution to economic development of several developing countries, including Nigeria. SMEs are regarded as the seed of big businesses, the energy that propels national economic engine and assiduous creator of jobs (Abor and Quartey, 2010). They serve as a source of economic growth and development (Ojeka, 2011; Lawal, 2014; Basil; 2005; Aruwa, 2006; Mensah, 2004; Ariyo, 2005; Ashamu, 2014). SMEs comprise 97% of the entire economy (Oke and Aluko, 2015), and aid as a base for creating innovation, employment, competition and economic vitality which in the long run results into poverty alleviation and national growth (Ojeka, 2011). The importance of SMEs has propelled several nations including Nigeria, to initiate several policies to aid the development of SMEs. Some of these efforts as identified by some scholars such as: Terungwa

(2012); Aladekomo (2003); Lawal, (2014); Ayeni-Agbaje and Osho (2015) among others include: the establishment of financial institutions and initiation of several funding programmes to aid the development of SMEs in Nigeria, and initiation of specialized banks and other credit agencies/schemes to make funding available to the sub-sector. These specialized banks and institutions include among others: The Nigerian Industrial Development Bank (NIDB) which was established in 1964, to make available, medium and long term funds, to medium and large – scale enterprises, Nigeria Bank for Commerce and Industry (NBCID) in 1973, which was created to make financial services and other allied services available to indigenous enterprises especially SMEs, and the Small and Medium Industries Equity Investment Scheme (SMIEIS) which was established in 2001, to make financial and technical services available to SMEs. SMIEIS made it a prerequisite for all banks to set aside ten percent of their Profit after Tax (PAT) for equity investment and promotion of SMEs. The established banks were to link up with the Small and Medium Scale Enterprises Development Agencies in Nigeria (SMEDAN) in implementing SMIEIS scheme (Ayeni-Agbaje and Osho, 2015). Yet, the rate of mortality of Small firms in Nigeria is still very high (Ojeka, 2011; Onugu, 2005). There is no universally acceptable definition of SMEs over the globe because the categorization of businesses into small, medium or large scale is founded on qualitative and subjective judgment (Ogboru, 2007). Therefore, the numerical definition of SMEs differs from one country to another and commonly depends on assets’ value or number of employees (Ahiawodzi and Adade, 2012). The


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National Council of Industry defined a medium scale enterprise as any company with operating assets less than ₦200 million, and employing less than 300 persons. A small-scale enterprise is one that has total assets less than ₦50 million, with less than 10 employees. Annual turnover was not considered in its definition of an SME. The National Economic Reconstruction Fund (NERFUND) defined a SSE as one whose total assets is less than ₦10 million, but made no reference either to its annual turnover or the number of employees. The Central Bank of Nigeria

(CBN), also defined medium scale enterprise as any company with operating assets less than ₦150 million, annual turnover less than ₦150 million employing less than 100 persons. A small-scale enterprise, on the hand, is one that has total assets less than ₦1 million, annual turnover less than ₦1 million with less than 50 employees (World Bank, 2001). However, the National Policy on Micro, Small and Medium Scale Enterprises (MSMEs) (2012), classified MSMEs in the table 1 below:

Table 1: Classification of SMEs by Assets and Employment S/N Size Category Employment Assets (N Million), (excl. land and buildings)

1 Micro Enterprises Less than 10 Less than 5 2 Small Enterprises 10 to 49 5 to less than 50 3 Medium Enterprises 50 to 199 50 to less than 500 Source: National Policy on MSMEs (2012) Simon Kuznets defined economic growth of a country as “a long-term rise in the capacity to supply increasingly diverse economic goods to its population, this growing capacity is based on advanced technology and the institutional and ideological adjustments that it demands”. Growth is thus objective, measurable and describes advancement in income, consumption, output, capital, labour force, among others (Todaro, 1885). Economic growth takes place when the productive capacity of a nation rises, and this is used to produce additional goods and services (Jhingan, 1997). Economic growth is therefore measured by the increase in the amount of goods and services that are produced in a country.

In spite of the roles being played by SMEs in economic development of nations, SMEs in Nigeria appear to be saddled with multitudes of problems including: financial, technological, among others which have hindered the progress of the sector and its contribution to the development of Nigeria. The main objective of this study is to evaluate the effect of SMEs on the growth of Nigeria’s economy, from 1982 to 2012. The specific objectives are to: identify SMEs contribution to Nigeria’s Gross Domestic Product (GDP) from 1982 to 2012, and examine the effect of SMEs on the growth of Nigeria’s economy, within the same period. Statement of the problem Small and Medium Enterprises (SMEs) have been acknowledged as a source of growth, industrialization and development in numerous countries in the globe. Several scholars including: Basil (2005), Ariyo (2005), Ojeka (2011), Abor and Quartey (2010), Oke and

Aluko (2015) among others have admitted that SMEs play energetic roles in the industrialization, growth, development of several nation, propels the national economic engine and serves as proficient productive job creator. Despite the establishment of specialized banks and other credit agencies/schemes to make funding available to SMEs, their situation has barely changed in terms of improving their performances. SMEs are still trying to access both financial and non-financial services provided by commercial and development banks. In Nigeria, SME sector has remained rather small in terms of its contribution to GDP and gainful employment, and has remained stagnant (Lawal, 2014). Although a lot of scholars from the field of Business Administration, Economics, Accounting, among others, have carried out research on the effect of SMEs on Economic Development in Nigeria (Onyeiwu, 2012; Akingunola, 2011). Their focus was majorly on the effect of the loan/credit granted by banks to SMEs in Nigeria on Nigeria’s Gross Domestic Product (GDP). Therefore, they compared the total loan/credit granted by banks to SMEs in Nigeria with Nigeria’s Gross Domestic Product (GDP) over a period of time, without comparing SMEs’ contribution (which depicts SMEs’ output), with GDP over the years. This is the gap that this study intends to fill. While some of the authors who carried out related studies (Akingunola, 2011; Onyeiwu, 2012; among others) concluded that there is a significant and positive relationship between SMEs financing (which was used to represent SMEs growth) and economic growth in Nigeria (represented by GDP), other authors (Abiola, Iyoha and Joseph, 2011; Basil, 2005) stated that the SMEs’ sector’s contribution to GDP has been somewhat small, SMEs has


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performed below expectation and is still far from attaining its targeted standards. There is therefore the need to evaluate the effect of SMEs on the growth of Nigeria’s economy by comparing SMEs’ share in GDP with Nigeria’s GDP from 1982 to 2012, in order to establish the relationship between the two variables. Hence the need for this study. Previous research Percentage of SMEs to total firms, employment and gross domestic product in African countries The Federal Office of Statistics carried out a study which showed that in Nigeria, Small and Medium Enterprises comprise 97% of the economy (Ariyo, 2005; Ogbuanu, Kabuoh and Okwu, 2014). MSMEs presently contribute about 50% to the nation’s Gross Domestic Product (Evbuomwan, Ikpi, Okoruwa, and Akinyosoye, 2013; Odeyemi, 2003). There are submissions that the SMEs sub-sector may perhaps encompass about 87 per cent of the total firms operating in Nigeria, excluding informal – enterprises (Ayeni-Agbaje and Osho, 2015). Averagely, SMEs represent above 90% of the enterprises and make up 50 to 60% of employment in lots of African countries. According to Abor and Quartey, (2010), SMEs in Ghana have been acknowledged to have made available about 85% of manufacturing employment in Ghana. They are also believed to contribute around 70% to Ghana’s Gross Domestic Product (GDP) and comprise around 92% of businesses in Ghana. SMEs have been known to offer about 85% of manufacturing employment in Ghana (Aryeetey, 2001). In South Africa, SMEs represent 91% of the formal business entities, contribute between 52% and 57% to GDP and offer about 61% of employment (Central Statistical Services (CSS) (1998); Ntsika, 1999; Gumede, 2000; Berry, Von Blottnitz, Cassim, Kesper, Rajaratnam, and Van Seventer, 2002). Okpara and Wynn, (2007) affirmed that SMEs contribute about 20% to 45% full employment and equally contribute about 30% to 50% to rural income which are mostly house-holds. Nigeria SMEs make available around 50% of all the jobs and enable our natural resources to be utilized due to their high innovativeness. This helps to raise the wealth of the nation via higher productivity (Ogbuanu et al., 2014). They have also aided in enhancing the standard of living of a lot of people, particularly those leaving in the rural areas. Data presented by the Registrar General’s Department specifies that 90% of the registered companies are micro, small and medium enterprises in Ghana (Mensah, 2004). Small scale businesses comprise over ten percent of the total registered

companies in Nigeria (Ayeni-Agbaje and Osho, 2015). About 50% of the total jobs in Nigeria are made available by SMEs (Ojeka, 2011). SMEs comprised around 70 percent of industrial employment in Nigeria in 1987 and this has basically been the same situation over the years (Omwumere, 2000). It other developing countries, the same situation occurs. In these countries, it is projected that SMEs employ 22 percent of the adult population. Precisely, around 15.5 percent and 13.9 per cent of the labour force is employed by the SMEs’ sector which is greater employment growth in comparison with micro and large scale enterprises which employ 5 percent and 11 percent in Ghana and Malawi respectively (Kayanula and Qaurtey, 2000). SMEs comprises above 60 percent of Gross Domestic Product (GDP) and 70 percent of over-all employment. Income countries of middle income, SMEs produced close to 70 percent of GDP and 95 percent of the entire employment, and in Organization for Economic Cooperation and Development (OECD) countries, SMEs make up the bulk of firms, contribute over 55 percent to GDP and makes up 65 percent of the entire employment (Basu, Blavy and Yulck, 2005). Importance and contributions of SMEs to nations Numerous importance and contributions have been adduced to SMEs in several parts of the world, by various authors. Ayeni-Agbaje and Osho, stated that Small and Medium Enterprises perform an essential role in both developed and developing countries in the globe. SMEs encompass the key majority of the world’s economies (Ojeka, 2011). They expedite economic growth and national development (Lawal, 2014). Some authors including Ayeni-Agbaje and Osho (2015), Adjei, (2012), Oke and Aluko (2015), Owualah (1987), Cook and Nixon (2000), Beck, Demirguc-Kunt and Levine (2005), Ojo (1992), Mensah (2004). Omwumere (2000), Ojeka (2011), Ahiawodzi and Adade (2012), World Bank (1995), Terungwa (2012), Olowe, Moradeyo and Babalola (2013), among others, agreed that SMEs are real apparatuses for realizing national objectives, with reference to the generation of employment at little investment cost, development of entrepreneurial capabilities, inspiring indigenous entrepreneurship and technology, economic growth, decreasing people’s migration from rural to urban areas, immense contribution to Gross Domestic Product (GDP), economic growth and development. SMEs acts as a source of generating employment for numerous citizens, assists in the process of industrialization, import substitution and export earnings of all countries. It also helps to stabilize income, lessen poverty and unemployment in numerous developing countries, requires least possible skill to be


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established, upturns productivity and aids in the utilization of human and capital resources that would have been left idle if they had to wait for huge sum of money to start large scale businesses.

In addition to the above contributions, Ayeni-Agbaje and Osho (2015) reported that, the Bolton committee of inquiry that was instituted in the United Kingdom in 1968 to assess the role of Small Scale Enterprise in the British economy, stated that these enterprises carry out two significant roles as: breeding ground for novel industries and source of vigorous competition. In the United states of America, SMEs have played an essential part in the changeover of the country from industrial era to the post-industrial technology period (Lawal, 2014; Ayeni-Agbaje and Osho, 2015). It is commendable to recognize that a massive percentage of Nigerians directly or indirectly depend on SMEs for subsistence (Ojeka, 2011). Interestingly, Stiglitz and Uy (1996) revealed that the East Asian countries’ phenomenon was occasioned by the zeal ascribed to the SMEs sub-sector, that engendered the upsurge in exports and resultant advancement of the industrial sector. Indeed, the newly industrialized countries like China, South Korea, Indonesia, Singapore, Malaysia, Taiwan, among others, achieved economic growth through SMEs’ activities that later led to the transformation of Large-Scale enterprises (Aruwa, 2006). They are capable of withstanding hostile economic conditions due to their flexible nature (Kayanula and Quartey, 2000). Panitchpakdi (2006) views SMEs as a source of competition, economic dynamism, employment and innovation which arouses the spirit of entrepreneur and skills’ diffusion.

In contrast to the findings above, Abiola et al. (2011) stated that SMEs’ sector has been stagnated and remains somewhat small with regards to its contribution to GDP or lucrative employment in Nigeria. Even though there are indications that the sector has improved considerably since 1999, it is still far from attaining its targeted standards as the sector is confronted with numerous limitations which include inadequate credit availability that hampers its growth. Basil (2005) submitted that, in the case of Nigeria, SMEs have performed below anticipation as a result of a mixture of problems, including their attitude and habits, instability of governments, environmental related factors, and repeated changes in government policy. He further asserted that SMEs in Nigeria have not performed plausibly well and therefore have not played the anticipated essential and vivacious role in Nigeria’s economic growth and development. Problems militating against the SMEs

SMEs sector’s development in developing countries has been hampered by a lot of factors which contribute to the rate of SMEs failure (Arinaitwe, 2006). Numerous authors including Oke and Aluko (2015), Ayeni-Agbaje and Osho (2015), Ogechuku (2006), Basil (2005), Levy (1993), Okpara, 2000, Cook and Nixson (2000), and Parker et al. (1995), recognized many factors that lead to ill-timed demise of SME in Nigeria. Key among these factors is inadequate capital occasioned by difficulties in accessing funds from banks. SMEs seem to be deficiency in both equity financing and debt (Ahiawodzi and Adade, 2012). Commercial banks are usually hesitant to give loan to SMEs due to the presumed risky nature of SMEs (Onugu, 2005; Ashamu, 2014). Liedholm, MacPherson and Chuta (1994) concluded that SMEs perish owing to non-financial reasons, while Green et al. (2002) concluded that difficulties in obtaining required property rights or licenses, and keeping proper records are in some ways more necessary to running a small enterprise, than finance. Oguntoye (1984) concluded that Small-Scale Enterprises have no financial departments at all, a small number of them that have, keep ill and ineffectively managed ones. A lot of them depend on one-year annual financial report patched together by external financial analyst when many things have already gone wrong. Also, Oyefuga, Siyanbola, Afolabi, Dada, and Egbetokun, (2010)’s study identified uncoordinated business plans and poorly packaged projects as the most significant reasons for SMEs’ inability to access funds from the scheme. Again, Kayanula and Quartey, (2000) affirmed that Lack of antitrust legislation favours larger firms, while lack of protection for property rights limits SMEs’ access to foreign technologies. Ayeni-Agbaje and Osho (2015) postulated that SMEs tend to be deficient in management and organizational structure, which exist in large-scale entrepreneur. Ayeni-Agbaje and Osho (2015), Afolabi (2013), World Bank (2001), Aruwa (2004), Steel and Webster, (1991), Aryeetey et al. (1994), Sowa et al., (1992) Parker et al. (1995), Kayanula and Quartey (2000), among others, enumerated numerous factors that pose as barriers to financing SMEs in Nigeria. Some of these factors include: lack of collateral, cost of capital, unsuitable bank loans terms and lack of equity capital, unwillingness of banks, particularly commercial banks, to lend to SME sector. A lot of SMEs’ entrepreneurs live in their own houses in rural communities or in hired properties in towns. Unfortunately, houses or estates in rural areas may perhaps not be qualified to be accepted as collateral security (Iniodu and Udomesiet, 2004) in (Ayeni-


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Agbaje and Osho, 2015). Borrowing from the commercial banks is herculean to the SMEs. Besides the interest rates of between 22 and 35 percent, there are other charges which include administrative/management fee, concession fee, processing fee, and too many others (Owenvbiugie and Igbinedion, 2015). The deposit money banks whose duty it is to assist SMEs financially, could just be characterized as generally unstable and unreliable, in meeting the needs of these medium and small scale enterprises (Uzonwanne, 2015). Meanwhile, Mago and Toro (2013), World Bank (1995), Opara (2000), World Bank (2001), Ogechukwu (2006), Basil (2005), Oboh (2002), Onugu (2005), Evbuomwan, Ikpi, Okoruwa, and Akinyosoye, (2013), Ayeni-Agbaje and Osho (2015), Adjei (2012), Aryeetey et al. (1994), Aderemi (2003) Areetey and Ahene (2004), Abor and Quartey (2010), among others, outlined some other factors that inhibit the success of SMEs to include: high costs of start-up for firms, as well as licensing and registration requirements, lack of entrepreneurial spirit and drive, high cost of resolving legal claims and too much delays in court proceedings, insufficient market research, overconcentration on one or two markets for finished products, corruption and absence of transparency, absence of succession plans, incapability of producing or paying for a feasibility study or business plan, absence. Other factors include: poor interpersonal skills, untrustworthy employees, economic downturn, narrow thinking and quick-fix anticipations and poor corporate governance, multiple taxation and levies, absence of contemporary technology for processing and preserving products, policy reversals, data insufficiencies and epileptic power supply, insufficiencies occasioned from high decrepit state of infrastructural facilities (roads, water, among others).

Aryeetey et al., (1994) opined that poor quality control and standardization of product, inadequate international marketing experience and limited access to international partners, consistently hinder the expansion of SMEs’ into international markets. Also,

SMEs do not have the necessary information about foreign markets. Steel and Webster (1992) stated that sequel to price liberalization the high cost of local raw materials, together with agricultural goods, was confirmed to be extortionate for smaller enterprises engaging between 10-29 employees in Ghana. Interestingly, Ayeni-Agbaje and Osho (2015) reported that some of the small-scale industrialist come up to bankers with vague projects which banks find no degree of confidence in. Usually, SMEs find it difficult to gain access to suitable technologies and information on techniques which are available. A lot of cases, SMEs employ foreign technology with a limited percentage of joint ownership or leasing, and acquire foreign licenses, since local patents are hard to obtain (Aryeetey, Baah-Nuakoh, Duggleby, Hetting, and Steel, 1994). There still exists a gap in skills in the entire SME sector (Kayanula and Quartey, 2000). This can be adduced to the inability of entrepreneurs to afford the cost of training and advisory services which is high, while some SMEs see no need in upgrading their skills owing to smugness. Several potential entrepreneurs have no clear vision and mission of what they wish to do (Onugu, 2005).

Method Since the broad objective of this study is to examine the effect of SMEs on the growth of Nigeria’s economy, from 1982 to 2012, secondary data on the yearly share of all manufacturing SMEs (independent variable) in Nigeria, in GDP (N Billion) from 1982-2012 and the GDP (N Billion) (dependent variable) were selected from CBN Statistical Bulletin (2002, 2013, 2015), Central Bank of Nigeria, Annual Report and Statement of Accounts (2011; 2012), and National Bureau of Statistics–Job Creation and Employment Surveys (2012). Pearson Product-Moment Correlation Coefficient (PPMCC) was used to measure the strength and direction of the linear relationship between the two variables. Results and discussion


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Table 2: GDP at Current Basic Prices (N’Billion) and SMEs’ Share in GDP (N’Billion) from 1982 to 2012

Sources: CBN Statistical Bulletin (2002, 2013, 2015) Central Bank of Nigeria, Annual Report and Statement of Accounts (2011; 2012). National Bureau of Statistics –Job Creation and Employment Surveys (2012).

Year

GDP at current Basic Prices (N’Billion)

SMEs’ Share in GDP (N’Billion)

% share of SMEs in GDP

1982 101.01 7.89 7.81 1983 110.06 5.55 5.04 1984 116.27 4.93 4.24 1985 134.59 5.90 4.39 1986 134.6 5.67 4.22 1987 193.13 5.96 3.09 1988 263.29 6.73 2.56 1989 382.26 6.84 1.79 1990 472.65 7.37 1.56 1991 545.67 8.05 1.47 1992 875.34 7.66 0.87 1993 1,089.68 7.34 0.68 1994 1,399.70 7.28 0.52 1995 2,907.36 6.88 0.24 1996 4,032.30 6.94 0.17 1997 4,189.25 6.96 0.17 1998 3,989.45 6.98 0.17 1999 4,679.21 7.33 0.16 2000 6,713.57 7.18 0.11 2001 6,895.20 7.48 0.11 2002 7,795.76 507.84 6.51 2003 9,913.52 465.81 4.70 2004 11,411.07 349.32 3.06 2005 14,610.88 408.37 2.80 2006 18,564.59 478.52 2.58 2007 20,657.32 520.88 2.52 2008 24,296.33 585.57 2.41 2009 24,794.24 612.31 2.47 2010 54,612.26 643.07 1.18 2011 62,980.40 694.81 1.10 2012 71,713.94 761.47 1.06


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Table 3: Correlation Analysis between GDP at Current Basic Prices (N’Billion) and SMEs’ Share in GDP

(N’Billion),

GDP at current Basic Prices (N’ Billion) SMEs’ Share in GDP (N’ Billion)

GDP at current Basic Prices (N’ Billion)

Pearson Correlation 1 .844**

Sig. (2-tailed) .000

N 31 31

SMEs’ Share in GDP (N’ Billion)

Pearson Correlation .844** 1

Sig. (2-tailed) .000

N 31 31

**. Correlation is significant at the 0.05 level (2-tailed). H0= Three is no significant relationship between SMEs’ output and GDP Test statistic= Pearson Correlation Level of significance (α) = 0.05 (1%) Level of confidence= 0.95 (95%)

Decision = The Calculated Value for the Pearson correlation is 0.844 which implies that there is a correlation between GDP at current Basic Prices (N’ Billion) (Dependent Variable) and SMEs’ Share in GDP (N’ Billion) (Independent Variable). That means, there is a significant and positive relationship between the variables, while the value

of the significant level is 0.000 which is less than the table value of 0.05. Based on this finding, the null hypothesis will be rejected and the alternate hypothesis which states that there is a significant relationship between GDP at current Basic Prices (N’ Billion) and SMEs’ Share in GDP (N’ Billion) will be accepted.


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Figure 1: Scatter Plot Diagram of SMES’ Share in GDP (N’B) and GDP (N’B) from 1982 to 2012


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Goodness of Fit Test (R2): From the result obtained in the scatter plot, R2 is 0.713 showing a goodness of fit of 71.3%, on the grounds that the explanatory variable explains 71.3% of the explained or dependent variable (GDP). Coefficient of determination (R2) From the result, the coefficient of determination R2 which is 0.713 shows that the explanatory variables adequately explained the behaviour of the dependent variable (GDP). The result shows that approximately 71.3% of the variation in the dependent variable is explained by the explanatory variables.

Conclusion It can be inferred from the result above that there is a significant and positive relationship between SMEs’ growth and GDP in Nigeria, from 1982 to 2005. The Calculated Value for the Pearson correlation is 0.844 which means that there is a correlation between GDP at current Basic Prices (N’ Billion) (Dependent Variable) and SMEs’ Share in GDP (N’ Billion) (Independent Variable). This shows that there is a significant and positive relationship between the variables. Also, the value of the significant level is 0.000 which is less than the table value of 0.05. The study concluded that, there is a significant and positive relationship between SME’s contribution to Nigeria’s Gross Domestic Product (GDP) and Nigeria’s GDP from 1982 to 2012. The paper therefore recommended that Government should make more policies and carry out concerted effort towards the development of SMEs in order to make them further serve as the source of economic growth in Nigeria. References Abiola, B., Iyoha, F., and Joseph, T. (2011).

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