SMEs and Economic Growth in Nigeria: An Autoregressive Distributed Lag Approach

Abstract

This empirical study adopts an autoregressive distributed lag approach in order to examine how small and medium enterprises (SMEs) have contributed to economic growth in Nigeria between 1981 and 2013. We find that investment in SMEs has had a significant and positive impact on economic growth in the country. Given that Nigeria is economically underdeveloped, it is essential that the majority of its (largely rural) population be integrated into the process of economic development through entrepreneurship in small businesses. This means encouraging further investment in SMEs and prioritizing their access to credit facilities, infrastructure development, and capacity building to promote long-run socioeconomic development through this medium.