The Effect of Small Scale Enterprises on Poverty Reduction In Nigeria

International Journal of Economics and Management Studies

© 2020 by SSRG - IJEMS Journal

Volume 7 Issue 4

Year of Publication : 2020

Authors : Ololade Tolulope Ibi-Oluwatoba, Abiodun Thomas Ogundele, Olaoye Claudius Awoniyi, Isaac Olaitan Okeya

10.14445/23939125/IJEMS-V7I4P107

How to Cite?

Ololade Tolulope Ibi-Oluwatoba, Abiodun Thomas Ogundele, Olaoye Claudius Awoniyi, Isaac Olaitan Okeya, "The Effect of Small Scale Enterprises on Poverty Reduction In Nigeria," SSRG International Journal of Economics and Management Studies, vol. 7,  no. 4, pp. 38-45, 2020. Crossref, https://doi.org/10.14445/23939125/IJEMS-V7I4P107

Abstract:

The objective of this study examined the effect of small and medium-scale enterprises on poverty reduction in Nigeria, using annual time series data sourced from the CBN Annual Report of various issues. SMEs were proxied by the ratio of commercial bank credit to SME's to private sector credit, (RCP), microfinance credit to SME's (MCS), Inflation (INF), and interest rate (INT), while poverty was proxied by the incidence of poverty (PI). The model built was estimated using autoregressive distributed lag bound test and Vector Error Correction Mechanism (VECM). It was found that there exists a long-run relationship between SME's and poverty reduction. However, the error correction mechanism was not rightly signed and found to be insignificant, difficult to be adjusted in the long run. While DLRCP and LINF had a negative effect on DLPI, indicating (PI) reduction. DLMCS and LINT had a positive impact on DLPI. It found that DLMCS causes variation in DLPI, and DLRCP while LINT and LINF cause less change on poverty level in Nigeria. In conclusion, there is a significant relationship between SME's and poverty reduction in Nigeria. The study recommended that microfinance banks should provide loans and overdrafts to SMEs to solve the problem of poverty.

Keywords:

Small and medium scale enterprises, poverty reduction, unemployment, economic growth, Nigeria.

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