Roles of SME in Developing Countries: Nigeria as a Case Study

The impacts of SMEs in Africa cannot be belittled. SME (Small Medium Enterprise) can be defined as an enterprise capable of employing maximum of 35-100 workers. It must be clearly stated that some organizations do define small scale enterprises in terms of their value of assets, or in terms of turnover an number of staff employed.

It is accepted that small scale business forms the bedrock of any nation’s industrial take off especially in a typical developing country like Nigeria, in the following ways:
SMEs provide more employment per unit of capital invested because they are generally more labour intensive.
SMEs generally source their raw materials locally while a good number of large units rely on imported raw materials. In this era of scare foreign exchange, industries that source their raw materials locally stand a better chance of becoming more prosperous.
SMEs encourage indigenous entrepreneurship which will help to develop man-power techniques. SMEs will also help develop our non-oil sector especially agro-allied industries which may offset rural migration.
SMEs will help form the technological base where such industries would start from small units operating and innovating indigenous technology to suit our particular needs and utilizing local value of resources products, equipments and man power.
SMEs would aid larger industries by manufacturing raw material input and generally act as catalyst to larger industries thereby generating the desired forward and backward linkages required to build a healthy vibrant industrial base.
SMEs make possible the act of self-employment and self-employed. Self-employment can be defined as an alternative source of income created by someone with a trained skill as to support public service job or to cure a problem of unemployment. Self-employment does give the employee the opportunity of engaging in his trade or business talents. It prevents trauma of undergoing job-selection interview. It also gives a sense of fulfillment.
An overall look at the SMEs sector would reveal macro-economic facts pointing to developments that would enhance more income parity, raise capacity utilization of industries, lower inflation by producing more and creating competition.
Further development of SMEs would also increase GDP and will overall raise the standard of living in Nigeria.


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