IIARD International Institute of Academic Research and Development

INTERNATIONAL JOURNAL OF SOCIAL SCIENCES AND MANAGEMENT RESEARCH (IJSSMR )

E-ISSN 2545-5303
P-ISSN 2695-2203
VOL. 10 NO. 10 2024
DOI: 10.56201/ijssmr.v10.no10.2024.pg115.133

---

Growth of Micro Small and Medium Enterprises (MSMEs) in Nigeria: Implication of Fuel Subsidy Removal

Owota, Perelayefa George, PhD, Mansi, Nera Ebenezer, PhD

---

Abstract

The study investigated the effect of subsidy removal on the growth trajectory of micro, small, and medium-scale enterprises (MSMEs) in Nigeria, with a specific focus on Bayelsa state. Utilizing a survey research design, the study aims to examine the effects of transportation and operational costs on both revenue generation and access to finance for MSMEs. The population of the study comprises 548,349 registered MSMEs in Bayelsa state, with a sample size of 400 MSMEs selected for data collection through questionnaire administration. The study relies solely on primary data sources. The findings of the study indicate a significant positive effect of transportation costs on revenue generation for MSMEs in Bayelsa state. Similarly, transportation costs demonstrate a moderate positive effect on access to finance for MSMEs. Furthermore, the study highlights a significant positive effect of operational costs on revenue generation, along with a modest but significant positive effect of operational costs on access to finance for MSMEs. Based on these findings, recommendations are proposed to improve transportation infrastructure, enhance operational efficiency, promote financial inclusion, and adopt a supportive policy framework tailored to the diverse needs of MSMEs in Bayelsa state

keywords:

Subsidy removal, Business growth, Transportation

---

References:

Ajayi, O. I., Ajuwon, O. S., & Ikhide, S. (2021). Access to finance and performance of services
sector MSMEs in Nigeria. Oradea Journal of Business and Economics, 6(2), 8-20.
Ajuwon, O. S., Ikhide, S., & Akotey, J. O. (2017). MSMEs and employment generation in
Nigeria. The Journal of Developing Areas, 51(3), 229-249.
Ajuwon, O., Ikhide, S., & Akotey, J. (2018). Financing MSMEs (Micro Small and Medium
Enterprises) in Nigeria: Implications of Transaction Costs.
Alabi, F. A., David, J. O., & Aderinto, O. C. (2019). The impact of government policies on business
growth of SMEs in South Western Nigeria. International Journal of Management Studies
and Social Science Research, 1(2), 1-14.
Alfaro, L., & Chen, M. X. (2018). Transportation cost and the geography of foreign
investment (pp. 369-406). Edward Elgar Publishing.
Ayadi, R., & De Groen, W. (2014). Micro-, Small-and Medium-Sized Enterprises with High-
Growth Potential in the Southern Mediterranean: Identifying Obstacles and Policy
Responses.
Babajide, A. A., Oluwaseye, E. O., Lawal, A. I., & Isibor, A. A. (2020). Financial technology,
financial inclusion and MSMEs financing in the south-west of Nigeria. Academy of
Entrepreneurship Journal, 26(3), 1-17.
Bazilian, M., & Onyeji, I. (2012). Fossil fuel subsidy removal and inadequate public power supply:
Implications for businesses. Energy Policy, 45, 1-5.
Bhattacharyya, R., & Ganguly, A. (2017). Cross subsidy removal in electricity pricing in
India. Energy policy, 100, 181-190.
Ebitu, E. T., Glory, B., & Alfred, U. J. (2016). An appraisal of Nigeria’s micro, small and medium
enterprises (MSMEs): Growth, challenges and prospects. British Journal of Marketing
Studies, 4(5), 21-36.
Evans, O., Nwaogwugwu, I., Vincent, O., Wale-Awe, O., Mesagan, E., & Ojapinwa, T. (2023). The
socio-economics of the 2023 fuel subsidy removal in Nigeria.
Evans, O., Nwaogwugwu, I., Vincent, O., Wale-Awe, O., Mesagan, E., & Ojapinwa, T. (2023). The
socio-economics of the 2023 fuel subsidy removal in Nigeria.
Harring, N., Jönsson, E., Matti, S., Mundaca, G., & Jagers, S. C. (2023). Cross-national analysis
of attitudes towards fossil fuel subsidy removal. Nature Climate Change, 13(3), 244-249.
Idachaba, F. E. (2010). Telecommunication cost reduction in Nigeria through infrastructure sharing
between operators. Pacific Journal of Science and Technology, 11(1), 272-276.
Ikenga, A. F., & Oluka, N. L. (2023). An examination of the benefits and challenges of the fuel
subsidy removal on the Nigerian economy in the fourth republic. International Journal of
Applied Research in Social Sciences, 5(6), 128-142.
Ikuemonisan, E. S., & Akinbola, A. A. (2019). Welfare effects of transportation cost and food price
volatility in the context of globalization in Nigeria. African Journal of Food Science, 13(6),
111-119.
Ilodigwe, A. O. (2023). Fuel Subsidy Removal and Its Negative Impact on Small and Medium
Scale Enterprises. Journal of Education, Humanities, Management and Social Sciences
(JEHMSS), 1(4).
Inegbedion, H. E., Inegbedion, E., Obadiaru, E., & Asaleye, A. J. (2020). Petroleum subsidy
withdrawal, fuel price hikes and the Nigerian economy. International Journal of Energy
Economics and Policy, 10(4), 258-265.
Iwarere, H. T. (2014). The need for cost audit in enhancing reliance in the disclosed operational
performance of organisations: The case of Nigeria. African Journal of Business
Management, 8(9), 300-306.
Jewell, J., McCollum, D., Emmerling, J., Bertram, C., Gernaat, D. E., Krey, V., ... & Riahi, K.
(2018). Limited emission reductions from fuel subsidy removal except in energy-exporting
regions. Nature, 554(7691), 229-233.
Kalu, N. E. (2012). Understanding Africa’s China policy: A test of dependency theory and a study
of african motivations in increasing engagement with China. Political Science Department
-- Theses, Dissertations, and Student Scholarship. 21.
Litman, T. (2009). Transportation cost and benefit analysis. Victoria Transport Policy Institute, 31,
1-19.
Majekodunmi, A. (2013). The political economy of fuel subsidy removal in Nigeria. International
Journal of Management and Social Sciences Research, 2(7), 76-81.
Mpi, D. L. (2019). Encouraging micro, small and medium enterprises (MSMEs) for economic
growth and development in Nigeria and other developing economies: The role of'the Igbo
apprenticeship system.'. The Strategic Journal of Business & Change Management, 6(1),
535-543.
Nienhüser, Werner (2008) : Resource dependence theory: How well does it explain behavior of
organizations?, Management Revue, ISSN 1861-9916, Rainer Hampp Verlag, Mering, Vol.
19, Iss. 1/2, pp. 9-32.
Nwafor, M. E., & Onya, O. V. (2019). Road transportation service in Nigeria: Problems and
prospects. Advance Journal of Economics and Marketing Research, 4(3).
Ogunode, N. J., & Aregbesola, B. G. (2023). Impact of Subsidy Removal on Nigerian Educational
System. Middle European Scientific Bulletin, 39, 105-116.
Ohonba, N., & Ogbeide, S. O. (2023). Premium Motor Spirit (PMS) Subsidy Removal and
Implications on Businesses and Economy in Nigeria. African Development Finance
Journal, 6(2), 133-147.
Ojeme, J. O., Okatahi, A., & Aliyu, T. (2018). The impact of fuel subsidy removal on small
businesses financing in Nigeria (a case study of fedepoly Nsarawa microfinance bank
ltd). African Journal of Business and Economic Development| ISSN, 2782, 7658.
Omotosho, B. S. (2020). Oil price shocks, fuel subsidies and macroeconomic (in) stability in
Nigeria. Fuel Subsidies and Macroeconomic (In) stability in Nigeria (February 20, 2020).
Oseni, E., & Oseni, E. F. (2015). Achieving inclusive economic growth and development in
Nigeria through MSMEs. Journal of Economic & Financial Studies, 3(04), 30-40.
Oseni, E., & Oseni, E. F. (2015). Achieving inclusive economic growth and development in
Nigeria through MSMEs. Journal of Economic & Financial Studies, 3(04), 30-40.
Radas, S., Ani?, I. D., Tafro, A., & Wagner, V. (2015). The effects of public support schemes on
small and medium enterprises. Technovation, 38, 15-30.
Rentschler, J., Kornejew, M., & Bazilian, M. (2017). Fossil fuel subsidy reforms and their impacts
on firms. Energy Policy, 108, 617-623.
Rodrigues, A. (2015). Cash transfer of subsidy & its impact on micro small and medium enterprise
in Goa. International Journal of Advanced Research in Management and Social
Sciences, 4(9), 33-53.
Solarin, S. A. (2020). An environmental impact assessment of fossil fuel subsidies in emerging and
developing economies. Environmental Impact Assessment Review, 85, 106443.
Tambunan, T. T., & Busnetty, I. (2015). Impacts of energy subsidy reform on MSMEs and their
adjustment strategies.
Tekola, H., & Gidey, Y. (2019). Contributions of micro, small and medium enterprises (MSMEs)
to income generation, employment and GDP: Case study Ethiopia. Journal of Sustainable
Development, 12(3), 46-81.
Thomas, A., & Olaniyiolowu, A. (2016). Enhancing the Growth of Small and Medium Scale
Enterprises (SMEs): The Nigeria Paradox. International Journal of Management
Sciences, 7(3), 145-151.
Yao, X., Ma, S., Jia, N., & Ling, S. (2022). How subsidy removal affects the new energy vehicle
industrial chain: Empirical evidence from China. Available at SSRN 4106713.

DOWNLOAD PDF

---

Back