Role of Small and Medium Scale Enterprises in Poverty Reduction in Nigeria
Abstract
This study examines role of small and medium scale enterprises in poverty reduction in Nigeria from 2002Q1 to 2023Q4 using the ARDL bounds approach and Granger causality tests. The bounds test confirms a long-run relationship among the variables. Long-run results show that poverty and unemployment significantly hinder SME performance, while FDI, GDP, and population are insignificant. In the short run, GDP exerts a negative and significant effect on SMEs, suggesting growth that is not inclusive. Granger causality reveals that SMEs drive both FDI and GDP, underscoring their pivotal role in growth and investment attraction. Conversely, FDI influences GDP and population but not SMEs. The findings highlight SMEs as critical for sustainable development yet constrained by structural challenges. The study recommends strengthening SME support, aligning FDI with domestic enterprises, and reducing poverty
Keywords
Small and Medium Enterprises (SMEs)Foreign Direct Investment (FDI)
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