SMES AND SUSTAINABLE EMPLOYMENT: A PATH TO ECONOMIC RENEWAL IN NIGERIA

Abstract

Nigeria, a nation rich in investment potentials, business opportunities, and abundant human and natural resources, grapples with a persistent challenge of high unemployment rates, particularly among its youth population. Despite its resource endowments, the country's unemployment crisis has escalated over the years, as evidenced by the National Bureau of Statistics' (2021) report indicating an alarming rise in unemployment rate from 27.1% in the second quarter of 2020 to 33.3% by the end of the same year. The impact of the COVID-19 pandemic has exacerbated this issue, leading to widespread job losses and layoffs. Moreover, the influx of approximately four million new entrants into the labor market each year after graduating from higher institutions, as noted by Okorie and Ibegbulem (2014), further strains the employment landscape. This crisis not only threatens the economic fabric of the nation but also its social stability. In light of this dire situation, it becomes imperative to explore viable avenues for addressing unemployment and fostering economic growth. One promising avenue is the development of small and medium scale enterprises (SMEs). SMEs have been defined through various lenses. The Nigerian industrial policy, as outlined by Okonkwo and Obidike (2016), delineates SMEs based on investment ranges between N100,000 and N2 million, excluding land but incorporating working capital. The Central Bank of Nigeria (2010) establishes SMEs by assessing asset bases (excluding land) between N5 million and N500 million, coupled with a labor force of 11 to 300 employees. However, Ibrahim (2011) widens the scope by defining SMEs as businesses distinct from public limited liability companies, encompassing even those with capital below N5 million. This research critically examines the multifaceted dimensions of SMEs in Nigeria and their potential to mitigate the unemployment crisis. The study delves into the diverse interpretations of SMEs, shedding light on their capital-based definitions and broader criteria. The investigation evaluates the role of SMEs as a feasible solution to unemployment and a driver of economic progress. By analyzing their contributions to job creation, innovation, and inclusive growth, this study seeks to provide valuable insights for policymakers, entrepreneurs, and stakeholders striving to address Nigeria's pressing unemployment challenge. Through an in-depth analysis of SMEs' impact on the employment landscape and the broader economy, this research underscores the importance of nurturing and supporting these enterprises to foster sustainable development and enhance social stability.