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Int. j. econ. manag. soc. sci., Vol(3), No (9), September, 2014. pp.

481-489

TI Journals
ISSN:
International Journal of Economy, Management and Social Sciences 2306-7276
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Copyright 2014. All rights reserved for TI Journals.

Institutional Support for Small and Medium Enterprises in Nigeria:


An Empirical Investigation
Ode Egena *
Department of Business Management, Benue State University, Nigeria

Wombo, Dinnah Ngovenda


Department of Business Management, Benue State University, Nigeria.

Ede Ekpe Theresa


Department of Accounting, Benue State University, Nigeria.

Mile Ngodoo Bridget


Department of Economics, Benue State University.Nigeria

*Corresponding author: odeexpress@gmail.com

Keywords Abstract
SMEs This study aims at finding out the impact of institutional support initiatives on SMEs from a firsthand
Support Initiatives perspective of the would-be beneficiaries.The methodology for the study is based upon a survey
Government support questionnaire of 225 SMEs, engaging three or more persons. The Statistical Package for Social Sciences
SME growth (SPSS) was used to analyze the responses. Although the study found out that there exist a relationship
between support initiatives and growth of SMEs, contrary to common presumption that increased business
support (financial and/or non-financial) has a huge influence on business growth; business support did not
have a substantial impact on the growth of SMEs in Nigeria. The study recommends that support agencies
(government or private) should not provide a blanket support for SMEs. Rather, business support should
consider industry diversity and potential for growth as basis for focus and provision of support.

1. Introduction
Over the past few decades, Small and Medium Scale Enterprises (SMEs) have been recognized as a major contributor to economic activity. The
Federation of Small Business, UK records that, as at the start of 2012, the SME sector accounts for almost 99.9% of all private sector firms in
UK, 59.1% of private sector employment and 48.8% of private sector turnover [23]. These figures are not characteristic to UK only. Similar
figures exist for most developed and developing economies like Nigeria.

Research has shown that the SME sector is an important contributor to GDP and economic performance [21] [7] [46]. This reflects why different
countries create an enabling environment for the survival of its business sector.

The performance of the SME sector is closely linked with how the government and private institutions support the growth of business [31].
Across nations, it has been observed that the policy environment (regulatory and legal) is an important contributor to business survival, growth
and a countrys economic performance [7] [5]. As such, Ardagna and Lusardi [7] argue that a country with tight and rigid regulatory
environment is believed to hamper business growth and development.

As the relevance of SMEs to economic development become increasingly important, so too has the policy environment, government
involvement and regulation grown over the years. Basically, regulation serves one of two objectives:

1. Promote competition

2. Mitigate the adverse effects of business activity on individuals and other organizations

Although, entrepreneurship can also take place in large firms, the SME sector is an exceptional vehicle for entrepreneurial activity in any nation.
This is not only because it generates a large chunk of employment, but, mostly because most of the start-up activity sprouts from SMEs. The
SME sector is also an important source of innovation, new products and service development. In addition, the SME sector is a key element for
social cohesion and regional development.

This explains why governments and various international institutions focus on small firms and entrepreneurship as indispensable elements in any
policy or plan to promote economic growth and development. Within this framework, recent research has focused on the effects of regulation
and government support on SME performance.
Egena Ode *, Dinnah Ngovenda Wombo, Theresa Ekpe Ede, Bridget Ngodoo Mile 482

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

Various reasons account for why government and the private sector support SMEs. Some of the reasons include: increased competition,
providing a platform for future growth, developing supply chains, increased economic flexibility, promoting innovation and generation of new
ideas, among others.

Aside the aforementioned, advocates of public support for SMEs advance several reasons. One of such reasons is that, market failures cause
biases for SMEs [40]. Statistics show that three out of every five businesses fail within the first month [12]. This fragility of SMEs, especially
start-up SMEs explains why they require support. Secondly, the small size of SMEs creates cost disadvantage. When compared to larger firms,
SMEs do not have the same capacity to influence the environment in their favour, while larger firms do. More so, regulations impose
disproportionate costs on SMEs and private institutional agreements are more costly to SMEs due to their lack of economies of scale [40].

Finally, SMEs require support because they are limited in capability development. This is not just because of their small size, but SMEs not
only, but usually also lack the management capacity. Most times, SMEs cannot afford costly support services (e.g., financial, legal, human
resources, training). This makes the ability to access and analyze information particularly weak for SMEs. In addition, their absorptive capacity
is poor.

Despite all the efforts to support SMEs due to their fragility, Auget and St-Jean [50] acknowledged that SME owner-managers do not appear to
make maximum use of the services available. Again, most of them who are willing, either do not have access to the support initiatives, or
understand the relevance of the services the agencies provide, or they simply do not seem to know enough about the agencies working in their
region. Several researchers have stressed the importance of creating enabling policies and initiatives to support enterprise and entrepreneurship
in Nigeria [37] [9] [17] [3].

Although, the private sector is not well developed in Nigeria like the UK or US, the sector performs an important role in employment generation,
poverty reduction and national development. Despite being an important driver of economic growth, the sector is faced with a myriad of
problems. The government and private institutions make efforts to boost enterprise and encourage the development of the sector by initiating
various programmes of support for SMEs. What is not established is whether these initiatives really get to the SMEs or drive SME growth. This
research aims at finding out the impact of government support initiatives on the SMEs from a firsthand perspective of the would-be
beneficiaries. Therefore, the major hypothesis for testing is to identify whether (if) there exits significant relationship(s) between enterprise
support initiatives and the growth of small and medium scale enterprises.

2. Methodology
The primary data for this study was gathered from a combination of survey questionnaires and semi-structured interviews of key informants. The
population for this study consists of all registered small and medium scale enterprises in Benue State, Nigeria. The research frame and sample
was drawn from 1276 SMEs, engaging three or more persons, identified by the Department of Planning and Statistics, Ministry of Finance and
Economic Planning, with operations based in, but not limited to Benue State.

The research study was conducted using stratified sampling technique in selecting respondents from the SMEs in Benue State that have an
operating life span of at least 3 consecutive years. The stratified sampling technique is a probability sampling method, which ensures that
different groups within the population are adequately represented. Respondents were randomly selected from the groups in such a way that every
group within the population was represented. The objective is to reduce cost, save time and ensure accuracy in data presentation and analysis.

The Creative Research Systems survey software was used to calculate the required sample size. The sample size was based on a confidence level
of 95% with a 5% margin of error. A sample size of 295 was used for the study. The sample was drawn from the agricultural sector,
manufacturing, food and beverage processing, wholesale and retail, transport and communication, leisure and hospitality, professional services,
and financing sectors respectively.

The study made use of both primary and secondary sources of data. Primary data was collected through questionnaire administration and
telephone interview. Secondary data was collected from the directories of companies, government publications, bulletins, annual reports,
textbooks, online articles and journal articles. Questionnaires and in-depth telephone interviews were used to obtain the required data from
respondents.

Out of the two hundred and ninety five questionnaires sent out to SMEs, two hundred and twenty five responses constituting 76.3% were
collected. Female owner - managers (28.9%) were half the size of the male owners (62.2%). 8.9% of the sample had a shared ownership between
males and females. Majority of the respondents were from a non-business background (57.8%), while the reminder (42.2%) of the SME owner-
managers studied a business related course. 42.2% of the respondents had between five to ten years of experience prior to start-up. 28.9% of the
respondents had three to five years experience while, 13.3% had over ten years of experience. This signifies that majority of the owner-managers
had the required experience prior to start-up.

3. Literature Review
3.1 Definition of Small and Medium Scale Enterprises
It has been established that the SME sector is an important engine of growth for developing economies. This is not only because SMEs are very
essential for creating competitive and efficient markets, but the sector is an important tool for poverty reduction and the largest provider of
employment in most countries. Zoltan et al [41] sums this up by noting that the future economic prosperity of many economies depends
considerably on the extent to which it promotes entrepreneurship and the development of SMEs.
483 Institutional Support for Small and Medium Enterprises in Nigeria: An Empirical Investigation

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

There is no consensus definition for SMEs. This is because the term small and medium are relative terms, and vary from one country to
another, and from industry to industry. This lack of consensus definition is reflected in a study by Georgia Institute of Technology identified
over 55 different definitions [27] of SMEs in 75 different countries. The different definitions are usually subjective and sometimes based on
quantitative or qualitative judgments.

Despite the lack of consensus in the definition of SMEs, the US Committee for Economic Development, a small business must have at least two
of the following features [4]:

a. The manager is independent considering that the manager owns the business.
b. The capital is supplied and ownership is held by an individual or few individuals.
c. The operations are primarily local, although the market may not be local.
d. When compared to the larger competitors in the industry, the business is usually small.

The definition of SMEs can be classified either quantitatively or qualitatively [42]. The quantitative definitions use size, turnover, balance sheet
total and the number of employees as a criterion for defining SMEs while the qualitative definitions focus on special characteristics that
distinguish them from larger corporations. Most qualitative definitions try to establish a linkage between the owner and the enterprise.

Most known definitions of SME are quantitative; however, there should be a limit to using the quantitative definitions. This is due to industry
specific differences. This section will address the different definitions of SME in the UK, EU, and Nigeria. A small firm can be defined in terms
of employment, assets, turnover or any other subjective quality. The committee regarded small business as independent, with small market share
and owned and managed by same individual.

For the purpose of this study the definition [11] below will be adopted.

Micro firm: Up to nine employees


Small firm: Up to 49 employees (includes micro)
Medium firm: 50249 employees
Large firm: 250 employees and over

3.2 Government Support and SME Growth in Nigeria


Despite the enthusiasm expressed by the Nigerian government and support agencies, very little effort is devoted to objective analysis of the
impacts in terms of the desired outcomes or objectives. Government agencies, researchers and policymakers want to know if the support
initiatives have really been successful. This is because the government in an attempt to address the challenges of SMEs and spur growth has
invested in numerous initiatives. A review of the literature summarizes these initiatives into three broad categories:

1. Those designed to encourage the provision of financial services to SMEs

2. Those designed to encourage the provision of non-financial services to SMEs (i.e. business development)
3. Those that are established to improve the business environment in which SMEs operate

Several studies have revealed the dynamic role of small and medium scale enterprises as catalyst for economic growth, employment generation
and general development of developing countries such as Nigeria [29] [28]. Despite the important role these enterprises play in the development
of the economy, these SMEs face a wide variety of challenges ranging from high cost of operation, poor infrastructure, funding, inappropriate
government policies or poor implementation and poor management [51]. This study seeks to identify and assess comprehensively, the impact of
enterprise support programmes on the growth of small and medium scale enterprises, with particular emphasis on Benue State.

Subsequently, previous studies have identified a number of factors affecting the growth of SMEs ranging from lack of training and experience,
insufficient profits, poor infrastructure and inadequate demand [36]. Many of the studies attribute the source of failure to financial resources but
capital alone is not the major factor behind business failure. As highlighted [36] studies have shown that there could be a negative relationship
between the rate of growth and capital. It is believed that to carry out a successful business, additional capital is not often a requisite, because
creativity, innovativeness and initiative usually compensate for the extra capital [36]

A number of studies have empirically studied the factors which influence the growth of SMEs [19] [44] [25] [16] [20] [28]. In an earlier research
[19] which developed a model of SME growth. He identified growth as a function of ability, need and opportunity and the reason for the
variation in growth rates among firms. Similar to Davidssons analysis, Storey [44] in his contribution concluded that access to resources, type of
growth strategy and firms specific characteristics determine the growth of firms. Another empirical study [25] identified seven key factors
affecting SME growth. The factors include: the availability of outside assistance, the personal characteristics of the owner, marketing policy,
motivation, market characteristics and strategic management. It is important to note Halls findings on the availability of outside assistance as a
determinant of growth. His thesis supports this research which seeks to establish the impact of support initiatives on SME growth.

Cheng [16] in his study to identify the determinants of SME growth, provides evidence that the managerial style adopted by owner-managers,
together with the amount of risk they are willing to take, are strong influence of SME growth. He identified four factors: characteristics of
owner-managers, the nature of the firm, the business strategy and external factors, if combined appropriately, as stimulators of growth.

The findings [1] in a more recent research are somewhat consistent with the earlier findings [16] [19] [20] [44], except on employment and
sales/assets.

He [1] concluded that employment, on one hand and sales and assets on the other hand are not interchangeable criteria for measuring growth.
But a comparison using the two variables, measured over two different time spans yielded similar results. The research also concluded that
Egena Ode *, Dinnah Ngovenda Wombo, Theresa Ekpe Ede, Bridget Ngodoo Mile 484

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

entrepreneurs characteristics such as education, need for achievement, attitude, previous experience, family background, self efficacy, locus of
control and creativity should form a valid foundation for a business selection for support. This is because, it is believed, business owners with the
aforementioned characteristics posses more potential to grow their business. A study conducted [7] which aimed at identifying factors
influencing the growth of SMEs also agreed with previous studies. They established that SME growth is largely influenced by firm and owner-
manager characteristics. In addition, they identified job satisfaction as a strong influence on SME growth.

3.3 Policies, Strategies and Government Support for SMEs in Nigeria


Nigeria has undergone several political and economic changes over the past few years. The Nigerian economy could best be described as
predominantly agrarian before the oil boom of the 1970s with agriculture accounting for the larger percentage of the national output. The
discovery of oil drastically transformed the Nigerian economy [6]. This affected agriculture which was the main source of income for the
economy. The industrial sector was also badly affected and this made enterprise and entrepreneurship to experience a slothful growth since
1970s.

The economic policy orientation was inward-looking, with a huge emphasis on protection and government controls, which led to an
uncompetitive manufacturing and enterprise sector [17]. To reverse the worsening economic fortunes in terms of declining growth, increasing
unemployment, galloping inflation, high rate of poverty, deteriorating balance of payment conditions, overwhelming debt burden and increasing
flawed fiscal deficits, among others, government embarked on several policies to boost the private sector as an engine of growth in the economy.
The Nigerian government has introduced several support programmes and policies.

These programmes and policies cut across all sectors to promote and facilitate entrepreneurship. The educational sector is not left out as the
government also introduced entrepreneurship modules in the syllabus of all undergraduate courses in Nigeria [3]. This is aimed at encouraging
entrepreneurship in Nigeria in attempt to stem the high rise in unemployment.

In Nigeria, like most countries of the world, entrepreneurship is seen as a major contributor to the overall GDP. The performance of this sector is
closely linked to how the government promotes its development by way of policies and programmes designed to support new business as well as
create the enabling environment for the continuous survival of the existing businesses [31].

Several researchers have stressed the importance of creating enabling programmes and policies of support that promote enterprise and
entrepreneurship in Nigeria [37] [17] [3] [9]. Since independence in 1960, several governments have embarked on projects, policies and
programmes aimed at stimulating and promoting entrepreneurship. Several authors have reviewed the various policy frameworks and classified
them in diverse perspectives. Some of these perspectives will be discussed in this section.

Oluremi [37] classified the various programmes into two categories namely Entrepreneurship Development Programmes/Institutions (EDP) and
Finance/Micro-credit Programmes and Institutions. He [37] argues that EDPs consist of policies and programmes designed to develop, stimulate,
and enhance the performance and capacities of Nigerian entrepreneurs while the second category consist of programmes aimed at providing
credit facilities for entrepreneurs. The classification was extended [9] by subdividing all the broad enterprise and entrepreneurship policies and
support programmes in two categories. His classification includes Government Intervention Strategies (GIS) and Private/Market led strategies
(PMS). GIS strategies are government led strategies while PMS strategies are private Sector driven [7]. The GIS approach which may be direct
or indirect can be through direct government participation, establishing SMEs and SME promotion institutions, technical institutions, provision
of infrastructural facilities and creating enabling environment through policies and incentives. The indirect approach may be through public
policy (indirect policy), giving preferential treatment to Small Scale Industrialist (SSI), encouraging savings and reinvestment and any other
measure that enhances the distribution of income to the poor [9].

There has been some criticism of government involvement in entrepreneurship [9]. The critics argue that business is business and must be
performed only by business [9].This belief has led to the introduction of privatization and commercialization policies in developing countries.
In Nigeria, the process of privatization and commercialization dates back to 1965 but saw major implementation in 1999 when the Public
Enterprises (Privatization and the Commercialization) Act in 1999 empowered the Bureau for Public Enterprises to change emphases from
commercialization to encouraging core investors, and promoting foreign investment in the privatization programme.

This does not in any way justify the lack of involvement by government in the promotion of enterprise and entrepreneurship. Several authors
have argued that the government should provide institutional support to encourage and enhance entrepreneurship [33] [9] [36]. The role of
government in promoting entrepreneurship cannot be overemphasized. In Nigeria, the government has embarked on different policies and
programmes to encourage enterprise and entrepreneurship because of the role this important sector plays in economic development, poverty
reduction, employment generation and income generation [29] [38]. The table below [34] shows a compilation of some major policies and
programmes of support for enterprise and entrepreneurship in Nigeria between 1960-2012.

4. Analysis and Findings

Table 2 interestingly revealed that majority of the sampled SMEs (57.8%) did not receive any support (private or government) whatsoever.
Several reasons could be responsible for this. St-Jean [50] explains that SME owners do not appear to make maximum use of the various
initiatives available. Again, most of the SMEs who are willing either do not have access to the support initiatives and agencies, or they do not
seem to know enough about the agencies or initiatives of support within their region.
485 Institutional Support for Small and Medium Enterprises in Nigeria: An Empirical Investigation

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

Table 1: Typology of Small Enterprise Policy and Initiatives of Support in Nigeria (1960-2012)

S/no Support Initiative Objective Remarks


1 Import Substitution policy to encourage the production of primary products and encourage This negated the original aim since almost every
Strategy the production of those items originally imported. The main aim was to item needed by the so-called industries was
lessen over-dependence on foreign trade and save foreign exchange imported
2 Export Promotion Realizing the obvious pitfalls of the import substitution strategy, Lack of incentives and raw materials had led to
Strategy Nigeria added the strategy of export promotion and exportation of new the failure of this strategy.
products and those originally imported. To encourage and implement
this policy, the Nigerian Export promotion Board was established.
3 Balanced Development This policy was adopted as a result of the lopsided development of the The initiative was not sustained
Strategy industrial sector. The main aim of balanced development of all
industries is to promote greater linkages within the sector. That is, the
government wanted to create intra-industry linkages and inter-sectional
linkages so that intra-industry transactions could increase
4 Local Resource Strategy As a result of the dwindling oil revenue and foreign exchange for the This strategy helped in the maximum utilization of
importation or materials and spare parts, the government decided to lay local resources as well as help save foreign
emphasis on the strategy of industrializing by local sourcing of raw exchange, among other merits.
materials
5 Structural Adjustment The programme represented a fundamental shift in the basic philosophy The initiative failed to adequately meet the
Programme of economic management at the national level. a set of measures intentions and, in some cases, have worsened the
intended to achieve recovery and growth. The SAP was continued in a conditions in contemporary Nigeria.
3-year Economic Consolidation Expansion Programme (ECEP)
6 Privatization and The Public Enterprises (Privatization and the Commercialization) Act in The policy entails detaching the enterprises from
commercialization 1999 empowered the BPE to change emphases from commercialization government departments and ministries and make
to encouraging core investors, and promoting foreign investment in the them to be a cost accountability centres as done
privatization programme. in the private sector. Government was relieved
releasing of subvention to the enterprises.
7 Small Scale Industries To provide financial and technical support for SMEs in Nigeria Inadequate manpower to sustain the initiative
Credit Scheme
8 National Open To promote acquisition of skills and youth entrepreneurship in Nigeria It has been observed that there is high shortage of
Apprenticeship Scheme tools, participants are either paid in arrears and
(NOAS) drop-out rate is high (Usiwoma, et al, 2005)
9 National Directorate of To design and implement programmes to combat mass unemployment Poor implementation and lack of commitment
Employment (NDE) and develop work programmes to reduce poverty and attitudinal change
to enable Nigerian Youths to accept skills acquisition
10 The Family Economic To encourage and stimulate the growth of the informal sector through Discontinued
Advancement capacity building and providing credit support.
Programme (FEAP)
11 Small and Medium To facilitate the access of micro, small and medium entrepreneurs and Still making progress. Its effects are not yet felt by
Enterprise Development investors to all resources required for their development most SMEs in Nigeria
Association of Nigeria
(SMEDAN)
12 Small and Medium The Scheme requires all banks in Nigeria to set aside ten (10) percent of Selective implementation
Enterprises Equity their Profit After Tax (PAT) for equity investment and promotion of
Investment Scheme small and medium enterprises to stimulate growth and generate
(SMEEIS) employment
13 Industrial Development Provision of extension services to SMEs in project appraisal and Poor funding and implementation
Centres (IDCs) training
14 Bank of Industry (BOI) It was reconstructed in 2001 out of the Nigerian Industrial Fund is for more established entrepreneurs
Development Bank (NIDB) Limited to provide financial and business
support services for SMEs
15 The Nigerian Bank for To provide soft loans to Small Scale Industrialist. Became Insolvent
Commerce and Industry
16 National Economic To stimulate the rapid rise of real production enterprises in Nigeria The Fund and the Industrial Development Centres
Reconstruction Fund were handed over to SMEDAN
(NERFUND)
17 Peoples Bank Aimed at making banking services more accessible and extend credit to Discontinued
the poor.
18 Community Bank To provide banking credit accessible to the active poor. Discontinued/Replaced with Micro Finance Banks
19 Better Life To provide credit and support to women Discontinued
Programmes/Family
Support Programme
(BLP/FSP)
20 Micro Finance Banks A flexible structure & processes aimed at providing financial services Lack national spread, have high interest rate and
to micro entrepreneurs and poor and low income population on a lack of belief in the Banks caused by bankruptcy
sustainable basis

21 National Economic A programme aimed at laying a solid foundation for sustainable poverty The key elements of this strategy was the renewed
Empowerment Strategy reduction, employment generation, wealth creation, and value privatization, de-regulation and liberalization
(NEEDS) reorientation. programme (to shrink the domain of the public
sector and buoy up the private sector) which has
not yet achieved its stated objectives
Egena Ode *, Dinnah Ngovenda Wombo, Theresa Ekpe Ede, Bridget Ngodoo Mile 486

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

Table 2: Respondents response for Business support


Frequency Percent Valid Percent Cumulative Percent
Valid No 130 57.8 57.8 57.8
Yes 95 42.2 42.2 100.0
Total 225 100.0 100.0

Support Initiatives and Number of Employees

Table 3 below presents a crosstabulation of SMEs with or without Support and number of employees. Overall, 130 SMEs without support
employed more staffs, except SMEs that employ between 50-250 employees. In the category of 10-49 employees, SMEs with and without
support tallied, with 30 SMEs in each category. A closer look at the table shows that, 20 SMEs with support had the overall highest number of
employees, ranging from 50-250. Hence, it would be fair, based on the result, to conclude that support initiatives have an impact on SME
growth, in terms of the number of staff employed.

The characteristics of the sampled SMEs, in terms of size, educational background, sex, experience prior to start-up and access to business
support is consistent with the findings of Cheng [16] His study identified four factors that influence the growth of SMEs: characteristics of
owner-managers, the nature of the firm, the business strategy and external factors, such as business support. If these characteristics are combined
appropriately, they can stimulate growth. The study is also consistent with the findings [8] which aimed at identifying factors influencing the
growth of SMEs. As noted earlier, the study established that SME growth is largely influenced by firm and owner-manager characteristics.
Furthermore, Isaga [28], argued that employment, on one hand, and sales and assets on the other, are not interchangeable criteria for measuring
growth. But a comparison using the two variables yielded similar results.

Table 3: Support Initiatives and Number of Employees


Business support
Total
No Yes
Employees 10 - 49 employees Count 30 30 60
% within Business support 23.1% 31.6% 26.7%
50 - 250 employees Count 15 20 35
% within Business support 11.5% 21.1% 15.6%
Less than 10 employees Count 85 45 130
% within Business support 65.4% 47.4% 57.8%
Total Count 130 95 225
% within Business support 100.0% 100.0% 100.0%

Comparison between SMEs with financial and non-financial support


Findings from the survey and the interviews have come out with some interesting points regarding characteristics of SMEs in Benue State,
Nigeria. A one-way ANOVA was used to examine whether there were statistically significant differences in SMEs that received financial and
non-financial support in relation to their overall rating of their businesses. The results revealed statistically significant differences among the two
groups, F (3.612) = 7.245, p = .007 for financial support and F (2.580) = 5.065, p = 0.38 for non-financial support. Based on the Games-Howell
Post-hoc test, the difference in mean for survey respondents who said financial support initiatives highly improved their SMEs (M = 3.50, SD =
1.37), not sure (M= 3.50, SD = .889), unimproved (M = 3.27, SD = 1.557) showed statistically significant differences between SMEs at 0.05
level of significance. Games-Howell Post-hoc test for SMEs with non-financial support further revealed a statistically significant difference
between SMEs. There was also a statistically significant difference between SMEs who indicated that non-financial support improved their
performance (M = 2.43, SD = 1.07), not sure (M = 3.50, SD = .889) and unimproved (M = 2.69 SD = 1.45) at a significance level of 0.05.

Table 4: ANOVA Test Results


Sum of Squares df Mean Square F Sig.
Financial Support Between Groups 28.979 4 7.245 3.612 .007
Within Groups 439.235 219 2.006
Total 468.214 223
Non-financial Support Between Groups 20.259 4 5.065 2.580 .038
Within Groups 431.963 220 1.963
Total 452.222 224

Test of Hypothesis
The One-sample Kolmogorov-Smirnov Z test was used to estimate the parameters of the sample before the test of hypothesis. This procedure
estimates the parameters from the sample. The sample mean and sample standard deviation are the parameters for a normal distribution, the
sample minimum and maximum values define the range of the uniform distribution. The sample mean is also the parameter for the Poisson
distribution, and the sample mean is the parameter for the exponential distribution.
487 Institutional Support for Small and Medium Enterprises in Nigeria: An Empirical Investigation

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

The output shows an N of 225 (the sample size) and a mean of 2.02. The rating was based on a minimum of 1 (Strongly Agree) and a maximum
of 5 (Strongly Disagree). The results show the Asymp. Sig (2-tailed) of .000. Since the p-value is less than 0.05 (p < .05), indicating that there is
no reason to doubt the distribution is normal, so it was safe to proceed with the t-test.

An independent sample t-test was conducted to examine whether there is a significant relationship between support initiatives and SME growth,
in relation to the SME rating of the impact of support initiatives. The test reveals a statistically significant relationship between variables (df =
224, p < 0.01).

The independent samples t-test information to ascertain whether there is a significant difference between support initiatives and SME growth.
The output shows an N of 225, a standard deviation of 1.344 and a mean of 2.02. As we already know from the prior test, the t-test output has a
Sig. (2tailed) / p-value of .000. A p-value of .000 means that the probability of randomly drawing a sample of 225 from a population with a mean
of 3 (neither agrees nor disagrees) and getting a sample mean as low as 2.02 purely by chance is 0.00%. In other words it is unlikely to have
occurred by chance and is more likely the case that the mean is not as hypothesized. Given the significant result found, it can be conclusively
argued that the sampled SMEs reported significantly that there is a significant relationship between government support initiatives and SME
growth.

Since the research is based on a significance level of .05, and the p-value is less than .05 (p<.05), the null hypothesis which states that there is
no relationship between enterprise support initiatives and the growth of small and medium scale enterprises is rejected.

However, support for a business is not a guarantee for growth [36]. His [36] analysis showed that, to carry out a successful business, additional
capital (financial support) is not often a requisite, because creativity, innovativeness and initiative usually compensates for the extra capital.
Similarly, Davidsson [19], in his study, developed a model of SME growth. He identified growth as a function of ability, need and opportunity
and the reason for the variation in growth rates among firms. Finally, the determinants of SME growth, provides evidence that the managerial
style adopted by owner-managers, together with the amount of risk they are willing to take, are strong influence of SME growth [16].

These findings are also supported by the statistic from the sample indicating 57.2% of the sampled businesses received no support (financial
and/or non-financial). This section further provides answers to the second research question.

Even though it has been established that there is a relationship between support initiatives and business growth, a crosstabulation of the sampled
SMEs show more interesting insights. The results shows that SMEs without support, performed above those that received support in all the
category of turnover used for the survey, except SMEs with turnover above 1m (81%). Overall, SMEs without business support had a total of
57.8%, within the categories of turnover over SMEs that received support (42.2).

5. Conclusion and Recommendation


The issue of business support has been at the centre of a heated debate among various stake holders, academics and policymakers. Some argue in
favour of business support while others are against the provision of business support, especially financial support. The SME sector perform a
dynamic role and has been considered as an important catalyst for creating employment, poverty reduction, economic development and
improved economic performance of developing nations, like Nigeria. This study was driven by the rate of business failure in Nigeria, and Benue
State in particular. This study has empirically evaluated the impact of support initiatives on the growth of small and medium scale enterprises in
Nigeria, specifically focusing on Benue State. Although the study found out that there exist a relationship between support initiatives and the
growth of SMEs, contrary to common presumption that increased business support (financial and/or non-financial) has a huge influence on
business growth; business support did not have a substantial impact on the performance of SMEs in Nigeria. Apart from the fact that the
ownership of SMEs in Nigeria is dominated by men, the study found that majority of the owners is educated, with majority having prior
experience to start-up.

Specifically, the study finds that SMEs without any form of support, performed better than those which received support, in terms of the number
of staffs employed and turnover. The study attributes the findings to the difference in sectors of sampled SMEs. That is, some sectors naturally
performed more than others due to the peculiarities of the sector, because market demand for their various products and services differ. Also,
there was a significant difference between firms that received support (financial and/or non-financial) and those that do not.

The study also notes that its findings do not necessary mean that business support is not necessary for growth. Rather, support agencies
(government or private) should not provide a blanket support for all SMEs. Largely, a huge proportion of the SMEs received no support, yet they
performed reasonably well. Business support should consider industry diversity and potential for growth as basis for focus and provision of
support.

As earlier mentioned in the methodology section, this piece of research work does suffer from several limitations which in the future is expected
to be improved upon One major limitation for this study was the access to Data. This was due to the large size and infinite nature of the small
and medium scale enterprises in Nigeria, and a lack of a comprehensive database of registered SMEs. To have a comprehensive analysis of the
impact of support initiatives on SME growth, we need to have tick by tick Data, as well as a very detailed data on the SMEs and related records
over time. However, accessing that kind of Data needed financial resources beyond the means of this study.

There is also evidence of some crucial and other important factors which impact SME growth that were not given much or detailed attention.
Some of the factors which can impact on growth include: training and experience, insufficient profits, poor infrastructure, inadequate demand,
characteristics of owner-managers, the nature of the firm, the business strategy, job satisfaction and external factors. These highlighted areas that
may merit more comprehensive attention in future research studies.
Egena Ode *, Dinnah Ngovenda Wombo, Theresa Ekpe Ede, Bridget Ngodoo Mile 488

International Journal of Economy, Management and Social Sciences Vol(3), No (9), September, 2014.

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