PROPOSAL ON THE IMPACT OF MACROECONOMICS POLICY ON THE GROWTH AND DEVELOPMENT OF SMALL SCALE BUSINESS IN NIGERIA

Abstract

There are so many variables that determine the economic growth of a Nation, one of which is macroeconomics variables. Macroeconomics variables includes, but not limited to real gross domestic product (RGDP), Fiscal and Macroeconomic policy, Foreign exchange policy and many others. This study examines the impact of macroeconomic policy on the growth and development of small scale businesses in Nigeria. This study however recommends that there should be continuity in programmes and policies of government. Programmes and policies should not change with regime change. There should be a deliberate and conscious effort on the part of government and policy makers to design programmes and policies that are people oriented, home grown and have the capacity to promote and sustainable growth and development.

CHAPTER ONE

INTRODUCTION

In today’s modern world, Small and Medium scale Enterprises (SMEs) is one of the most authentic drivers of sustainable development, especially in the emerging economies. Historical evidence of SMEs as tool of economic development can be observed in the 19th century Europe, when the continent’s economy is absolutely under the control of cottage industries, most which were actually SMEs (Onwukwe, 2002). The status quo only changed during the industrial revolution and consequent introduction of mass production. But the mass production model was undermined by the twin oil shocks of the 1970s, which prompted an unanticipated reappraisal of the important roles of SMEs in the global economy (Onwukwe, 2002). Most empirical studies conducted over the years revealed that SMEs are crucial for the socio-economic growth and development of every country. For instance, Oboh (2003) observes that the development of SMEs was instrumental to the economic boom of the American nation between the 1970s and 1980s. Similarly, the Indian’s Gross Domestic Product (GDP) witnessed consistent growth and economic transformation in the 20th and 21st century and this development was attributed to the success of the country’s SMEs programme (Oboh, 2003; APEC, 2002).

Currently, there are many issues confronting the Nigerian economy and these include abject poverty and unemployment. According to Onwukwe and Ifeanacho (2011), these issues are partly caused by the country’s failure to ensure proper implementation of sustainable development programmes. Obviously, the lack of recognition for such sustainable development programmes, especially those that are capable of enhancing SMEs’ growth, is responsible for the current economic state of our country. The situation is further compounded by the government’s attitude of indifference and apathy, which contributes directly to the current dire situation of the country’s economy. According to Onwukwe (2002), the progressive decline in the average Nigerian’s per-capita income has forced more than 50% of the country’s population to find themselves below poverty line. It is sad to note that despite the 100% increase in Global wealth; almost 50% of the global population still lives on $2 per day (Onwukwe and Ifeanacho, 2011). Of course, Nigeria like most other developing countries falls under this category. Consequently, Nigeria failed to achieve the first target of the Millenium Development Goals (MDGs), which is to ensure a 50% reduction of poverty by 2015. As pointed out by Onwukwe and Ifeanacho (2011), the fight for poverty alleviation in Nigeria and other African’s country is grossly inadequate. According to the authors, despite its abundant natural resources, Nigeria remains in the list of the poorest countries of the world. The 2004 annual report published by the Central Bank of Nigeria revealed a declining performance of the country’s economy. Over the years, the country’s domestic economy witness excessive monetary expansion, which has resulted to high demand pressure on foreign exchange. The next result of this trend is a consistent depreciation of the country’s official currency in all segments of the market. The economy is largely characterized by persistent structural bottleneck, which has in turn frustrated every attempt on quick economic recovery.

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