INSTITUTIONAL CHALLENGES CONSTRAINING SMES PRODUCTIVITY GROWTH IN NIGERIA

Abstract

Small and medium-sized enterprises (SMEs) are crucial to Nigeria's economy, fostering entrepreneurship and innovation across industries, yet they encounter internal and external institutional barriers hampering their growth and productivity. This study investigates the impact of institutional challenges such as government bureaucracy, corruption, regulatory complexity, import limitations, etc., on the Nigerian SMEs, utilizing transaction costs and new institutional economic frameworks to identify barriers to SME productivity growth. Through a comprehensive review of literature and empirical studies, the research unveils the interconnected challenges facing Nigerian SMEs and their profound effects on economic development. At the national level, government bureaucracy, corruption, speech restrictions, and import limitations present significant hurdles to SME productivity, hindering operating efficiency, trust, and innovation. Regional assessments highlight diverse challenges across Nigeria, particularly in the North Central and South West regions, necessitating tailored interventions and strategic changes for a conducive business environment. The study concludes with recommendations to address institutional impediments and unlock the full potential of Nigerian SMEs, advocating for simplified regulatory frameworks, enhanced anti-corruption measures, and the promotion of government stability.