EFFECTS OF ENVIRONMENTAL FACTORS ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES (SMEs) IN ABUJA, NIGERIA

Abstract

The world over, small businesses in-terms of SMEs accounts for about 60% to 80% of employment generation in the economy. This implies that the SMEs sector constitutes the largest employer of labour in many economies of the world and particularly in Africa and Nigeria in specific. Therefore, understanding the factors negating or improving the performance of this very important sector becomes desirable and germane. This study examines the effect of environmental factors on the performance of SMEs in Abuja metropolis.The target population of the paper constitutes two thousand six hundred and ninety (2690) registered SMEs operating within Abuja metropolis. A
sample size of 97 respondents was determined using the Yamane formula at 10% precision level. A random sampling technique as well as stratified sampling were used in selecting the sample size of the study. Both descriptive and inferential statistics were employed to analyze the data obtained. The findings revealed that level of education of SMEs owners or managers,spending on marketing
and other promotional activities, and the use of technology exact positive impact on the performance of SMEs. The current tax regime and operationalization as well as inflation also exact positive effect on the performance of SMEs.Inadequate power supply significantly negates the performance of SMEs in Abuja metropolis. The study recommends that the owners and or managers of SMEs should strive to acquire necessary and good understanding of the business environment and ensure hiring of competent and quality employees for effective running and managing of their businesses. The paper also recommends that government should continue to provide more tax incentives to SMEs sector in order to trigger more employment within the economy.