Impact of Operational Issues and Financial Performance on the Growth of Small Medium Enterprises in Kwara State, Nigeria

Abstract

Small and Medium Scale Enterprises (SMEs) in Nigeria particularly the block making industry face many challenges, ranging from managerial, financial to operational. These problems are more pronounced at developmental phases than when they are well entrenched in the market. This study is therefore designed to examine the impact of operational issues and financial performance of block making industry. A total of 465 out of 500 SME respondents in the block making industry completed the questionnaire; systematic random sampling technique was used for the selection of the SMEs. Descriptive statistics were used to summarize the socio-demographic characteristics of the respondents while multiple regression analysis,was used to analyze the data collected. The finding of the study revealed that advertisement budget adequacy (p-value = 0.020), government fiscal measures (p-value = 0.033) and operational attitude (p-value = 0.000) as the most significant factors impacting on financial performance of block making industry and they jointly explained 96.6% of the total variation of the financial performance of the industry (R2 = 0.966); The study concluded that government needs to strengthen SMEs support institutions such as Bank of Industry to operate in full capacity as the apex bank and allied banks must administer individual loan to SMEs to upgrade the position of SMEs development in Nigeria. In the light of the above, the study recommended that government should restructure and promote SMEs sources of finance such as the Bank of Industry, the small scale credit guarantee scheme because of its greater economic benefits to facilitate improvement in working capital adequacy, efficiency, growth and development to the sector.