Evaluation of the Role of Social and Economic Infrastructure in the Promotion of Business Activities in Nigeria (A Case Study of Some Selected SMEs in Abuja)
Chapter One
OBJECTIVES OF THE STUDY
The main aim of the study is to evaluate the role of economic and social infrastructure in promoting business activities in Nigeria. The specifi objectives are:
- To identify infrastructure challenges that affect business activities in FCT Abuja.
- To evaluate the specific roles played by both economic and social infrastructures in promoting business activities in FCT Abuja.
- To suggest entrepreneurial policies that will enhance the operations of small and medium scale businesses in FCT Abuja.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Introduction
In this section, we review relevant empirical works and their evidence on the relationship between infrastructural development and manufacturing performance focusing on developed and developing economies. Ijaiya and Akanbi (2009) empirically analysed the long run effect of infrastructure on industrialisation in Nigeria using the error correction mechanism. The model used a non-linear production function of Cobb-Douglas to determine the influence of infrastructure on industrial development in Nigeria and found that long-run relationship exists between infrastructure and industrialisation. It also found that transportation converges faster than any other facility, and that communication facilities and electricity supply diverged from the long-run equilibrium position, thus negating the initial apriori expectation. Adenikinju (1998) examined the impact of government investment on manufacturing performance in Nigeria. He used two indicators, government investment in social infrastructure and economic infrastructure, as priorities for government investment, while manufacturingperformance is measured by the efficiency of production total factor productivity. However, the findings show mixed results. While investment in social infrastructure seems to have strong position effects on manufacturing productivity, investment in economic infrastructure has a negative effect. The finding in respect of the government expenditure on economic infrastructure supports earlier studies by De Melo and Urata (2004) which reported a negative relationship between public spending on economic infrastructure and economic growth. Adenikinju (1998) suggested that reductions in public investment, especially in the areas of wealth and education, may reduce long-run growth trend in manufacturing productivity. The study found that government expenditure on economic infrastructure has a retarding effect on manufacturing productivity. Chete and Akpokodje (1997) examined the possibility of public investment influencing private investment in Nigeria and observed that public investment crowds in private investment in the country. Busari and Olaniyan (1998) conducted a similar study covering a period of 1970 to 1994. They argued, through a bivariate framework, that inflation uncertainty as well as fiscal deficit uncertainty negatively impacted private investment decision. A weak negative relationship was also confirmed between exchange rate uncertainty and private investment in Nigeria. To further determine this relationship, Ekpo (1999) carried out a study on the relationship between private investment and public investment in order to determine the influence that different classes of public spending exerts on private investment. It was observed in the study that capital expenditure on agriculture has positively influence on investment spending in Nigeria, while capital spending on health and education positively and significantly impacted private investment. Similarly, Bamidele and Englana (1998) researched into the nexus between private investment behaviour and macroeconomic environment in Nigeria and came up with the findings that government policy reversals, poor infrastructural facilities and political instability are responsible for the high cost of running business in the country. The study affirmed that macroeconomic stability, export diversification, transparency, reliable and efficient infrastructure are necessary factors that can enhance the growth of Nigeria. Akpan (1998) explored the various fiscal incentives adopted by the Nigerian government to stimulate investment in the manufacturing sector, and the factors hindering the achievement of the objectives. He pointed out that fiscal incentives can be more efficient and effective in increasing investment in the manufacturing sector’s production activities. He found that the problems that curtail the chances of policy success are both economic and socio-political. For instance, the infrastructural base of the Nigerian economy is very inefficient, thus leading to high cost of production with discouraging impacts on the manufacturing investment.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine Evaluation of the Role of Social and Economic Infrastructure in the Promotion of Business Activities in Nigeria. Selected Smes in Abuja form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain evaluation of the Role of Social and Economic Infrastructure in the Promotion of Business Activities in Nigeria. Selected Smes in Abuja . In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of evaluation of the Role of Social and Economic Infrastructure in the Promotion of Business Activities in Nigeria.
Summary
This study was on evaluation of the Role of Social and Economic Infrastructure in the Promotion of Business Activities in Nigeria. Selected Smes in Abuja. Three objectives were raised which included: To identify infrastructure challenges that affect business activities in FCT Abuja, to evaluate the specific roles played by both economic and social infrastructures in promoting business activities in FCT Abuja, to suggest entrepreneurial policies that will enhance the operations of small and medium scale businesses in FCT Abuja. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from selected SME in Abuja. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
The major findings emanating from the study have it that economic and Social infrastructure do not contribute significantly to manufacturing sector performance in Nigeria. The relationship between growth of government capital expenditure and manufacturing value added is positive but very low. This can be attributed to high level of corruption and inefficiency in government sector. Growth of government spending on education has a positive but insignificant effect on manufacturing value added. The effect of growth of government expenditure on health on manufacturing value added is negative. Electricity generation and consumption have negative effect on manufacturing sector performance. This implies inefficiency in the country’s power sector in the country. Teledensity has a positive impact on manufacturing sector performance. Inflation rate negatively impact on manufacturing sector performance due to its influence on high operating cost of manufacturing companies. Prime lending rate depresses performance of the manufacturing sector.
Recommendation
To ensure that this is realised, the current industrial climate must be restructured such that it can promote industrial performance and make the country a hub for least cost industrial production. To this end, government should put in every effort to make the Nigerian industrial environment very conducive and attractive through the provision of adequate infrastructure back-up such as supply of utilities in terms of electricity, water, sewage, telephone services, postal services, security services, custom services, judiciary and health care services. It should also embark on the maintenance of deficient infrastructures and institute a very strong institutional framework for the country. Finally, high lending rate must be addressed by policy makers to ensure that firms have access to credit at a reasonable cost.
References
- Adenikinju A. F. (1998), “Government investment and Manufacturing Performance in Nigeria, Nigeria economic Society, Rekindling Investment for Economic Development in Nigeria.
- Adenikinju A. and Olofin, S.O. (2000) Economic Policy and Manufacturing Sector Growth Performance in Africa, Nigerian Journal of Economics and Social Studies, vol 42, No1. Pp 67-80.
- Akpan, G.E. (1998). Fiscal Incentive and Manufacturing Investment in Nigeria. In Rekindling Investment for Economic Development in Nigeria. Proceedings of the Annual Conference. N.E.S
- Akpokodje, G. (1998). Macroeconomic Policies and Private Investment in Nigeria. In: Ben A. Aigbokhan, ed: Rekindling Investment for Economic Development in Nigeria. The Nigerian Economic Society, Ibadan. pp 59-74.
- Bain, H. (2004) “Prices, costs and profits in Canadian manufacturing: The influence of tariffs and concentration”. Canadian Journal of Economics, vol. 28; November.
- Bamidele, A and Englana, A. (1998). ‘Macroeconomic Environment, Investment Stimulation and Economic Growth and Development: The Nigerian Experience’, in RekindlingInvestment for Economic Development in Nigeria: Proceedings of the Annual Conference of the Nigerian Economic Society, pp 75-101.
- Bhagwati, J. (2008) “Export promoting trade strategy: Issues and evidence”. World Bank Research Observer, Vol. 2, No 1.
- Busari, T. D. and Olaniyan, O. (1998). ‘Aggregate Investment and Policy Uncertainty’, Rekindling Investment for Economic Growth in Nigeria: Proceedings of the Annual Conference of the Nigerian Economic Society (NES), pp 457-473.
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