Determinants of Small Enterprises’ Survival Rate in the Suburban Area of Lagos State: Implication for Using SMEs as Strategy for Urban Development in Lagos State
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Date
2020
Authors
Saibu, O.
Bello, A.
Journal Title
Journal ISSN
Volume Title
Publisher
Faculty of Social Sciences, University of Lagos
Abstract
In recent times, significant attention has been focused on small and medium scale enterprises in developing countries because of their potential for diversification and expansion of industrial production, as well as job creation. But unfortunately, despite the plausible significance of these firms, the performance of SMEs has been disheartening and the mortality rates of these enterprises remain extremely high. Considering this, this study investigated the factors responsible for SME disheartening performance and high mortality (failure) rate using Shomolu LGA-one of the highly SMEs concentrated clusters in Lagos state as the case study. Structured questionnaires were administered to collect data on 200 SMEs that have to be in existence for at least 5 years. Following the analysis of data and discussion of findings, the major findings are that: the survival rate of SMEs in Lagos is 42.2% and the average time to fail for SMEs in Lagos state is about 10 years. However, the manufacturing SMEs have the highest survival rate (53.8%) and longest time to fail (18 years) followed by services with a 40% survival rate and 10 years as a time to fail while trade has a 43% survival rate but the least time to survive. The finding shows that the major source of finance for SMEs in Lagos state is owners’ savings while the high cost of production is the major problem of SMEs in Lagos state. The study also found that inadequate finance is the major cause of SME death and low sales are the major initial sign businesses show before they collapse. It was also established that the top priority in the intervention and assistance, the SME sub-sector, required from the government to strengthen their survival rate is increasing access to affordable credit facilities.
Description
Scholarly articles
Keywords
Entrepreneurship , Survival rate , Business incubation , SME , Nigeria , Research Subject Categories::SOCIAL SCIENCES::Business and economics::Economics
Citation
Saibu M O and Bello A (2020) Determinants of Small Enterprises’ Survival Rate in the Suburban Area of Lagos State: Implication for Using SMEs as Strategy for Urban Development in Lagos State in Readings in UN Sustainable Development Goals (SDGs) and the Lagos Region Edited by Saibu et al Chapter 11 Pp 211-242