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Impact of Petroleum on SMEs Growth in Nigeria

Author

Listed:
  • Sam, B.A. TENDE

    (Department of Business Administration, Faculty of Administration, Nasarawa State University, Keffi)

  • Ezie OBUMNEKE

    (Department of Economics, Faculty of Humanities, Social and Management Sciences, Bingham University, Karu, Nasarawa State)

Abstract

The study undertakes an empirical research on the impact of petroleum on small and medium scale enterprises (SMEs) development in Nigeria. The log linear error correction model was adopted to examine how petroleum price (PP), Imported petroleum (IMP) and domestically produced petroleum (DPP) had impacted on Nigeria’s SMEs. Unit root test was carried out on each of the variables to determine their level of stationarity. They were however found stationary after first difference (that is, they are all integrated of order one (I(1)), then it was safe to proceed with Johansen Cointegration Test. The integrated variables were then used for the regression analysis. The cointegration result showed that the variables used in the model have a long term, or equilibrium relationship between them. It was observed that from the analysis that PP and IMP were found to be statistically insignificant and both had negative relationships with SMEs development Nigeria, while DPP had a positive impact and is statistically significant. Due to the underproduction of the Nigerian petroleum refineries, the government had to resort to importation of the shortfall which also has its cost implications on its sales and distribution. Local manufacturers and farmers had to pay more for transporting their goods and services to the markets. Incessant price hikes of petroleum products have led to crisis and industrial actions led by some pressure groups in Nigeria which has caused distortion in the SMEs activities of Nigeria overtime The study thus recommends that the down-stream oil need to be deregulated to allow private investors come in to build in more refineries so as to produce the petroleum at a relatively lower cost to propel the growth of SMEs in the country.

Suggested Citation

  • Sam, B.A. TENDE & Ezie OBUMNEKE, 2014. "Impact of Petroleum on SMEs Growth in Nigeria," International Journal of Entrepreneurial Knowledge, Center for International Scientific Research of VSO and VSPP, vol. 2(2), pages 4-14, December.
    • Handle: RePEc:jek:journl:v:2:y:2014:i:2:p:4-14
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    File URL: http://ijek.org/files/IJEK_2-2014v2/ijek_2-2014,v.2_tende,s.obumneke,e..pdf
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    References listed on IDEAS

    as
    1. Gylfason, Thorvaldur, 2001. "Natural resources, education, and economic development," European Economic Review, Elsevier, vol. 45(4-6), pages 847-859, May.
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    Cited by:

    1. Adi Wijaya & Muhammad Awaluddin & A. Erwin Kurniawan, 2022. "The Essence of Fuel and Energy Consumptions to Stimulate MSMEs Industries and Exports: An Empirical Story for Indonesia," International Journal of Energy Economics and Policy, Econjournals, vol. 12(2), pages 386-393, March.
    2. Edeh, Jude N. & Acedo, Francisco J., 2021. "External supports, innovation efforts and productivity: Estimation of a CDM model for small firms in developing countries," Technological Forecasting and Social Change, Elsevier, vol. 173(C).
    3. Jaromír Vrbka & Jakub Horák & Tomáš Krulický, 2022. "The influence of world oil prices on the Chinese Yuan exchange rate," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 9(4), pages 439-462, June.

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    More about this item

    Keywords

    Petroleum; SME; Nigeria;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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