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  3. Vol. 48 No. 2 (2023): Africa Development: Special Issue on Covid-19 Pandemic and African Economies (Including a Revised Text of the Second Thandika Mkandawire Annual Memorial Lecture)
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Vol. 48 No. 2 (2023): Africa Development: Special Issue on Covid-19 Pandemic and African Economies (Including a Revised Text of the Second Thandika Mkandawire Annual Memorial Lecture)

Issue Published : August 24, 2023

5 - Impact of Covid-19 Pandemic on the Financial Performance of SMEs in Nigeria: A Study of the South East Geopolitical Zone

https://doi.org/10.57054/ad.v48i2.5082
Stella Okoroafor

Corresponding Author(s) : Stella Okoroafor

stella.okoroafor@umonarch-email.ch

Africa Development, Vol. 48 No. 2 (2023): Africa Development: Special Issue on Covid-19 Pandemic and African Economies (Including a Revised Text of the Second Thandika Mkandawire Annual Memorial Lecture)
Article Published : August 24, 2023

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Abstract

This article explores the impact of the Covid-19 pandemic on the financial performance of small and medium-scale enterprises (SMEs) in the South East geopolitical zone of Nigeria. The study objective was to determine the extent to which the Covid-19 pandemic affected the revenue of SMEs, their profitability and their access to credit. The target population for the study were registered SMEs in the South East geopolitical zone of Nigeria, being Abia, Anambra, Ebonyi, Enugu and Imo. Using purposive sampling method, thirty SME owners from each zone were selected for the study, giving a total of 150 SME owners. The study adopted a quantitative research method, using a questionnaire. The findings revealed that the Covid-19 pandemic significantly reduced the profitability and revenue of SMEs but not their access to credit. The study therefore recommended the need for business owners to minimize cost and look for possible innovations/opportunities to grow sales and improve revenue. Also government should make soft loan available to SMEs to help cushion the effect of the pandemic on their financial performance. Finally, future research should consider other related variables that have not been covered in this article.

Keywords

Nigeria SMEs financial performance Covid-19 pandemic

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Stella Okoroafor 2023. 5 - Impact of Covid-19 Pandemic on the Financial Performance of SMEs in Nigeria: A Study of the South East Geopolitical Zone. Africa Development. 48, 2 (Aug. 2023). DOI:https://doi.org/10.57054/ad.v48i2.5082.
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References
  1. Abideen, S., 2020, Coronavirus (Covid-19) and the survival of Small and Medium Enterprises in Abeokuta, Ogun State Nigeria, Scholars Journal of Economics, Business and Management, Vol. 7, pp. 209–214.
  2. Aderemi, T.A., Ojo, L.B., Ifeanyi, J.I., and Efunbajo, S.A., 2020, Impact of corona virus (Covid-19) pandemic on small and medium scale enterprises (SMEs) in Nigeria: a critical study, Acta Universitatis Danubius: Oconomica, Vol. 16, No. 4, pp. 251–261. https://dj.univ-danubius.ro/index.php/AUDOE/article/view/268/593
  3. Amuda, Y., 2020, Impact of Coronavirus on Small and Medium Enterprises (SMEs): Towards post-Covid-19 economic recovery in Nigeria, Academy of Strategic Management Journal, Vol. 19, No. 6.
  4. Bank for International Settlements, 2020, Covid-19 and corporate sector liquidity. https://www.bis.org/publ/bisbull10.pdf. Accessed 31 August 2021.
  5. Bularafa, B.A., and Adamu, U.G., 2021, Effect of Covid-19 pandemic on SME performance in Nigeria, Advanced International Journal of Business, Entrepreneur- ship and SMEs, Vol. 3, No. 7, pp. 75–92.
  6. Carpenter, R.E. and Peterson, B.C., 2002, Is growth of small firms constrained by internal finance? The Review of Economic Statistics, Vol. 84, No. 2, pp. 298–309.
  7. Chen, J., 2021, Prospect theory. Investopedia 23 July 2021. https://www.investopedia.com/terms/p/prospecttheory.asp. Accessed 20 March 2022,
  8. Collins, C.N., 2020, Effect of Covid-19 Pandemic on global stock market value: A differential analysis, Acta Universitantis Danubius. Economica, Vol. 16, No. 2, pp. 261–275.
  9. Cucinotta, D., and Vanelli, M., 2020, WHO declares Covid-19 a pandemic, Acta Biomedica, Vol. 91, No. 1, pp. 157–160.
  10. Deloitte, 2020, International Accounting Standard (IAS 18). https://www.iasplus.com/en/standards/ias/ias18 Accessed 11 February 2022.
  11. Dushime, A., and Osele, A., 2021, Nigeria: an overview of the economic impact of the coronavirus pandemic in Nigeria. Mondaq 1 September 2021. https://www.mondaq.com/nigeria/tax-authorities/1107286/an-overview-of-the-economic-impact-of-the-coronavirus-pandemic-in-nigeria. Accessed 26 March 2022.
  12. Enesi, O., and Ibrahim, U., 2021, Effect of Covid-19 pandemic on the performance of Small and Medium Business Enterprises in Abuja-FCT, Nigeria, Open Journal of Business and Management, Vol. 9, pp. 2261–2276.
  13. Ganale, M.A., and Zafar, F., 2020, Impact of Covid-19 (Coronavirus) on Small and Medium Enterprises (SMEs) in Pakistan. Small and Medium Enterprises Development Authority (SMEDA). SMEDA Research Journal View Project.
  14. Giang, M.H., Trung, B.H., Yoshidal, Y., Xuan, T.D., and Que, M.T., 2019, The causal effect of access to finance on the productivity of small and medium enterprises in Vietnam, Sustainability, MDPI, Open Access Journal, Vol. 11, No. 19, pp. 1–19.
  15. Herbert, D., 2022, Covid-19’s impacts on SMEs and policy recommendations in response, The National Law Review, Vol. 12. https://www.natlawreview.com/article/covid-19-s-impacts-smes-and-policy-recommendations-response
  16. Islam, D.Z., Khalid, N., Rayeva, E., and Ahmed, U., 2020, Covid-19 and financial perfor- mance of SMEs: Examining the nexus of entrepreneurial self-efficacy, entrepreneu- rial resilience and innovative work behavior. https://revistaclinicapsicologica.com/data-cms/articles/oldissue/20200918055741am.pdf. Accessed 28 August 2022.
  17. Jackson, J.K., Weiss, M.A., Schwarzenberg, A.B., and Nelson, R.M., 2021, Global economic effects of Covid-19. Congressional Research Service. 10 November 2021.
  18. James, P., 2021, The Federal Republic of Nigeria Unemployed Nigerians. This Day, 2 December 2021. https://www.thisdaylive.com/index.php/2021/12/02/the-federal-republic-of-unemployed-nigerians/. Accessed 29 January 2022.
  19. Mallum, F., and Kadiri, Y.S., 2020, An analysis of the impact of Covid-19 on the Nigerian economy. https://www.researchgate.net/publication/344797193. Accessed 31 January 2022.
  20. Organization for Economic Co-operation and Development (OECD), 2020, Finan- cing SMEs and entrepreneurs: An OECD Scorebord. Special Edition: The impact of Covid-19. OECD SME and Entrepreneurship Papers.
  21. Ohia, C., Bakarey, A.S. and Ahmad, T., 2020, Covid-19 and Nigeria: putting the rea- lities in context, International Journal of Infectious Diseases, Vol. 95, pp. 279–281.
  22. Ojukwu, C.O., 2021, Impact of Covid-19 on financial performance of micro-en- terprises in Nigeria, Journal of Good Governance and Sustainable Development in Africa (JGGSD), Vol. 6, No. 1, pp. 1–17.
  23. Okey-Colbert, E.U., Chinakwe, P.C., and Aguwambe, I.J., 2020, Emerging challenges and opportunities of Coronavirus (Covid-19) pandemic for Small and Medium Enterprises (SMEs) in Nigeria. Maiden Virtual International Conference, 27–28 August 2020.
  24. Oyedokun, G.E., and Taiwo, A.O., 2022, Income taxes and financial performance of small and medium enterprises in Nigeria. https://www.researchgate.net/publication/357474848_INCOME_TAXES_AND_FINANCIAL_PERFORMANCE_OF_SMALL_AND_MEDIUM_ENTERPRISES_IN_NIGERIA. Accessed 20 March 2022.
  25. Oyelola, O.T., Ajiiboshin, I.O., Raheem, S., and Igwe, C.N., 2013, Entrepreneurship for sustainable economic growth in Nigeria, Journal of Sustainable Development Studies, Vol. 2, No. 2, pp. 197–215.
  26. Ozili, P., 2020, Covid-19 pandemic and economic crises: The Nigeria experience and structural causes. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3567419. Accessed 26 March 2022.
  27. Prasad, R., 2021, The effect of Covid-19 pandemic on financial performance of Indian SMEs: comparative evidence from manufacturing, service and pharmaceutical sector, SKBU Business Review, Vol. 1, No. 2.
  28. Stobierski, T., 2020, 13 financial performance measures managers should monitor. https://online.hbs.edu/blog/post/financial-performance-measures. Accessed 12 February, 2022.
  29. Sullivan-Taylor, B., and Branicki, L., 2011, Creating resilient SMEs: why one size might not fit all, International Journal of Production Research, Vol. 49, No. 18, pp. 5565–5579.
  30. Syriopoulos, K., 2020, The impact of Covid-19 on entrepreneurship and SMEs, Journal of International Academy for Case Studies, Vol. 26, No. 2.
  31. United Nations Development Program (UNDP), 2021, September 13. The impact of Covid-19 on business enterprises in Nigeria. United Nations Development Programme, 13 September 2021. https://www.ng.undp.org/content/nigeria/en/home/library/mdg/the-impact-of-covid-19-on-business-enterprises-in-nigeria.html. Accessed 13 March 2022.
  32. World Health Organization (WHO), 2020, Coronavirus Disease (Covid-19). https://www.who.int/health-topics/coronavirus#tab=tab_1. Accessed 27 January 2021.
  33. Yadav, A. and Igbal, B.A., 2021, Socio-economic scenario of South Asia: An overview of impact of Covid-19, Sage Journals, Vol. 28, No. 1, pp. 20–37.
Read More

References


Abideen, S., 2020, Coronavirus (Covid-19) and the survival of Small and Medium Enterprises in Abeokuta, Ogun State Nigeria, Scholars Journal of Economics, Business and Management, Vol. 7, pp. 209–214.

Aderemi, T.A., Ojo, L.B., Ifeanyi, J.I., and Efunbajo, S.A., 2020, Impact of corona virus (Covid-19) pandemic on small and medium scale enterprises (SMEs) in Nigeria: a critical study, Acta Universitatis Danubius: Oconomica, Vol. 16, No. 4, pp. 251–261. https://dj.univ-danubius.ro/index.php/AUDOE/article/view/268/593

Amuda, Y., 2020, Impact of Coronavirus on Small and Medium Enterprises (SMEs): Towards post-Covid-19 economic recovery in Nigeria, Academy of Strategic Management Journal, Vol. 19, No. 6.

Bank for International Settlements, 2020, Covid-19 and corporate sector liquidity. https://www.bis.org/publ/bisbull10.pdf. Accessed 31 August 2021.

Bularafa, B.A., and Adamu, U.G., 2021, Effect of Covid-19 pandemic on SME performance in Nigeria, Advanced International Journal of Business, Entrepreneur- ship and SMEs, Vol. 3, No. 7, pp. 75–92.

Carpenter, R.E. and Peterson, B.C., 2002, Is growth of small firms constrained by internal finance? The Review of Economic Statistics, Vol. 84, No. 2, pp. 298–309.

Chen, J., 2021, Prospect theory. Investopedia 23 July 2021. https://www.investopedia.com/terms/p/prospecttheory.asp. Accessed 20 March 2022,

Collins, C.N., 2020, Effect of Covid-19 Pandemic on global stock market value: A differential analysis, Acta Universitantis Danubius. Economica, Vol. 16, No. 2, pp. 261–275.

Cucinotta, D., and Vanelli, M., 2020, WHO declares Covid-19 a pandemic, Acta Biomedica, Vol. 91, No. 1, pp. 157–160.

Deloitte, 2020, International Accounting Standard (IAS 18). https://www.iasplus.com/en/standards/ias/ias18 Accessed 11 February 2022.

Dushime, A., and Osele, A., 2021, Nigeria: an overview of the economic impact of the coronavirus pandemic in Nigeria. Mondaq 1 September 2021. https://www.mondaq.com/nigeria/tax-authorities/1107286/an-overview-of-the-economic-impact-of-the-coronavirus-pandemic-in-nigeria. Accessed 26 March 2022.

Enesi, O., and Ibrahim, U., 2021, Effect of Covid-19 pandemic on the performance of Small and Medium Business Enterprises in Abuja-FCT, Nigeria, Open Journal of Business and Management, Vol. 9, pp. 2261–2276.

Ganale, M.A., and Zafar, F., 2020, Impact of Covid-19 (Coronavirus) on Small and Medium Enterprises (SMEs) in Pakistan. Small and Medium Enterprises Development Authority (SMEDA). SMEDA Research Journal View Project.

Giang, M.H., Trung, B.H., Yoshidal, Y., Xuan, T.D., and Que, M.T., 2019, The causal effect of access to finance on the productivity of small and medium enterprises in Vietnam, Sustainability, MDPI, Open Access Journal, Vol. 11, No. 19, pp. 1–19.

Herbert, D., 2022, Covid-19’s impacts on SMEs and policy recommendations in response, The National Law Review, Vol. 12. https://www.natlawreview.com/article/covid-19-s-impacts-smes-and-policy-recommendations-response

Islam, D.Z., Khalid, N., Rayeva, E., and Ahmed, U., 2020, Covid-19 and financial perfor- mance of SMEs: Examining the nexus of entrepreneurial self-efficacy, entrepreneu- rial resilience and innovative work behavior. https://revistaclinicapsicologica.com/data-cms/articles/oldissue/20200918055741am.pdf. Accessed 28 August 2022.

Jackson, J.K., Weiss, M.A., Schwarzenberg, A.B., and Nelson, R.M., 2021, Global economic effects of Covid-19. Congressional Research Service. 10 November 2021.

James, P., 2021, The Federal Republic of Nigeria Unemployed Nigerians. This Day, 2 December 2021. https://www.thisdaylive.com/index.php/2021/12/02/the-federal-republic-of-unemployed-nigerians/. Accessed 29 January 2022.

Mallum, F., and Kadiri, Y.S., 2020, An analysis of the impact of Covid-19 on the Nigerian economy. https://www.researchgate.net/publication/344797193. Accessed 31 January 2022.

Organization for Economic Co-operation and Development (OECD), 2020, Finan- cing SMEs and entrepreneurs: An OECD Scorebord. Special Edition: The impact of Covid-19. OECD SME and Entrepreneurship Papers.

Ohia, C., Bakarey, A.S. and Ahmad, T., 2020, Covid-19 and Nigeria: putting the rea- lities in context, International Journal of Infectious Diseases, Vol. 95, pp. 279–281.

Ojukwu, C.O., 2021, Impact of Covid-19 on financial performance of micro-en- terprises in Nigeria, Journal of Good Governance and Sustainable Development in Africa (JGGSD), Vol. 6, No. 1, pp. 1–17.

Okey-Colbert, E.U., Chinakwe, P.C., and Aguwambe, I.J., 2020, Emerging challenges and opportunities of Coronavirus (Covid-19) pandemic for Small and Medium Enterprises (SMEs) in Nigeria. Maiden Virtual International Conference, 27–28 August 2020.

Oyedokun, G.E., and Taiwo, A.O., 2022, Income taxes and financial performance of small and medium enterprises in Nigeria. https://www.researchgate.net/publication/357474848_INCOME_TAXES_AND_FINANCIAL_PERFORMANCE_OF_SMALL_AND_MEDIUM_ENTERPRISES_IN_NIGERIA. Accessed 20 March 2022.

Oyelola, O.T., Ajiiboshin, I.O., Raheem, S., and Igwe, C.N., 2013, Entrepreneurship for sustainable economic growth in Nigeria, Journal of Sustainable Development Studies, Vol. 2, No. 2, pp. 197–215.

Ozili, P., 2020, Covid-19 pandemic and economic crises: The Nigeria experience and structural causes. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3567419. Accessed 26 March 2022.

Prasad, R., 2021, The effect of Covid-19 pandemic on financial performance of Indian SMEs: comparative evidence from manufacturing, service and pharmaceutical sector, SKBU Business Review, Vol. 1, No. 2.

Stobierski, T., 2020, 13 financial performance measures managers should monitor. https://online.hbs.edu/blog/post/financial-performance-measures. Accessed 12 February, 2022.

Sullivan-Taylor, B., and Branicki, L., 2011, Creating resilient SMEs: why one size might not fit all, International Journal of Production Research, Vol. 49, No. 18, pp. 5565–5579.

Syriopoulos, K., 2020, The impact of Covid-19 on entrepreneurship and SMEs, Journal of International Academy for Case Studies, Vol. 26, No. 2.

United Nations Development Program (UNDP), 2021, September 13. The impact of Covid-19 on business enterprises in Nigeria. United Nations Development Programme, 13 September 2021. https://www.ng.undp.org/content/nigeria/en/home/library/mdg/the-impact-of-covid-19-on-business-enterprises-in-nigeria.html. Accessed 13 March 2022.

World Health Organization (WHO), 2020, Coronavirus Disease (Covid-19). https://www.who.int/health-topics/coronavirus#tab=tab_1. Accessed 27 January 2021.

Yadav, A. and Igbal, B.A., 2021, Socio-economic scenario of South Asia: An overview of impact of Covid-19, Sage Journals, Vol. 28, No. 1, pp. 20–37.

Author Biography

Stella Okoroafor

UGSM-Monarch Business School, Switzerland.

 

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