EFFECT OF ECONOMIC RECESSION ON THE PERFORMANCE OF SMALL AND MEDIUM ENTERPRISES IN MAIDUGURI METROPOLIS, BORNO STATE, NIGERIA

Abstract

The study examined the effect of economic recession on the performance of small and medium enterprises in Maiduguri Metropolis. Small and medium enterprises are recognised as engine room for economic development of any country. They contribute to the Nigerian economy development in terms of employment opportunities, poverty reduction and income generation. Equally, SMEs faced with enormous economic challenges due to rapid changes in business environment as a result of global recession. As a result of recession, there appeared to be rising in unemployment level of citizens, couple with contraction of consumers ‘income, decline in gross domestic product as well as decline in industrial production which affect the SMEs performance. The population of the study is five hundred and thirty eight (538) respondents with a sample size of two hundred and twenty nine respondents. The data collected was analysed using ordinary least square regression analysis. The findings of the study reveal that there is significant effect of economic recession on profitability of small and medium enterprises in Maiduguri Metropolis. Similarly, there is significant effect of economic recession on sales growth of small and medium enterprises in Maiduguri Metropolis. Therefore, study recommends that small and medium enterprises should be strategically positioned to increase their competitiveness and profitability during recession because it impact on their performance. Similarly, government should reduce tax rate on individual and SMEs by certain percentage, this in effect will increase their sales growth as well as profitability.