REVAMPING THE ECONOMY THROUGH small and medium enterprises (SME) was introduced into the development landscape as early as the late 1940s, and the primary aim was to improve trade and industrialization in the present developed nations. (OECD, 2004).
The definitions of SME are usually derived in each country, based on the role of SME in the economy, policies and
programs designed by particular agencies or institutions empowered to develop SME. For instance, a small business in
the developed economies of countries like Japan, Germany and United States of America (USA), may be a medium or
large-scaled business in a developing economy like Nigeria. Moreover, the definition of revamping the economy through
SME also varies overtime from agencies or developing institutions to another, depending on their policy focus.
The above variation notwithstanding, SME can be defined based on certain criteria including, turnover, number of
employees, profit, capital employed, available finance, market share and relative size within the industry. The definition
can be based on either some quantitative or qualitative variables. Quantitative definitions mainly express the size of
enterprises, mainly in monetary terms such as turnover, asset value, profit, as well as quantitative index like number of
employees. As examples, the 1975 companies Act in the United Kingdom stated that an enterprise with a turnover of less
than £ 1.4 million was small, those with turnover between £1.4 and £5.7million were medium, while those enterprises
having turnover above £5.7 million were large. It also went further to classify the enterprises based on number of
employees – those with fewer than 50 workers being small, between 50 and 250 workers being medium and those
employing above 250 workers were described as being large. Similarly, the European Union (EU) in 1995, defined SME
as any enterprise employing less than 250 employees, and went further to break down the SME into micro (less than 10
employees, small (from 10 to 49 employees) and medium (between 50 to 249 employees).
In order to tackle global challenges impeding sustainable human development, world leaders came up with the
Millennium Development Goals (MDGs) in 2000, were expected to be met by 2015. The first of these MDGs is “to
eradicate extreme poverty and hunger”. Consequent upon this, it became very pertinent for the nations of the world to
create strong socio-economic structure that would serve the interests of majority of their citizenry, especially the poor.
Since then, different countries have been working to raise the living standard of their citizens in order to achieve this goal,
among other Millennium Development Goals.
With globalization and economic liberalization, global economic activities have significantly increased over the
recent past, bringing about corresponding increase in global wealth, which is said to have almost doubled since 1990
(SNV/WBSCD, 2007). However, despite the improvement in interventions, and positive growth in
economic activities around the world, many individuals in developing countries still live below the poverty line. Moreover,
as globalization proceeds, developing countries and face major challenges in strengthening their human and institutional
capacities to take advantage of trade and investment opportunities.
While the governments in developing countries are saddled with the burden of making policies in trade and
investment areas, it is enterprises that are directly involved in trade and investment. Consequently,
revamping the economy through SME the way government, development partners and the private sector address barriers to trade and investment, has direct implications on the economic growth of these developing countries. Therefore the private sector development, which has the core competence for wealth creation (WBCSD, 2004) and to take advantage of global trade and investment opportunity, is
considered to be vital to poverty alleviation. This is implicated thus: revamping the economy through SME small and medium enterprises in Nigeria is an important tool to developement.