Efficiency of micro enterprises in the Nigerian economy
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Date
2003-09-07
Authors
Igbekele A. Ajibefun
Adebiye G. Daramola
Journal Title
Journal ISSN
Volume Title
Publisher
AERC
Abstract
This study investigates the efficiency of microenterprises in the Nigerian economy, using
cross sectional data collected on 180 microenterprises selected from block-making, metalfabricating and sawmilling occupational groups. Quantitative estimates obtained from
the stochastic frontier production function indicate a wide variation in technical and
allocative efficiencies within and across occupational groups and across operational scales.
The wide variation in the level of efficiency is an indication that there is ample opportunity
for these enterprises to raise their level of efficiency.
The level of education of enterprise owners was found to be highly significant in
affecting the level of efficiency of the microenterprises. This implies that education is an
important policy variable, and could be used by policy makers to improve both technical
and allocative efficiency in the sampled enterprises. Hence, education policy that would
encourage operators of microenterprises in the country to undergo literacy and training
programmes would lead to substantial increase in efficiency of production and hence in
the volume of output at the current level of technology. Finally, rising age of enterprise
owners was found to lead to decline in the mean efficiency. Therefore, government policy
should focus on ways to attract and encourage young entrepreneurs who are agile and
able to put in more efforts at raising the level of efficiency.
Description
HC 502 . A 47 2003
Keywords
Small Businesses - Nigeria , Industrial Effeciency - Nigeria , Nigeria - economic conditions