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ASSESSING THE IMPACT OF ELECTRONIC BANKING ON SMES

CHAPTER ONE

INTRODUCTION

Background of the study

Small and medium scale enterprises (SME) play an important role in achieving the Sustainable Development Goals in most countries, at all levels of development, by promoting inclusive and sustainable economic growth, providing employment and decent work for all, promoting sustainable industrialization, fostering innovation, creating values, and reducing income inequalities (OECD, 2017). Sustainable economic growth is the key to reducing poverty in emerging countries. As a result of the high degree of poverty in emerging nations and the flexibility of small medium firms compared to other endeavors, there should be a larger interest in small medium enterprises. In Nigeria, a growing country with over 160 million people and over 65 percent of the population under 35 years old (SMEDAN/NBS MSME Survey, 2013), policymakers must seek national economic development through small and medium companies rather than relying on the oil sector. This shift in Nigeria’s economic policy is due not only to the depletion of oil reserves, but also to the abundant potentials of small and medium firms, such as land availability, low labor costs, and so on. Despite the fact that a shift in economic policy in favor of small and medium businesses has resulted in a significant increase in the number of accessible small and medium businesses, the sector’s contribution to Nigeria’s Gross Domestic Product (GDP) is small. Small medium firms (SMEDAN/NBS MSME Survey, 2013) do not account for up to 50% of independent contribution to Nigeria’s national GDP in the education, wholesale/trade, and manufacturing sectors, which have the highest distribution. This low rate of contribution to Nigeria’s national GDP can be linked to a lack of access to capital, numerous taxation, market access, and antiquated technology, all of which impair the ease of doing business in SMEDAN/NBS MSME Survey, 2013. Small medium firms’ inability to use information communication technology (ICT) is seen as a major barrier to them creating effective operations and expanding their businesses (Dutta & Mia, 2009). Economic sectors that use ICT developments are known for their great efficiency, ease of operation, and convenience. Internet and mobile technology inventions are two significant information communication technologies that have improved the way people do business in recent years. In many businesses, the growing number of applicants for internet jobs has been critical in product marketing and distribution (Yang, Li, Ma, & Chen, 2018).

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