Determinants of the Growth of Small and Medium Enterprises in Nigeria: A Case Study of Sachets Water Producing and Marketing Outlets in Adamawa State

Abstract

This study examined the determinants of the growth of Small and Medium Enterprises (SMEs) in Nigeria, with particular reference to sachet water producing and marketing outlets in Adamawa State. Specifically, the study investigated the effects of inadequate financing, rising energy costs, multiple taxation, and increasing distribution and marketing costs on the operations and growth of sachet water firms. A descriptive research design was adopted. The population comprised owners, managers, and employees of sachet water producing and marketing firms in Adamawa State. A sample of 180 firms was selected using convenience and purposive sampling techniques. Data were collected through a structured questionnaire validated by experts, with a Cronbach’s Alpha reliability coefficient of 0.83. Data were analysed using descriptive statistics and simple linear regression at the 0.05 level of significance. The results revealed that inadequate financing had a significant negative effect on the operations and growth of sachet water firms, accounting for 29.8% of the variation in firm performance. Rising energy costs also exerted a significant negative effect and explained 60.9% of the variation, making it the strongest determinant examined. Multiple taxation significantly reduced the operations and growth of the firms and accounted for 33.8% of the variation, while rising distribution and marketing costs had a significant negative effect and explained 39.0% of the variation. The study concluded that the growth and sustainability of sachet water SMEs in Adamawa State are substantially constrained by financing difficulties, high energy expenses, multiple taxation, and rising distribution and marketing costs. It therefore recommends improved access to affordable finance, reliable and cost-effective energy, harmonisation of taxes and levies, and the adoption of cooperative distribution and cost-efficient marketing strategies to support the sustainable growth of sachet water enterprises.