Volatility of Nigerian Business Environment: Impact of Strategic Working Capital Management on Small and Medium Scale Enterprises Survival

Abstract

The general and common phenomenon among the administrators of the Nigerian economy and government business is the encouragement and orientation of citizens into the establishment and development of Small and Medium Scale Enterprises (SMEs) for the purpose of self-employment.  This even necessitated the introduction of entrepreneurship development programmes into the curriculum of tertiary institutions in the country.  Majority of small and medium scale Enterprises established in the Nigerian environment are however faced with the problem of sustainability.  Some of the enterprises that are established, after tedious process of sourcing for capital, to see the light of the day, find it difficult to maintain continuity.  Some of the enterprises even go into extinct.  It is a clear indication of the fact that setting up an enterprise is not the only important phase of entrepreneurship development, but solvency and sustainability of the enterprises are also of paramount importance.  Sustainability and solvency of a business greatly depends on the environment where it operates.  The focus of this research is to establish the impact of strategic working capital management on sustainability of the small and Medium Scale Enterprises in the Nigerian volatile business environment.  It is a shift of attention from the campaign of establishment of Small and Medium Scale Enterprises to sustainability.  It is to establish the impact of the Nigerian volatile business environment on the sustainability of Small and Medium Scale Enterprises and the need for strategic working capital Management.  The research considers the present volatile nature of the Nigerian business environment.  A comprehensive review of working capital management was carried out.  Empirical comparative study was made from published annual report of selected companies in Nigeria.  The comparative analysis was interpreted which lead to the findings.  Recommendations were provided.  One of the recommendations is that small and medium scale entrepreneurs should always be aware of the working capital requirements of their business to maintain proportionate stock and turnover level in order to be at equilibrium all the time of operations of the enterprise.

Keywords: Working capital, Volatile environment, small and medium enterprises solvency, liquidity.