Trend of Human Capital Development on Small and Medium Scale Enterprises in Nigeria (2003-2023)

Abstract

Human  capital  has  been  recognized  globally  as  one  of  the  major  factors  that  is responsible for the wealth of nations and human resource constitutes the ultimate basis of Small and Medium scale Enterprises development and wealth of Nations. Most developed Nations are rich because of the emphasis they laid on human capital development. This study investigated the impact of human capital development on the performance of small and medium-scale enterprise (SMEs) in Nigeria over the period from 2003 to 2023. The study adopted an “ex-post  facto” research design, utilizing secondary data sourced from the Central Bank of Nigeria Statistical Bulletin, Bureau of Statistics, and SMEDAN reports. Autoregressive Distributed Lag (ARDL) methodology was employed for data analysis, allowing for the examination of short and long-term effects of human capital variables such as formal education, training, and participation in seminars, conferences, and workshops on SME performance indicators. Trend analysis, correlation matrix, stationarity test, least square regression estimation analysis were carried out on observations to obtain results. The findings revealed a consistently positive and significant relationship between human capital development and SMEs performance across the study period. Specifically, higher levels of formal education, training initiatives, and participation in knowledge-sharing events are associated with enhanced business outcomes in terms of profitability, productivity, and market competitiveness for Nigerian SMEs. Least Square Multiple Regression showed that Adjusted R2- 08859 indicating that approximately 88.59% of the variance in SMEsP is explained by the model, suggesting a high level of explanatory power. F. statistics showed 39.80876, Prob (F-statistics) was 0.0000 indicated that the overall model is highly significant and Durbin-Watson stat was 206373.3 suggesting that there is no significant autocorrelation in the residuals of the model, the constant term (C) has a coefficient of 2.0040 and is significant with a p-value of 0.0002,indicating that it has a substantial positive impact on SMEsP when all predictors are zero. ARDL Results indicated short and long run impact of human capital development on SMEs performance in Nigeria. Also, trend analysis found a positive trend in human capital development. Invariably, all the null hypotheses set were rejected and the alternative hypotheses were accepted. This study concluded that investments in human capital development play a crucial role in bolstering SME performance in Nigeria. The results underscore the importance of continuous skill enhancement and knowledge acquisition among SME operators, suggesting that such initiatives contribute not only to immediate operational improvements but also to sustain growth over time. Based on the findings, the study recommended that policymakers and business support agencies in Nigeria prioritize initiatives that promote access to formal education, vocational training programs, and participation in professional development activities like seminars and exhibitions. Facilitating easier access to these resources and enhancing their quality can empower SMEs to navigate challenges, capitalize on emerging opportunities, and contribute more robustly to Nigeria's economic development goals.