Effect of Ethno-Religious Conflict and Political Instability on MSMEs Performance in Adamawa State

Abstract

The aim of this paper is to examine the effect of ethno-religious conflict and political instability on the performance of MSMEs in Adamawa state of Nigeria. The population of the study is 3075 registered MSMEs in Adamawa north senatorial district out of which the sample of 354 were computed using Taro Yamane formula and selected using convenience sampling technique. Accordingly, the study collects data using primary method with structured questionnaire based on the respondents’ willingness and ability to participate. The collected data was analyzed and hypotheses were tested using Structural Equation Modeling with SmartPLS software. The finding revealed that ethno-religious conflict and political instability have significant negative effect on the performance of SMEs in Adamawa state of Nigeria. Based on the finding, it is conclude that MSMEs in Adamawa state are finding it challenging to operate across regions divided by ethnic or religious conflict because it creates barriers between ethnic and religious groups, fragmenting markets and limiting the MSMEs access to broader customer base of other regions with different religious or ethical ideology. In view of that, it is recommended that Adamawa MSMEs should diversify their customer base by exploring markets in the regions that are less prone to ethnic or religious conflict. This might involve exporting products, establishing an online sales channel or partnering with suppliers outside the crisis prone areas. Also the enterprise should build customer-centric strategies that are vital in continuance support even during the period of uncertainty. Lastly Nigerian government should enhance security measure in the conflict prone areas as well as providing financial incentives to MSMEs that actively participate in, or support peace building efforts within their communities to encourage businesses to support social harmony.