Assessing the effects of fiscal policy on micro, small, and Medium-scale enterprises' performance in Nigeria

This study investigated the impact that fiscal policy has on the performance of the Micro, Small and Medium-Sized Enterprises (MSMEs) in Nigeria between 1998 and 2023. Particularly, the paper assessed the impacts of government expenditure and fiscal multiplier on MSMEs growth, profitability, and sustainability. It was a quantitative research design because its research methodology assumed an ex post facto research design, a reliance on secondary source of data taken as the sources of data are: Central Bank of Nigeria (CBN), National Bureau of Statistics (NBS), and Federal Inland Revenue Service (FIRS). The sample of the data covered 25 years and was based on the main indicators of fiscal policy government spending and the fiscal multiplier and the indicators of MSMEs performance. The data collection process used time-series data of the official government data in form of national statistics which has been analysed by the econometric methods such as the Ordinary Least Squares (OLS) regression method and Correlation analysis to determine the nature of relationship that exists between fiscal policy and MSMEs performance. The results revealed that government expenditure t= 0.4715; p>0.05 made a positive impact on the growth of MSMEs where the fiscal multiplier moderated the state influence upon the phenomena significantly. It was also discovered in the study that the greater effect of the fiscal multiplier impact could be seen where the government spending was focused on productive areas which enhanced the activities of the MSMEs. This however had different effects in different sectors, this is why different fiscal interventions are necessary. The research findings were on the fact that a well-tuned fiscal policy, especially an efficient government expenditure and a strong fiscal multiplier effect, was essential to improve the performance of MSMEs in Nigeria. The findings gave good ideas to the policy makers on how to encourage the development of MSMEs using meaningful fiscals strategies.