Amid the turbulent economic climate faced by small businesses in Nigeria, a leading expert in financial management, Abolade Ogunlowore, has spotlighted the critical role that financial practices play in sustaining Small and Medium-sized Enterprises (SMEs).
In a recently published paper, Ogunlowore explored how budgeting and capital investment strategies directly impact the long-term survival of Nigerian SMEs.
Her findings are based on a comprehensive study conducted across various sectors, shedding light on what separates thriving businesses from those that collapse prematurely.
In an interview, she pointed out that SMEs are the backbone of Nigeria’s economy but are frequently beset by poor access to capital, unstructured financial systems, and erratic decision-making.
“Many of these businesses don’t fail because their products or services lack value. They fail because they’re not managing their finances properly,” she said.
According to her, SMEs contribute about 48% of Nigeria’s Gross Domestic Product (GDP), yet they often struggle with budget implementation and investment planning—two practices that can either make or break their operations.
“Budgeting is not just a periodic activity. It should be a real-time discipline that tracks income and expenses to guide strategic decisions. SMEs must shift from guesswork to data-backed planning if they want to survive,” Ogunlowore stated.
Her study involved a sample of 398 respondents from Nigeria’s vast pool of over 37,000 registered SMEs. Using structured questionnaires and statistical analysis, she evaluated the effectiveness of budgeting and capital investment practices on business sustainability.
The results were telling. Businesses that adopted structured budgeting practices recorded significantly higher levels of operational stability. Capital investment decisions, such as purchasing long-term assets or expanding capacity, also had a strong positive correlation with business sustainability.
She noted that “budget practice has a statistically significant and positive effect on SME sustainability, with a beta value of 0.314 and a p-value of 0.000.” This means budgeting is not just beneficial—it’s essential.
Capital investment, often overlooked by smaller firms due to limited funds, was also shown to be a game-changer. “Even in a capital-constrained environment like Nigeria, strategic investment decisions can create stability and growth opportunities,” she explained.
Ogunlowore emphasized that financial management is not a luxury but a necessity in today’s business environment. “We are in an era of fluctuating markets and shifting consumer demands. The businesses that survive are those that anticipate, plan, and respond with financial discipline,” she said.
She also recommended that SME owners receive training in financial planning, risk assessment, and capital allocation. “SMEs should not wait until they’re in financial distress before paying attention to their books. Preventive financial management is cheaper than recovery,” she said.
The study concluded with a call to action for government agencies and private sector actors to support financial literacy and infrastructure among SMEs. “If we want economic growth, we must invest in the systems that keep our SMEs alive,” she added.
For Ogunlowore, the mission is clear: transform how SMEs think about money. As she put it, “It’s time we stopped treating finance as an afterthought in business and started seeing it as the driver of sustainability.”
