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Abstract

This study evaluated the role of SMEs in tackling unemployment in Nigeria with particular emphasis on the sustainability of the employment generated by SMEs. Annual time-series data were sourced from World Development Indicators (2019) for the period between 1991 and 2018. The study employed the Dynamic Ordinary Least Square (DOLS), Fully Modified Ordinary Least Square (FMOLS) and Canonical Cointegrating Regression (CCR) methods to achieve the objective of this study. The results confirmed the existence of a long-run relationship among the dependent and explanatory variables of the study. Further, the DOLS, FMOLS and CCR coefficients of employment generated by SMEs which is approximately 0.5%, 0.9% and 0.9% respectively showed that employment generated in the SMEs subsector has a significant positive impact on unemployment in Nigeria indicating that the preponderance of SMEs has not really reduced unemployment in Nigeria as a result of the excess supply of labour in the economy. Hence, this study concluded that the employment generated by SMEs in Nigeria is not enough to permanently solve the unemployment conundrum in Nigeria. Based on the findings of this study, this study recommended that the Nigerian government formulate and implement population control policies as well as policies geared towards providing a conducive business environment where SMEs can thrive and also provide adequate infrastructure to ensure an increase in the ease of doing business index in Nigeria.