Countries and institutions have varying denitions of what classies a company as a Small or Medium Sized Enterprise (SME). The main factors considered are the number of employees and annual turnover. The Central Bank of Nigeria (CBN) denes SMEs as economically independent companies with 11 to 300 employees and an annual turnover of between N5 million to N500 million.
In contrast, the U.S. Small Business Administration’s Ofce of Advocacy classies SMEs as all enterprises with fewer than 500 employees and annual revenue of between $7 million ( N2.1 billion) to $25 million ( N7.6 billion) . In Europe, they are dened as enterprises with less than 250 employees and an annual turnover not exceeding €50 million ( N18.36 billion)
The contribution of SMEs in the development of world economies is signicant both in their GDP contribution and the creation of employment. SMEs play a unique
role in the development of countries, as they constitute a major part of industrial activity in both developed and developing economies.
Studies by the International Finance Corporation (IFC) show that approximately 96% of Nigerian businesses are SMEs compared to 53% in the US and 65% in Europe.While the sector contributes only about 7% to Nigeria’s total export, SMEs contributions to total exports in economies such as China, US, UK, Mexico and India are much
higher as shown below