Nigeria's SMEs and innovative product development: Challenges and opportunities in the 21^st century

Globalization has changed the way firms, industries contend with competition, and for any country to be relevant in this 21^st century, there is a need for a paradigm shift in the way governance and businesses are conducted. It is against this backdrop that many emerging economies have embarked on economic restructuring and Nigeria is no exception. For a country like Nigeria with her vision 20:20, which is geared towards making her amongst the top 20 economies in the world, there is a need for her small and medium enterprises (SMEs) to play the leading role in this regard. The SMEs though faced with many challenges have been making a lot of impact in the economic development of many Asian economies and Nigeria cannot be an exception. Therefore, the country needs to develop knowledge and learning based economy that will aid the development of innovative products, by changing both her technology/business models. This paper has tried to find out why SMEs in Nigeria have not been able to play the lead role expected of them in driving the economy towards the vision 20:20. However, a theoretical model on industrial development was created using Sonobe & Otsuka (2006) industrial development strategy. It was found out that many firms and SMEs in Nigeria are caught in the productivity gap, when they are to move into the quality improvement stage of industrial development through the development of innovative products. However, they could not and this has led to the extinction of many SMEs, as they could not cope with the new competition, because of their inability to develop innovative products development. The paper therefore advocated for the government to create an enabling environment and the abolition of multiple taxation, with easy access to borrowing by SMEs at little interest rates. Similarly, firms should develop clusters and networking in order to share information and relationships towards innovative product development. However, this paper has taken a holistic view of SMEs and innovative product development but in the future a detailed research on a particular industry will be undertaken. In order to find out the peculiarities of the particular industry, towards innovative product development. Why have they not been able to achieve such feat like their counterparts in India, China and other emerging economies?