ABSTRACT

The issue of Foreign Direct Investment (FDI) has been an age long issue for quite some decades especially in Small and Medium Enterprises (SMEs) in Enugu state, Nigeria. However, little or no attention has been given to the importance of foreign direct investment to the development of SMEs in the state. SMEs are the major drivers of employment in Enugu state and Nigeria at large, because statistics has it that 60% of Nigeria’s workforce comes through small and medium scale enterprises. Despite the significance attached to inflow of foreign direct investment and the development of small and medium scale enterprises as essential driving forces for economic growth, the extent to which SMEs have developed in response to this inflow has remained an issue of concern, given Nigeria’s poor economic predicament. Thus, this study investigates whether FDI undermines SMEs development in Enugu state, Nigeria. A survey research design was adopted for this study. The study utilized Marxian Political Economy Theory to unearth the philosophical underpinning behind the government’s role as an instrument in undermining the development of SMEs. The data collected from the questionnaire instrument were analyzed using chi square, as well as percentages and frequencies. The research findings show that Foreign Direct Investment undermined the development of Small and Medium Enterprises in Enugu state. The study recommends that the state government should formulate policies aimed at promoting the interests of the SMEs. However, while it is important for government to woo foreign investors into a state, it should not be at the detriment of the local businesses such as the SMEs. Thus, the economic policies of the state should be geared towards maintaining a balance between the growth of SMEs and the activities of foreign investors.