Engineering and Economic Strategies for Manufacturing SMEs in Nigeria: Coping with Wage Inflation and Fuel Price Surge (Case Study)

Authors

https://doi.org/10.22105/masi.vi.58

Abstract

This study investigates the engineering and economic strategies adopted by manufacturing SMEs in Nigeria to cope with the sharp increase in minimum wage from ₦30,000 to ₦70,000 and the significant rise in fuel costs from ₦650 to nearly ₦1,500 per liter (ref with duration of time extremes). Through a comprehensive analysis of the manufacturing sector, the research identifies various operational optimization techniques, such as lean manufacturing, automation, and energy-efficient technologies that have been implemented to counterbalance rising production costs. The study also explores the shift towards alternative energy sources, such as solar power and biodiesel, which have helped firms reduce dependency on expensive fuel. Financial management strategies, including cost-cutting measures, renegotiation of supplier contracts, and adjustments in pricing models, were also evaluated. Labor productivity improvements, achieved through training programs and workforce restructuring, have enabled SMEs to meet the compulsory payment of the new minimum wage without significantly eroding profit margins. The findings highlight the critical role of government interventions, such as tax incentives and grants, in supporting SMEs during this period of economic adjustment. By utilizing a mixed-method approach of surveys, case studies, and economic modelling, this research offers practical insights into how Nigerian manufacturing SMEs have maintained competitiveness and operational sustainability amidst the dual pressures of wage inflation and fuel price surges. 

Keywords:

Wage Inflation, Fuel Price Surge, Manufacturing SMEs, Operational Optimisation, Energy Efficiency

Author Biography

  • Charles Onyinegbaliwene Amgbari, Department of Mechanical Engineering, Federal Polytechnic, Ekowe, Bayelsa State, Nigeria.

    Principal Lecturer, Department of Mechanical Engineering, Federal Polytechnic, Ekowe, Bayelsa State, Nigeria. PMB 110 

References

  1. [1] Abubakar, J. B., & & Baita, I. J. (2020). The impact of innovation on SME performance in the Nigerian manufacturing sector. International journal of economics, commerce & management, 4(12). https://ijecm.co.uk/wp-content/uploads/2020/12/8126.pdf
  2. [2] Doguwa, I. S. (2012). Inflation and economic growth in nigeria: detecting the threshold level. CBN journal of applied statistics (JAS), 3, 99–124. https://www.scirp.org/reference/referencespapers?referenceid=3861891
  3. [3] Eze, O. (2015). Inflation and economic growth in Nigeria. Management, journal of economics and international business, 3(1), 20–30. http://sciencewebpublishing.net/jeibm/archive/2015/3/pdf/Olu and Odih.pdf
  4. [4] Ilegbinosa, I. A., & & Jumbo, A. A. (2015). SMEs and economic growth in nigeria: an autoregressive distributed lag approach. Business, lahore journal of, 3(2), 1–16. http://dx.doi.org/10.35536/ljb.2015.v3.i2.a1
  5. [5] Omoke, P. (2010). Inflation and economic growth in nigeria: evidence from granger causality test. Journal of economic and monetary integration, 3(2), 35–50. doi:10.5539/jsd.v3n2p159
  6. [6] Onwuchekwa, C., Emele, A., & & Onwuchekwa, E. (2017). Industrial clusters and SME development in Nigeria: A strategy to cope with economic shocks. Journal of industrial development, 13(1), 104–120.
  7. [7] Osuala, A. E., & & Osuala, K. I. (2013). The relationship between inflation and economic growth in Nigeria. Journal of economics and international finance, 5(8), 177–187. https://B2n.ir/n80610
  8. [8] Ogbuanu, K. O., Kabuoh, M. N., & & Okwu, A. (2014). The role of SMEs in industrial development and inflation mitigation in Nigeria. African research review, 8(3), 78–91. https://B2n.ir/z00248
  9. [9] Shuaib, M. N., Oliyide, J. A., & & Ibrahim, A. R. (2015). Impact of inflation on economic growth in Nigeria: 1960-2012. Journal of macroeconomics, 47, 234–248. https://B2n.ir/q21941
  10. [10] Akinwale, Y. O., & & Dada, T. O. (2019). The contribution of SMEs to economic growth and employment generation in Nigeria: An empirical investigation. African journal of business management, 13(2), 56–68. https://doi.org/10.5897/AJBM2018.8689
  11. [11] Jones, M., & & Brown, K. (2019). The economic consequences of wage policies on small businesses. Journal of developmental economics, 18(2). https://irle.berkeley.edu/wp-content/uploads/2023/03/Small-Businesses-and-the-Minimum-Wage-3-14-23.pdf
  12. [12] Taiwo, A., & Yusuf, S. (2012). SMEs in Nigeria: constraints to growth, inflationary impact, and future prospects. Journal of business and economic policy, 3(2), 100-115. https://www.researchgate.net/publication/321480472_SMEs_in_Nigeria
  13. [13] Afolabi, A. (2013). Growth effect of small and medium enterprises (SMEs) financing in Nigeria. Journal of African macroeconomic review, 3(1), 193-205. https://B2n.ir/b01090
  14. [14] Adeyemi, O. M., & & Oyatoye, E. O. (2016). The impact of government policies on the growth of SMEs in Nigeria: A case study of the manufacturing sector. Journal of business and economics, 5(2). https://B2n.ir/j46028
  15. [15] Ndungu, J. (2016). The impact of wage increases on SMEs: a case study of Kenya. African business review, 9(1), 23–38. https://documents1.worldbank.org/curated/en/922261550256034160/pdf/The-Impact-of-the-Minimum-Wage-on-Firm-Destruction-Employment-and-Informality.pdf
  16. [16] ILO. (2017). Wage policies in emerging markets: challenges and opportunities. International Labour Organization Report. https://B2n.ir/a48281
  17. [17] Smith, T., Johnson, P., & & Ray, L. (2019). Wage compliance and organizational performance: a global perspective. International journal of business and finance, 22(1), 33–47. https://www.scirp.org/reference/referencespapers?referenceid=3549123

Downloads

Published

2025-02-09

Issue

Vol. 2 No. 1 (2025): Management Analytics and Social Insights

Section

Articles

License

Authors retain copyright and grant Management Analytics and Social Insights (MASI) the right of first publication. Articles are published under the Creative Commons Attribution 4.0 International License (CC BY 4.0), which permits use, sharing, adaptation, distribution, and reproduction in any medium or format, including for commercial purposes, provided that appropriate credit is given to the author(s) and the source, a link to the license is provided, and any changes are indicated. Authors may deposit and share the published version of their article in institutional, subject, or other repositories and on personal or institutional websites.

How to Cite

Wilson, E. O. ., & Amgbari, C. O. (2025). Engineering and Economic Strategies for Manufacturing SMEs in Nigeria: Coping with Wage Inflation and Fuel Price Surge (Case Study). Management Analytics and Social Insights, 2(1), 44-50. https://doi.org/10.22105/masi.vi.58

Similar Articles

1-10 of 30

You may also start an advanced similarity search for this article.