Ease of Doing Business, Trade across Borders and Profitability of Small and Medium-Size Enterprises in Port Harcourt

International Journal of Research and Innovation in Social Science (IJRISS) | Volume V, Issue I, January 2021 | ISSN 2454–6186

Ease of Doing Business, Trade across Borders and Profitability of Small and Medium-Size Enterprises in Port Harcourt

Onwo, Isioma Nwabunor¹, Sylvester Favor Udeorah, Ph.D², Ijeoma Emele Kalu, Ph. D^3
1Institute of International Trade and Development (IITD), University of Port Harcourt. Port Harcourt, Nigeria
^2,3Department of Economics, Faculty of Social Sciences. University of Port Harcourt .Port Harcourt, Nigeria

Abstract
This paper discussed the ease of doing business – trading across borders – and the profitability of small and medium-size enterprises in Port Harcourt. The objective was to assess whether the cost/time aspect of the trading across border indicator had an impact on SMEs profitability. Primary data was collected through semi-structured questionnaires and interviews from 114 respondents (90 SMEs and 24 Institutional representatives). The study used descriptive statistics to analyse the data with the aid of SPSS software. The findings of the study indicated that the cost/time impact of the trading across border index has a negative impact on the profits of SMEs in Port Harcourt. The study identified some problems such as numerous/ambiguous levies and the non-functionality of the Port Harcourt seaport. The study recommended the streamlining of levies and the revamping of the Port Harcourt seaport as some measures to improve the trading across borders aspect of EODB in Port Harcourt to encourage more SME participation and enhancement of profitability.

Key Words: SMEs, Profitability, Trading across borders, Business environment and Ease of doing business (EODB).

1. INTRODUCTION

Trade is as old as mankind itself, whereby; people exchanged goods with their neighbours (Gbosi, 2014). However, trade has evolved to the point where goods and services are now exchanged or traded beyond borders or across nations. Akpuru-Aja (2001) posits that the main focus of trade is to understand the export-import behaviours of nations across frontiers. Therefore, it can be said that trade is a very important part of any economy because it provides the means by which nations are able to profit from what they produce by selling it to others. It is common knowledge that when the proceeds of a business transaction exceed the costs, a gain or profit is achieved. In addition, the wider the profit margin, the more funds are likely made available to be reinvested in the business to achieve expansion or growth. Also, through trade, nations are able to obtain what they need from other economies. This buttresses the fact that indeed no one or no nation can be totally self-reliant because others may have what it doesn’t have and vice versa. Though there is a controversy between trade openness and economic growth (Zahonogo, 2016), however, opening a nations border to encourage trade, helps to boost economic growth due to factors such as transfer of technologies and the gains of foreign direct investments(FDIs).

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