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The purpose of this study was to establish the relationship between the contributions of insurance companies and the growth of SMEs in Nigeria, using NICON, Abuja as a case study. Two research hypotheses were formulated and tested using the chi square, to achieve the objectives of this study. Percentages and frequencies ere also employed in the analysis. The research was descriptive in nature involving quantitative methods which was administered through questionnaires. Simple random sampling was used whereby the researcher went to NICON and administered questionnaire to the sampled or selected employees. Findings revealed that innovation is a strong empirical evidence for fast growing SMEs, competition has a great effect on SMEs industry and credit remains a great challenge to the growth of SMEs. Besides that insurance companies mitigate risks and enhance loan acceptability by SMEs sector with banks.

It was concluded that improvement in business skills increases the performance of SMEs. Also NICON need to have a fresh look at the scope and spectrum of services provided to SMEs and have a better understanding on the scale of enterprise sector.


1.1        Background of the study

1.2        Statement of problem

1.3        Objective of the study

1.4        Research Hypotheses

1.5        Significance of the study

1.6        Scope and limitation of the study

1.7       Definition of terms

1.8       Organization of the study










3.0        Research methodology

3.1    sources of data collection

3.3        Population of the study

3.4        Sampling and sampling distribution

3.5        Validation of research instrument

3.6        Method of data analysis



4.1 Introductions

4.2 Data analysis


5.1 Introduction

5.2 Summary

5.3 Conclusion

5.4 Recommendation
















The substantial growth of small and medium enterprises (SMEs) activity clearly marks SME as one of the most remarkable economic phenomena. SME is a business that is privately owned and operated with a small number of employees and relatively moderate volume of sales. The definition of SMEs varies from country to country depending on the level of development and the strength of the economy. The lower limit for small scale enterprises is set at between five and ten workers and the upper limit is set at between fifty and one hundred workers. The upper limit for medium scale enterprises is set between one hundred and two hundred and fifty workers (Hallberg, 2000).

In Uganda there are approximately 1,069,848 SMEs currently in operation and they comprise over 90% of the private sector. They contribute to employment, provision of basic goods and services, and generation of export and tax revenues for national socio-economic development. Their Gross Domestic Product (GDP) contribution to the economy is 75% and they employ about 2,500,000 nationals. The location of these SMEs is mostly in urban areas with 80% located therein. They operate business like restaurants, accountants, hairdressers, conveniences stores and guesthouses (Hatega, 2007).

On the other hand insurance is a contract by which one party undertakes in consideration of a payment called premium to secure the other against pecuniary loss by payment of a sum of money in the event of destruction or damage to property, fire, accidents or death of a person. Economy, investment and finance reports (2010) defines insurance as a policy from a large financial institution that offers a person, company, or other entity reimbursement or financial protection against possible future losses or damages. An insurance contract is an agreement by which the insurer promises, from a premium or assessment, to make a payment to a policy holder or a third person if an event that is the object of a risk occurs. SMEs often face a variety of problems related to their size. Frequent causes are bankruptcy, theft, fire, death, automobile accidents and workers injuries.


For example, National Insurance Corporation Limited (NIC) is an insurance company in Uganda. The company is a leading provider of insurance and risk management services with 19 branches spread throughout the country (Robinson, 2009). NIC was established by Act of Parliament in 1964. The basic function of NIC insurance is to provide security and protection against risks to business. NIC has also undertaken several projects aimed at empowering the development and growth of SMEs in Uganda. Amongst these projects include; organizing public workshops and seminars aimed at enhancing techniques of small scale traders, for example the 2001 conference on marketing insurance, Publishing literature on insurance services covering issues like the need for business to be insured, business growth and financial discipline in business which are of importance to SMEs businessmen and supporting of SMEs in development and training of young businessmen in how to survive competently in the market place. (Mutesasira, Osinde, and Mule 2001).

However, besides NIC contributions to the growth of SMEs, it’s unfortunate that most of the SMEs are badly run due to lack of knowledge and skills in insurance policies, (Ocici, 2007),lack of professional and networking, limited knowledge of business opportunities, poor compiled records and accounts and low level of technical and management skills (UNCTAD 2002). In addition, high premium cost is also a major effect on growth of SMEs. It is therefore against this background that the researcher deems it worthy to find out by analyzing the relationship between contributions of insurance companies to the growth of SMEs.


Despite the contribution of insurance corporations to the growth of SMEs in economic development, failure and slow growth still exists and the public doubts its management (Ocici, 2007). Research suggest that 80% of the businesses affected by major incident close down within 18 month, and 90% of those who lose data close down within 2 years. This is due to the failure of small businesses to have adequate insurance cover and proper business continuity plans (cover sure, 2007). However literature has shown that insurance companies are not willing to insure SMEs and it was the aim of this research to establish whether a relationship between these two variables exists.



The main objective of the study was to investigate the contribution of insurance companies the growth of SMEs in Nigeria. Other objectives the study sought to achieve are:

  1. To examine major factors that affects the growth of SMEs.
  2. To assess the contribution of insurance companies to the growth of SMEs.
  • To investigate the factors inhibiting the purchase of insurance cover by SME operators.
  1. To determine the strength of the relationship between insurance companies and growth of SMEs.


Ho: There is no relationship between insurance companies and growth of SMEs

Hi: There is a relationship between insurance companies and growth of SMEs


Ho: Insurance companies have not improved SMEs in Nigeria

Ho: Insurance companies have improved SMEs in Nigeria


This research will be undertaken as an academic requirement by for the University before the degree of Bachelor of Commerce can be awarded. The researcher places prestige in the successful completion of the study.

It’s only through research that ideas and approaches will be developed and tested. This research will generate information to be used as basis for further research in to the contribution of insurance in other business segments.

The study will increase public awareness on the operations of National Insurance Corporation hence making it convenient for the public when dealing with the corporation.

This research will provide data to policy makers that will assist towards formulating for appropriate policy for policy makers operation. This will permit specific plans and policies geared towards promoting SMEs.


This study is primary concerned with the contribution of insurance companies to the growth of small and medium scale businesses. This study/project work covers National Insurance Corporation of Nigeria (NICON), Abuja. The researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following

  1. a) AVAILABILITY OF RESEARCH MATERIAL: The research material available to the researcher is insufficient, thereby limiting the study
  2. b) TIME: The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.


INSURANCE COMPANY: A business that provides coverage, in the form of compensation resulting from loss, damages, injury, treatment or hardship in exchange for premium payments. The company calculates the risk of occurrence then determines the cost to replace (pay for) the loss to determine the premium amount.

SMES: Small and medium-sized enterprises (SMEs) are non-subsidiary, independent firms which employ less than a given number of employees. This number varies across countries. The most frequent upper limit designating an SME is 250 employees as in the European Union.


This research work is organized in five chapters, for easy understanding, as follows

Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study. Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature. Chapter three deals on the research design and methodology adopted in the study. Chapter four concentrate on the data collection and analysis and presentation of finding.  Chapter five gives summary, conclusion, and recommendations made of the study


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