RISK MANAGEMENT STRATEGIES OF MICRO, SMALL AND MEDIUM AGRIBUSINESS ENTERPRISES IN NORTH-WEST, NIGERIA

Abstract

The study identifies the common risk management strategies (RMS) used by micro, small and medium scale enterprises (MSMAEs) in North-west, Nigeria. A sample of 334 MSMAEs were selected using multi-stage sampling procedure. Data were collected in 2020 with the use of structured questionnaire. Both descriptive statistics and principal component analysis (PCA) were employed to describe and analyse risk management strategies of MSMAEs. The result revealed that there were three categories of RMS namely, investment, budgeting and marketing. The investment RMS were the most used strategies with a mean score ( of 3.73 and a standard deviation ( of 2.85. This is followed by the marketing RMS with a mean score of 2.98 and a standard deviation of 2.08, irrespective of the business status. The least important RMS were the budgeting RMS with a mean score of 1.91 and a standard deviation of 1.52. The PCA results also revealed that RMS factor under micro agribusinesses had the highest and smallest correlation in terms of maintaining accurate and up-to-date financial record (0.93) and savings (0.66), respectively. Similarly, under the small agribusinesses, RMS factor had the highest and smallest correlation with timing or type of sales modification (0.95) and Borrowing (0.54). Furthermore, in medium agribusinesses, RMS factor had the highest and smallest correlation with timing of sale of output (0.92) and keeping of business record (0.68). In conclusion, MSMAEs managed their risk through investment, budgeting and marketing strategies. It was recommended that regular capacity building especially in the area of record keeping, maintaining accurate and up-to-date financial record, budgeting cash flow and outflows and conducting basic financial analysis couple with effective marketing management system should be given priority in risk management strategies in the sector.