Diaspora Capital and SME Development in Nigeria: Assessing SMEDAN’s Policy Frameworks and Institutional Role

Abstract

This study examines the institutional role of the Small and Medium Enterprises Development Agency of Nigeria (SMEDAN) in facilitating diaspora investment into Nigerian SMEs. Anchored in Institutional Theory, the research interrogates how institutional legitimacy, visibility, and policy coherence influence diaspora–SME linkages. A mixed-methods approach was employed: survey data from 65 SMEs were triangulated with 13 key informant interviews drawn from SMEDAN officials, SME operators, and diaspora investors.The findings reveal that while SMEDAN demonstrates institutional intent through policies such as diaspora bonds, export promotion initiatives, and integration with the African Continental Free Trade Area (AfCFTA), its practical impact on diaspora investment remains limited. Only 10.8% of SMEs reported diaspora facilitation, and participation in diaspora-specific platforms reached just 6.2%. Qualitative insights further underscore a disconnect between program design and investor needs, with diaspora respondents often bypassing SMEDAN in favor of informal networks or direct engagement through other agencies.

The study concludes that SMEDAN’s intermediary role is constrained not by a lack of policy vision, but by gaps in enforcement, outreach, and institutional credibility. Recommendations include establishing dedicated diaspora investment desks, strengthening inter-agency collaboration with bodies such as NiDCOM and NIPC, and enhancing visibility through digital platforms.