Effectiveness of Capital Allowances on SMEs Growth in North Central, Nigeria

This study investigates the effectiveness of capital allowances on the growth of Small and Medium Enterprises (SMEs) in North Central Nigeria, with specific focus on four dimensions: utilization of capital allowances, impact on profitability, effect on asset acquisition, and influence on employment generation. Using a descriptive survey research design, primary data were collected from 320 SME operators across the region through a structured questionnaire built around a 5-point Likert scale. Descriptive statistics and multiple regression analysis were employed to examine the relationship between the study variables and SME growth. The regression result indicates that capital allowance-related factors significantly influence SME growth, albeit modestly. Findings show that while awareness and perceived benefits related to asset acquisition and competitiveness are relatively high, skepticism remains regarding the clarity of policies and their impact on profitability and administrative burden. The study concludes that capital allowances contribute meaningfully to SME development but are limited by structural and implementation barriers. It recommends enhanced awareness programs, simplification of procedures, periodic policy reviews, and integration of capital allowances into broader SME development strategies. These measures are essential for unlocking the full potential of tax incentives as catalysts for regional economic growth.