Working Capital Management Impact on Economic Value Addition of the Poultry Industry in Nigeria.

Abstract

The poultry industry as a key player under the category of Small and Medium-Sized Enterprises (SMEs) in the Agricultural sector makes critical use of the component of working capital and their contribution to the economy of the country is a direct variable of the value addition generated.The efficiency and judicious utilisation of the key components of the working capital components combined with the peculiarity and uncertainties associated with the Nigerian business environment can make or mar the success of such SMEs operating in the poultry industry and this is a focus of this study. The study employed survey design with cluster sampling approach. The study population is made up of Poultry farmers in 162 farms as registered with the Poultry Association of Nigeria-Ogun State Chapter with the total of 200 farm managers, this number exclude farm attendants and other non-managerial staff as they are task staff . The Cochran formula was used to obtain a sample size of 150. The owners/managers and other participants in these farms were selected through a multi-stage sampling technique which involves the stratified, proportionate, and simple random sampling method. The instrument validity was done through scrutiny and evaluation by the research supervisors and experts in the study area, and reliability was determined via Cronbach’s alpha coefficient computed from pilot study responses. By the use of instrument codes, responses were processed into quantitative data for descriptive and empirical analysis. The analysis revealed that all proxies of working capital management practices such as cash management, accounts receivable management, accounts payable management and inventory management have a significant positive effect on economic value addition of the poultry industry (Adjusted R2= 0.057, F-statistics = 2.485.: p= 0.035<0.05).Thus, the study concluded that working capital management proxies, of cash management, accounts receivable management, accounts payable management and inventory management, has a significant positive effect on the economic value added of poultry industry in Ogun State, Nigeria.