Digital Transformation and business growth of small and medium enterprises in Lagos State, Nigeria

Issues such as lack of skill, high cost, security, and lack of efficient technology infrastructure are some of the most important factors that affect the successful implementation of digital strategy. There are many reasons why the implementation of digital strategies is not always successful in practice. Some of the reasons include not being skilled in the use of digital technology, being unable to afford the investment cost, electronic security issues, and not having a good digital infrastructure. Besides that, a few small business owners are still not seeing the potential of digital tools to help in raising productivity and enhancing financial performance. So, the extent to which small businesses have digitally transformed their operations is very diverse. Some businesses have completely gone digital while others still function mostly according to their traditional and local ways of doing business.

In Lagos State, small and medium enterprises (SMEs) play big roles in the economic growth, employment and generating income for the whole country of Nigeria. Despite this, a large number of such businesses have very slow growth and they hardly compete as they have operational inefficiencies and at the same time, very limited access to wider markets. Small businesses in different economic areas such as retail manufacturing economic services, and tech play a leading role in the economy of Nigeria's commercial center of Lagos State. Most SMEs in Lagos State have not extensively embraced digital technology due to the reasons such as lack of digital skills, expensive adoption and poor infrastructure.

During the COVID 19 pandemic, the importance of adopting digital transformation became a lot clearer as it disrupted the traditional ways of carrying out business. A lot of SMEs that have already embraced digital platforms still managed to operate by doing online sales, digital marketing and remote customer engagement. The experience illuminated the fact that digital technologies could be instrumental in helping companies not only withstand a crisis but also to adapt. That is why nowadays, a large proportion of people agree that digital transformation is the main driver of a company's sustainability and a wellspring for perpetual growth. With the increasing importance of digital technologies in business today, it is natural to wonder whether digital transformation can really be a driver of growth for small and medium enterprises (SMEs) in Lagos State.

Apart from this, a large number of SMEs in Lagos State have resorted to using social media sites such as Facebook and Instagram for advertising their products, on the other hand, only a few businesses are using modern technology such as cloud computing, data analysis, and ERP systems due to their high costs and lack of technical knowledge. According to Afolayan and Olanrewaju's report (2021), so many small and medium, sized enterprises in Lagos State use social media platforms such as Facebook and Instagram mostly for marketing and customer engagement. Yet, only a few firms can afford the use of more sophisticated technologies such as cloud computing, data analytics, and enterprise resource planning. It is mainly due to the high costs associated with these technologies and the lack of technical expertise in the firms. In general, while SMEs in Lagos State are getting digitally equipped day by day, a lot more can be done especially in those aspects that drive operational efficiency, innovation, and competitiveness.