ABSTRACT
This
project has been able to carry out Small and Medium Scale business enterprises
and economic growth. The research sample is randomly selected from De Eugene De-Rose Industry and Vono Product Plc by
survey method composed of thirty (30) respondents. Chapter one looked at the background of the
study (introduction), the statement of problems, objective of study. It also
highlights research questions, statement of hypothesis, significance of the
study, scope of the study, limitation of the study, history of the case study
and definitions of terms. Chapter two was based on literature review and
relevant texts on the subject topic. Chapter three outlined the research
methodology used in conducting the research work. It indicates that this
research work was carried out using the survey research method. The use of
questionnaire and personal interview in collecting relevant data was adopted.
Chapter four gives the data analysis, interpretation and presentation of data
collected; it also includes the test of hypotheses. Finally, chapter five
brings the research work to a conclusion by giving a summary of findings, conclusion
and recommendations.
Therefore,
through the hypotheses tested it was concluded through chi-square statistical
package that –There is a significant correlating between small and medium scale
and economic growth of Nigeria.
TABLE OF CONTENT
PAGE
TITLE PAGE I
CERTIFICATE II
DEDICATION III
ACKNOWLEDGEMENT IV
ABSTRACT V
TABLE OF CONTENT VI-VII
CHAPTER ONE: INTRODUCTION
1.1
BACKGROUND TO THE STUDY
1
1.2
STATEMENT OF PROBLEMS 3
1.3
OBJECTIVES OF STUDY 4
1.4
RESEARCH QUESTIONS 5
1.5
STATEMENT OF HYPOTHESIS 5
1.6
SIGNIFICANCE OF THE STUDY 5
1.7 SCOPE OF THE STUDY 6
1.8 LIMITATION OF THE STUDY 6
1.9 HISTORY OF THE DE ROSE PURE WATER (SMALL
SCALE
ENTERPRISE) 7
1.10
DEFINITION OF TERMS 10
REFERENCES 12
CHAPTER TWO: LITERATURE REVIEW
2.1 INTRODUCTION 13
2.2 THE
CONCEPT OF SMALL AND MEDIUM SCALE
ENTERPRISES (SMEs) 13
2.3 ROLE OF THE SMES SUB-SECTOR IN THE GROWTH
OF THE ECONOMY 18
2.4 SIGNIFICANCE OF THE SMEs SUB-SECTOR IN THE
NIGERIAN ECONOMY 21
2.5 PROBLEMS OF SMALL AND MEDIUM ENTERPRISES IN
NIGERIA 23
2.6 PROSPECTS OF SMALL AND MEDIUM ENTERPRISES
IN NIGERIA 27
2.7 SMEDAN 35
2.8 COMPARATIVE ANALYSIS BETWEEN INDIA’S SMALL
SCALE 36
2.9 WHY SMEs IN NIGERIA HAVE PERFORMED BELOW
STANDARD 41
2.10 SMALL BUSINESS ENTERPRISES: A STRATEGIC
MANAGEMENT PRACTICE 46
REFERENCES 48
CHAPTER
THREE: RESEARCH METHODOLOGY
3.1 INTRODUCTION 50
3.2
RESEARCH DESIGN 50
3.3 THE STUDY POPULATION 50
3.4 STATEMENT
OF RESEARCH QUESTIONS
AND
HYPOTHESIS 50
3.5
COLLECTION OF DATA
INSTRUMENT 51
3.6
PILOT TESTING: VALIDITY
AND RELIABILITY TEST 52
3.7 DATA COLLECTION INSTRUMENT 52
3.8
METHOD OF DATA ANALYSIS 52
CHAPTER FOUR: DATA
PRESENTATION AND ANALYSIS OF RESULT
4.1 INTRODUCTION 53
4.2 TESTING OF HYPOTHESIS 71
CHAPTER FIVE: SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
5.1 SUMMARY
OF FINDINGS 74
5.2
CONCLUSION 75
5.3 RECOMMENDATIONS 75
QUESTIONNAIRE 77
CHAPTER ONE
INTRODUCTION
1.2
BACKGROUND TO THE STUDY
Small and medium scale Business Enterprises in Nigeria economic
growth cannot be over emphasized as entrepreneurship is indispensable catalyst
for the sustenance of the economy in Nigeria as a whole.
Small
and Medium Enterprises (SMEs) have played and continue to play significant
roles in the growth, development and industrialization of many economies the
world over. In the case of Nigeria, SMEs have performed below expectation due
to a combination of problems which ranges from attitude and habits of SMEs
themselves through environmental related factors, instability of governments
and frequent government policy changes and somersaults (Suleiman, 2005).
Obadan,
(1997) highlights the top ten problem areas of SMEs in Nigeria in decreasing
order of intensity include: management, access to finance, infrastructure,
government policy inconsistencies and bureaucracy, environmental factors,
multiple taxes and levies, access to modern technology, unfair competition,
marketing problems and non-availability of raw materials locally. Thus
managerial problems represent the greatest problem facing SMEs in Nigeria while
non availability of raw materials locally is the least problem.
Interest in the role of small and medium scale enterprises in the
development process continues to be in the forefront of policy debates in
developing countries (Olorunshola, 2003). The advantages claimed for small
scale enterprises are various, including : the encouragement of
entrepreneurship; the greater like hood that small scale enterprises will
utilize labour intensive technologies and thus have an immediate impact on
employment generation; they can usually be established rapidly and put into
operation to produce quick returns; small scale enterprises development can
encourage the process of both inter-and intra-regional decentralization; and
they may well become a countervailing force against the economic power of large enterprises. More
generally the development of small and medium scale enterprises is seen as
accelerating the achievement of wider economic and socio-economic objectives,
including poverty alleviation.
The role of finance has been viewed as a critical element for the
development of small and medium scale industries. Previous study have
highlighted the limited access to financial sources available to small
enterprises compared to large organizations and the consequences for their
growth and development (Uduchukwu, 2003).
Typically, small enterprises face higher transactions cost than
large enterprises in obtaining credit (Olorunshola, 2003). Poor management and
accounting practices have hampered the ability of small enterprises to raise
finance. Information asymmetries associated with lending to small scale
borrowers have restricted the flow of finance to small enterprises. In spite of
these claims however, some studies show a large number of small enterprises
fail because of non-financial reasons.
1.2 STATEMENT OF
PROBLEMS
The statement of problems in this research investigation is to
evaluate the challenges of small and medium business enterprises and economic
growth of Nigeria. Generally, because of problem of underdevelopment of
entrepreneurship and small scale in Nigeria, a lot of noble business ideas have
been killed.
Market Trends: A major growth factor is being able to identity and
meets market gaps. The Nigerian SMEs ability to identify market gaps has often
been in doubt. Furthermore, it is a way of identifying a gap in these sectors
proper assessment of the market potential and dynamics that is necessary for a
proper value proposition, which will help them to avoid investing wrongly.
Failure to plan against future market trends, lack of resourceful research and
other areas where small scale business is deficient in productions. The lack of
adequate knowledge might make a business manager loose a good business
opportunity, and the ability to tap into other grounds or market to make more
profit.
Political instability: This does not encourage an investor to
invest in the economy and even if he has invested, he might decide to fold up
due to the prevailing hostile economic climate.
Inappropriate managerial skills: due to lack of enough capital or
sheer ignorance of technological advances, entrepreneurs tend to purchase
obsolete and inefficient equipment there by setting the state ab initio, which bring about lower level of productivity and poor product
quality. It all results in huge consequences on product output and market
acceptability. The key ones include inadequate infrastructural facilities
(road, water, electricity etc) insecurity of lives and property, inconsistent
monetary, fiscal and industrial policies.
Limited access to market, multiple taxation and levies, lack of
modern technology for processing and reserving products, policy reversals,
capacity limitation, data inadequacies, harsh operating environment, fragile
ownership base, fragile capital base. While some the challenges that SMEs face
are induced by the operating environment (government policies, globalization
effects, financial institutions, local government policies, attitude to work)
etc other challenges are driven by the inherent characteristic of the SMEs
themselves.
1.3 OBJECTIVES OF STUDY
The main objective of the study is to review the challenges of
small and medium business enterprises and economic growth in Nigeria. In so
doing, the researcher intends giving an in depth information and analysis on
the operations and activities of Eugene De Rose Industry and Vono Product Plc.
In view of the above, the researcher intends to find out the following,
(i)
To evaluate the performance
of the small medium enterprises toward the economic growth in Nigeria.
(ii)
To examine the mode of
operation of the enterprises in terms of growing the economy.
(iii)
To identify the major
constraints hindering the operations of the enterprises.
(iv)
To make suggestion as to how
the performance of the small and medium enterprise could be improved.
1.4 RESEARCH QUESTIONS
This research work is guided by the following research questions:
(i)
How effective has the small
and medium enterprises leading to the growth of Nigeria economy.
(ii)
What is the mode of
operations adopted under in the enterprises
(iii)
What are the major
constraints hindering the activities of the small and medium enterprises in
Nigeria?
(iv)
How can the performance of
the small and medium enterprises could be improved.
1.5 STATEMENT OF
HYPOTHESIS
The hypothesis is tested in the course of the study is stated
below:
Ho: There is no significant correlation between SMEs and economic
growth of Nigeria.
Hi: There is a significant correlation between SMEs and economic
growth of Nigeria.
1.6 SIGNIFICANCE OF THE
STUDY
The significance of this study is to demonstrate that small and
medium enterprises play a vital role in the growth of Nigerian economy and the
success of organization. Apart from small and medium enterprises has an impact
on organizational performance.
Hoselitz (2002) says the perceived self efficiency of enterprises
has been proven to affect the strategies and performance of their business. It
also developed to the creation of new organization of the country. Vital
decision making organizations are solely depend on the different behaviours of
the entrepreneurs in such organizations. It also aids and decides how the
organizational goals are accomplished. In conclusion small and medium
enterprise ill terms of the performance determine the growth rate of a
particular country.
1.7 SCOPE OF THE STUDY
The scope of the study being the challenges of small and medium
business enterprises and economic growth of Nigeria is taking Eugene De Rose
Industry and Vono Products Plc as case studies. However, the workers of the duo
organizations would be covered. The scope would also cover the period of
1999-2010.
1.8 LIMITATION OF THE STUDY
Synonymous with normal research work, this project will be limited
by time which is the greatest enemy of human race is a major constraint to this
project therefore makes it impossible to carry out an exhaustive research work
on the topic. It also leads to inadequate detailed analysis of the topic.
Finance; due to the capital outlay that is normally involved in
any research, and the limited supply of funds, this also constitutes a
constraint.
Availability of materials; it is a known fact that most research
work thrives on the availability of secondary data. The inadequacy of such
materials for this work necessitates my being confirmed to available literature
in the libraries visited.
Other limitations identified include the financial involvement,
market trends, political instability, inaccessibility of respondents, lack of
basic statistics etc.
1.9 HISTORY OF THE DE
ROSE PURE WATER (SMALL SCALE ENTERPRISE)
Eugene De Rose Pure Water Industry is an organisation that was
established a decade ago with vested interest in beverages production. It is
situated at 1/3 Eugene Close, opposite Iba Housing Estate.
Since it began, it has been blazing the trails and creating
remarkable pace setting in the spheres of production and creativity.
Its mission is to produce quality products and to give consumers
of the products value for money.
Their products include the following:
Table water
Pure water, and
Water dispensing machines.
Table water
Eugene de Rose table water is produced under the best hygienically
supervised conditions, with the latest/best automated bottling water equipment.
It is packed in various sizes, 50cl, 75cl, 150cl and 18.9 litres.
It also offers personalised labels to brand various occasions.
Sachet water
This is prepared in 60cl of N60 per bag
Water Dispensing
Machines
The water dispensing machines are durable, dependable and
affordable; it comes in different shapes and sizes. Some of these dispensers
are equipped with digital indicators highlighting hot and cold temperatures,
while some also have inbuilt refrigerators for storage.
History of Vono
Products Plc (Medium Scale Enterprise)
Vono Products Plc was incorporated on 9th October, 1960
with initial objective of meeting the domestic and institutional needs of
homes, schools, hospitals and various establishments in terms of metal and
packaged beds. Its head office is located at 326/328 Agege Motor Road, Lagos
State.
Nature of business – manufacturing distribution and marketing of industrial and domestic
related products, e.g. Mattresses, Cushions, sheetings, shoulder pads, carpet
underlay, complete bed innerspring mattresses, bunk-bed, hospital bed and
school furniture.
The company diversified five years later into furniture items,
hospital products and foam mattresses in a bid to broaden its scope of
operation and strengthen its competitive advantage.
Vono is a house hold name in the Nigerian Market with a very
strong and enduring brand that has enjoyed loyalty of the Nigerian populace for
over four decades. As a pioneer in the bedding industry, our products range are
of international standard and highly diversified covering such areas as
schools, hospitals, government institutions, hotels, homes and others. Vono has
the following plants:
·
Foam factory
·
Furniture factory and
·
Metal factory
Our vision, which is to be leading provider of seating and
sleeping comfort and frontline manufacturer of beddings and high brand metal /
furniture products, is aptly demonstrated by our ability, as on indigenous firm
to become the nation’s reference standard and model in terms of both product
quality and customer services.
·
Vono is a member f the
Manufacturers Association of Nigeria (MAN)
·
Vono is a Member of the
Furniture and Allied Products Manufactuers on Nigeria
·
Vono is a Member of the
Nigerian Employers Consultative Association
·
Vono is also supportive of
the Labour unions in the Industry i.e AMPISEN.
Vono Product Plc is a complete form, furniture and bedding company
with large array of products designed to ensure comfort, development and
conductive learning
How the topic affects
the case study activities
The problems which SMEs such as Eugene De Rose and Vono Products
Plc face in Nigeria are the likely factors that negatively affect Small and
Medium Enterprises generally such as lack of capital, poor electricity, poor
credit facilities that is problem of getting loan from banks e.g. Micro-Finance
Banks etc. That frustrates the enterprises sometimes out of functioning which
in the long run reduce employment rate and ruin the economic growth of this
country.
Therefore, it is observed that the factors mentioned above are the
problems militating against Eugene De Rose and Vono Products Plc.
1.10 DEFINITION OF
TERMS
Business Enterprise: This is the activity of providing goods and services involving
financial and commercial and industrial aspect.
Small Enterprise: An enterprise whose total cost including working capital but
excluding cost of land is between ten million naira (10,000,000) and one
hundred million naira (10,000,000) and one hundred million naira (100,000,000)
a workforce between eleven (11) and seventy (70) full time staff with a
turnover not more than ten million naira (10,000,000) in a year.
Medium Enterprise: A company with total cost including working capital but excluding
cost of land or more than one hundred million naira (100,000,000) but less than
three hundred million naira (300,000,000) a staff strength of between seventy
on (71) and two hundred (200) full time workers with an annul turnover of nor
more than twenty million naira (20,000,000) only.
Large Enterprise: Any enterprises whose total cost including working capital but
excluding cost of land is above three hundred million naira (300,000,000) a
labour force of over two hundred (200) worker
an annual turnover of more than twenty million naira (20,000,000) only.
Entrepreneur: He is an innovative individual who perceives business ideas and
put resources together to exploit these ideas profitably in business.
Business: This consists of activities, interactions, sentiments and
performance individual or groups.
Financing: It implies money as a support for an undertaking to facilitate small
scale business.
Industries: There are different types of business units which vanes between
agricultural, construction and manufacturing.
Economy: This is the relationship between production trade and supply of
money in a given economy.
Economy Growth: It is an increase in the capacity of an economy to produce goods
and services compared to the period of time to another.
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