ABSTRACT
The work is an academic exercise which
attempts to study the problems and prospects of small and medium scale
enterprises in Nigeria. The researcher by undertaking this survey was able to
unearth the contributions of small and medium scale business in changing a
depressed economy. Research questions were formulated from which the major
findings were obtained and recommendations were made. One of the findings is
employment generation which is a major contribution of small and medium scale
enterprises to any nation’s economy. It is therefore recommended that for small
and medium scale enterprises to play its role in contributing to growth and
development of the Nigeria economy, government should reform the educational
systems to be more functional, relevant and need-oriented and driven. There is
also the need to restructure and strengthen policy in favor of a rapid growth
and development of small and medium enterprises so as to serve as the hub of
industrial transformation.
TABLE OF CONTENT
Cover page
Title i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of
content vi
Chapter
One
Introduction
1.1
Background
of the Study 1
1.2
Statement
of Problem 6
1.3
Purpose
of the Study 8
1.4
Research
Questions 8
1.5
Research
Hypotheses 9
1.6
Significance
of the Study 9
1.7
The
Scope of the Study 9
1.8
Definitions
of Terms 10
References 13
Chapter
Two
Literature
Review
2.1 Theoretical Framework 14
2.2. The Contribution of small scale
business
in changing the depressed Nigeria economy
16
2.3
Factors Militation against the development of
small and
medium scale enterprise 21
2.4 Government
agencies responsible for
small enterprises development (SMEDA) 23
2.5 The role
of Nigeria Association of small
scale enterprises on the development of the sector 25
2.6 Problems
of small and medium scale business 26
2.7 Management
problems of small and 29
medium scale enterprises
2.8 Need for
training in small and medium
scale business 31
2.10 How to
Design small and medium
scale business plan 32
2.11 Reasons
why small and medium scale
business remains underdeveloped in
Nigeria 33
2.12 The
future of small and medium scale
Enterprises in Nigeria 34
2.13 The role of the Government in the
promotion of small and medium scale
industries 35
References 39
Chapter Three
Research Methodology
3.1 Research
Design 41
3.2 The
Population 41
3.3 The Study
Sample 42
3.4 Research
Instrument 42
3.5 Reliability of the Instrument 43
3.6
Administration of Instrument and scoring 43
3.7 Method of
Data Analysis 43
Chapter Four
Data Analysis and Interpretation
4.0 Introduction 46
4.1 Analysis
of Data and Result 46
4.2 Analysis
of Research Hypotheses 53
4.3 Summary of
Findings and Results 54
Chapter Five
Discussion, Conclusion and Recommendation
5.1
Discussion of Findings 57
5.2
Conclusions 59
5.3
Recommendations 62
5.4
Constraints of the Study 72
5.5
Suggestions for Further Studies
Bibliography 73
Appendix
I 78
CHAPTER ONE
INTRODUCTION
1
.1 BACKGROUND OF THE STUDY
Experience
has shown that industrial development in any country, provides
the brightest hope for generating sustenance growth employment,
saving and investment and indeed economic development. Nigeria,
like any other developing country with relatively low per-capital income,
looks unto industrialization and structural transformation, which are
imperative in the quest for the development. One of the most critical development
issues in Nigeria revolves around the need to design and implement
policies and strategies for an effective, competitive and diversified
industrial system. This is particularly important when one considers
the country's endowment. Olatoke (2005)
Giant
business establishment make headlines in our news media,
people therefore think less of small and medium
scale businesses but a clear examination will show that
small scale business venture are also extremely important in our
societal development. Most of today business giant started from
humble beginning, from dreams and dedication of perhaps one person
while backbone of our economic system hang on those business e.g. (Oil and
steel companies etc), but the small scale industries constitutes the muscle
that enable such business giant above is obvious however; that
the small medium scale businesses cannot compete directly with big
business. Experiences show that the small-businessman is mostly
successful when he fulfills a need that cannot be or
is not currently being supplied by these big business competitors."This
act to provide something better and different, gives Nigeria's small business
vitality". (Ihekwoaba, 2007)
The
federal government of Nigeria in realization of the importance of small and
medium scale industries to the development of the economy. In her first
National development plan (1962 - 1968) the federal government
introduces import substitution industries. In her second National
Development plan in early 80s the main strategies of the
industrial policy were foreign exchange policies and trade
regulations investment incentives and special incentives to provide
credit and technical assistance to small scale industries. (Udi&Omorokpe,
2006)
Under
the structural adjustment programmes (SAP) framework, having recognized futile
expenditure with increased revenue from petroleum, a new industrial policy was
launched in 1989, which re-emphasizes direct government realization
process for the first time, the national identified small and medium scale
enterprises or the main focus and strategy for the attainment of the
goal of economic self-reliance. (Ihekwoaba, 2007)
Small
and Medium Enterprises (SMEs) as defined by the National Council of Industries
refer to business enterprises whose total costs excluding land
is not more than two hundred million naira (N200, 000,000.00) only. A lot has
been said and written about SMEs the world over. It has also formed
the subject of discussions in so many seminars and workshops both locally and
internationally. In the same token, governments at various levels
(local, state and Federal levels) have in one way or the other focused on the
Small and Medium Enterprises. While some governments had formulated policies
aimed at facilitating and empowering the growth and development
and performance of the SMEs, others had focused on assisting the
SMEs to grow through soft loans and other fiscal incentives. International
agencies and organizations (World Bank, United Nations Industrial Development Organization
(UNIDO), International Finance Corporation (IFC), United Kingdom
Department For International Development (DFID), European Investment Bank (EIB)
etc are not only keenly interested in making SMEs robust and. vibrant in
developing countries but have also heavily invested in them. Locally,
the several Non-Governmental Organizations such as Fate foundation,
Support and Training Entrepreneurship Programme (STEP), the Nigerian Investment
Promotion Commission (NIPC), the Association of Nigerian Development Finance
Institutions (ANDFI), as well as individual Development Finance Institutions
(DFIs) have been promoting the growth of SMEs in Nigeria through advocacy and
capacity-building initiatives, and have continued to canvass for better support
structures for operators in the SME subsector. All the massive attention and
support given to SMEs relate to the widely acclaimed fact
that SMEs are job and wealth creators. (Olatoke, 2007)
In
justifying the introduction of SMIEIS, the then Governor of the
Central Bank of Nigeria, Sanusi (2003) said “with a concerted effort and
renewed commitment from all stakeholders, this scheme will surely succeed and
realize its intended objective of revamping the SMEs as engines of growth in
the economy and a veritable tool for the development of indigenous
technology, rapid industrialization, generation of employment for our
teeming youths and the pivot for sustainable economic development in
Nigeria". Small and Medium Enterprises (SMEs) occupy a place of pride in
virtually every country or state. Because of their (SMEs) significant roles in
the development and growth of various economies, they (SMEs) have aptly been
referred to as "the engine of growth" and
"catalysts for socio-economic transformation of any country." SMEs
represent a veritable vehicle for the achievement of national economic
objectives of employment generation and poverty reduction at low investment
cost as well as the development of entrepreneurial capabilities
including indigenous technology. Other intrinsic benefits of vibrant SMEs
include access to the infrastructural facilities occasioned by
the existence of such SMEs in their surroundings, the stimulation of economic
activities such as suppliers of various items and distributive trades for items
produced and or needed by the SMEs, stemming from rural urban migration, enhancement
of standard of living of the employees of the SMEs and their dependents as well
as those who are directly or indirectly associated with them.
(Ihekwoaba, 2007)
In
recognition of the enormous potential roles of SMEs, some of which have been
outlined above, various special measures and programmes have been designed and
policies enunciated and executed by government to encourage their (SMEs)
development and hence make them more vibrant in Nigeria. (Udi &Omorokpe,
2006)
The highlights
of these measures include:
i. Fiscal incentives and protective fiscal policies
ii. Specialized financial institutions and funding schemes for the
SMEs
iii. Favourable tariff structure
iv. The SMIEIS funding scheme
v. Selective exemption and preferential treatment in excise duties
vi. Establishment of Export Processing Zones
vii. Selective reservation of items for exclusive manufacture in the
SME subsector
Government's
full weight and support for NEPAD and AGOA activities and operations has
however been worrisome that despite the Incentives, policies, programmes and
support aimed at revamping the SMEs, they have performed rather below
expectation in Nigeria. Different people, organizations, and operators have
advanced various reasons as to why SMEs have not been able to live
up to their billing. While an average operator would always hinge his failure
on lack of access to finance, some others think otherwise arguing
that inappropriate management skills, difficulty in accessing global market,
lack of entrepreneurial skills and know how, poor infrastructure etc are
largely responsible. The Association of Nigerian Development Finance
Institutions (ANDFI) in 2004 issued this statement in relation to why SMEs
perform poorly in Nigeria: "Finance is usually considered as the major
constraints of SMEs. While this may be true, empirical evidences have shown
that finance contributes only about 25 percent to the success of SMEs. Thus,
the creation of other appropriate support system and enabling
environment are indispensable for the success of SMEs in Nigeria". (Udi &
Omorokpe, 2006)
1.2 STATEMENT OF PROBLEM
Small
and Medium Enterprises (SMEs) in Nigeria have not performed creditably well and
hence have not played the expected vital and vibrant role in
the economic growth and development of Nigeria. This situation has been of
great concern to the government, citizenry, operators, practitioners and the
organized private sector groups. Year in year out, the governments at federal,
state and even local levels through budgetary allocations, policies and
pronouncements have signified interest and acknowledgement of the crucial role
of the SME sub-sector of the economy and hence made
policies for energizing the same. There have also been fiscal
incentives, grants, bilateral and multilateral agencies support and aids as
well as specialized institutions all geared towards making the SME sub-sector
vibrant. Just as it has been a great concern to all and
sundry to promote the welfare of SMEs, it has also been a great cause of
concern to all, the fact that the vital sub-sector has fallen short of
expectation. The situation is more disturbing and worrying when compared with
what other developing and developed countries have been able to achieve with
their SMEs. It has been shown that there is a high correlation
between the degree of poverty hunger, unemployment, economic well being
(standard of living) of the citizens of countries and the degree of vibrancy of
the respective country's SMEs. If Nigeria were to achieve an
appreciable success towards attaining the Millennium Declaration Goals for
2015, one of the sure ways would be to vigorously pursue the
development of its SMEs. Some of the key Millennium Declaration Goals like
halving the proportion of people living in extreme poverty,
suffering from hunger, without access to safe water, reducing maternal
and infant mortality by three-quarts and two thirds respectively
and enrolment of all children in primary school by 2015 may indeed be a mirage unless
there is a turnaround of our SMEs' fortunes sooner than later. The time is now
to do something surgical to the situation of our SMEs given
the aggravating level of poverty in Nigeria and the need to meet up with the
Millennium Declaration Goals.
The main problems of SMEs, which are however not
insurmountable: low of entrepreneurial
skills, poor management practices, constrained access to money and
capital markets, low equity participation from the promoters because of
insufficient personal savings due to their level of poverty and low return on
investment, inadequate equity capital, poor infrastructural facilities, high
rate of enterprise mortality, shortages of skilled manpower,
multiplicity of regulatory agencies and overbearing operating environment,
societal and attitudinal problems, integrity and transparency
problems, restricted market access, lack of skills in international trade;
bureaucracy, lack of access to information given that it is costly, time
consuming and complicated at times. The problems and challenges that SMEs
contend with are enormous no doubt but it is curious to know that some SMEs are
able to overcome them. This
gives hope and should provide a basis for optimism that there is a way out.
There must be some survival strategies, which are not known to many SME
promoters. This research is also intended to explore and unravel some of the
key business survival strategies, which have worked for a few thriving SMEs.
The benefits of this could be tremendous in that other SMEs facing threats of
extermination as well as new and proposed new ones could also borrow
1.3 PURPOSE
OF THE STUDY
The overall objective of this
research is to identify ways and means, which will establish and sustain the
vibrancy of Nigerian SMEs so it can play the expected vital roles as the engine
of growth in our economic development efforts.
In order to achieve this, the
followings are the purpose of this study:
(1)
To
identify the major problems, challenges and constraints which have militated
against the SMEs.
(2)
To
examine the roles, functions and importance of SMEs in Nigeria economy.
(3)
To
determine the role of government in assisting the SMEs in Nigeria.
(4)
To
suggest appropriate recommendations for solving the problems, challenges and constraints
of SMEs from performing it roles.
1.4 RESEARCH
QUESTIONS
The followings are the research
questions:
(1)
What
are the major problems, challenges and constraints of SMEs in Nigeria?
(2)
What
are the roles, functions and importance of SMEs to Nigeria economy?
(3)
What
are the roles that government should play in assisting the SMEs in Nigeria?
(4)
What
are the recommendation solutions to the problems, challenges and constraints of
SMEs in Nigeria?
1.5 RESEARCH HYPOTHESES
The
following research hypotheses were formulated for this study:
Ho: there
is no significant relationship between SMEs and the growth of Nigeria economy
Ho2: there is no significant role
played by SMEs in the growth of Nigeria economy when compared with other
sector.
1.6 SIGNIFICANCE
OF THE STUDY
All and Sundry have been seriously agitated as to what to do
in order to reduce the crippling poverty, high level of ignorance and the
embarrassing high level unemployment rate in Nigeria. Given the vital
and salutary role and contributions which SMEs play in other developed and
developing economics.
This research is significance to
potential, prospective and existing SMEs. The study will be an eye opener to
them (owners of businesses) to know how to manage, its business, how to source
for fund, principles and practice to employ in maximizing its profits and cost
reduction.
The individuals, who are not
employed, will also gain from this study, in the sense that they can easily
source for funds and establish business enterprises instead of searching for
white collar jobs.
1.7 THE
SCOPE OF THE STUDY
The scope of this study is the entire
staff of Telnet (NIG) Ltd and Bitcoms system (NIG) Ltd (small and medium scale
enterprises) in Eti-Osa local government area of Lagos.
1.8
DEFINITIONS OF TERMS
i. Micro
Enterprise: A firm, whose total cost including working capital but
excluding cost of land is not more than ten million naira
(N10,000,000) and/or with a labour size of not more than thirty (30) full-time
workers and/or a turnover of less than two million naira (N2,000,000) only.
ii. Small
Enterprise: An enterprise whose total cost including working capital but
excluding cost of land is between ten million naira (N10,000,000)
and one hundred million naira (N100,000,000) and/or a workforce between eleven
(11) and seventy (70) full-time staff and/or with a turnover of not more than
ten million naira (N10,000,000) in a year.
iii. Medium
Enterprise: A company with total cost including working capital but
excluding cost of land of more than one hundred million naira (N100,000,000)
but less than three hundred million naira (N300,000,000) and/or a staff
strength of between seventy-one (71) and two hundred (200)
full-time workers and/or with an annual turnover of not more than twenty
million naira (N20,000,000) only.
iv. Large
Enterprise: Any enterprise whose total cost including working capital but
excluding cost of land is above three hundred million naira
(N300,000,000) and/or a labour force of over two hundred (200) workers and/or
an annual turnover of more than twenty million naira
(N20,000,000) only. Other abbreviations, terms and notations used in t his study include but are not limited to the
following:
(v) NASME:
Nigerian Association of Small and Medium Enterprises, which is an umbrella
association of all SMEs
(vi) MAN:
Manufacturers Association of Nigeria is the official association of
manufacturing companies in Nigeria
(vii) NACCIMA:
Nigerian Association of Chambers of Commerce, Industry, Mines and
Agriculture is an association of various Chambers of Commerce
in Nigeria
viii. NASSI:
Nigerian Association of Small Scale Industries is the umbrella association
of all the Small Scale Enterprises in Nigeria
ix. DFIs:
Development Finance Institutions are companies involved in project and
development finance such as the Bank of Industry (BOI)
x. SMEs:
Small and Medium Enterprises are those firms, which satisfy the definitions
given above
xi. SMEDAN:
Small and Medium Enterprises Development Agency of Nigeria
xii BOI:
Bank of Industry, which provides medium to long-term loans to enterprises
xiii. CBN:
Central Bank of Nigeria, the apex bank in Nigeria, which supervises other
banks
xiv. NACRDB:
Nigerian Agricultural Cooperative and Rural Development Bank
xv. NEEDS:
National Economic Empowerment and Development Strategy
xvi. SEEDS:
State Economic Empowerment and Development Strategy
xvii. NDE:
National Directorate of Employment.
xviii.
CMD: Centre for Management
Development
xix.
NAPEP: National Poverty
Eradication Programme
xx. MSME: Micro, Small and Medium
Enterprises
xxi. NGO:
Non-governmental Organization xxii. LCCI: Lagos Chamber of Commerce
and Industry
xxiii. NACC: Nigerian American
Chamber of Commerce xxiv. SRS: Simple Random Sampling.
Click “DOWNLOAD NOW” below to get the complete Projects
FOR QUICK HELP CHAT WITH US NOW!
+(234) 0814 780 1594
Login To Comment