ABSTRACT
The
research work aimed at examining the role of Small and Medium Scale enterprises
(SMEs) in an economy using Eddison Aluminum Company as a case study. The main
instrument used to generate data for the study was the questionnaire, sixty
(60) in number which received 93.33% response rate.
The
key issues uncovered by the research study are that respondents agreed that
small and medium scale enterprises like Eddison Aluminurn Company have played a
significant role in the Iron, Steel and Aluminum Industry in particular and the
economy in general. Also, most of the barriers to the growth of SMEs in Nigeria
include poor managerial skill, lack of feasibility studies, lack of timely
information, inconsistent government policies and inadequate infrastructural
facilities.
Effective
training can improve the productivity of Eddison Aluminum Company. There is
prospect for the survival of SMEs in Nigeria.
However,
the findings of the Study, the following recommendations are proffered. The
Federal Government should provide enabling environment like the provision of
infrastructures such as good roads, electricity supply, water to enable the
operations of SMEs in Nigeria.
Finally financial institutions like banks, finance houses, mortgage homes
should grant soft loans to SMEs without too much rigidity on collateral
security.
TABLE
OF CONTENTS
Title Page Pages
Certification - - - - - - - - i
Dedication - - - - - - - - ii
Acknowledgement - - - - - - - iv
Abstract - - - - - - - - vi
Table
of contents - - - - - - - - vii
CHAPTER ONE: INTRODUCTION
1.1 Background
of the Study
1.2 Statement
of the Problem
1.3 Purpose
of Study
1.4 Statement
of Research Questions
1.5 Statement
of Research Hypothesis
1.6 Significance
of the study
1.7 Historical
Background of Eddison Aluminium Company Apapa, Lagos
1.8 Scope
of the Study
1.9 Method
of Data collection
1.10 Definition
of Terms
References.
CHAPTER TWO: LITERATURE REVIEW
2.0 Introduction
2.1 Definition,
Nature and Classification of Small and Medium Scale Enterprises (SMEs).
2.2 Characteristics
of SMEs
2.3 Economic
Importance of Small and Medium Scale Businesses
2.4 The
Role of Small business Organizations in Nigeria Economy
2.5 Efforts
made to Facilitate Financing and Promoting of SMEs in Nigeria.
2.6 Obstacles
to Effective Funding of SMEs in Nigeria
2.7 Conclusion
References
CHAPTER THREE: RESEARCH METHODOLOGY
3.0 Introduction
3.1 Re-Statement of Research question
3.2 Re-Statement Research Hypothesis
3.3 Research Design
3.4 Study Population
3.5 Sample Size
3.6 Data Collection Instrument
3.7 Data analysis Technique
3.8 Limitations of the Research Methodology
References
CHAPTER FOUR: DATA ANALYSIS AND INTERPRETATION
4.0 Preview
4.1 Analysis of Personal Data
4.2 Presentation `
4.3 Testing of Hypothesis
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary
5.2 Conclusion
5.3 Recommendations
Bibliography
Appendices
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND
OF THE STUDY
The growth
of small and medium scale enterprises in any economy is usually regarded as a
catalyst to the development of industrial sector in that country. Small and
medium scale firms have a vital role to play in promoting the social and
economic well being of the nation. This is because this sub-sector is a viable
means of utilizing the locally available resource. It is also a sustainable
means for food security, employment generation, improving the earning capacity
of the populace and laying the foundation for a sustainable development
programme.
According
to Ojodu (2002), in "Reinvigorating Nigeria Economy" the promotion of
small scale business is a well recognized and much heralded strategy of
industrial development in developed and developing countries, and its ability
to enhance entrepreneurial and managerial skills. In advanced economies of us,
Japan, Germany, U.K. etc, small and medium scale business have been recognised as the appropriate
production units for the transformation of locally produced agricultural and
other products which serve as inputs for large 'scale industries.
Development economists are of the opinion that
labour intensive industries like the SMEs can enhance employment generation,
advance development goals like improved income distribution, generation and
diffusion of technology and industrial skills, increased utilization of local
resources, improved
spatial distribution of industrial
activities and reduction of rural urban population movement. In a depressed
economy; like Nigeria,
effective and efficient operation of small and medium scale enterprises as well
as creation of conducive operating atmosphere is the only way for industrial
development.
By
definition in 1979, the Central Bank of Nigeria (CBN) in its credit guidelines
to commercial banks, stated that small scale enterprises were those with annual
turnover not exceeding N500,000.
In
addition, a small and medium industry is defined in CBN Briefs (2002-2003)
edition as any enterprises with a maximum asset base of N200milion excluding
land and working capital, and with the number of staff employed by the
enterprise not less than 10 and more than 300.
In view of the operational efficiency of
Eddison Aluminum Company, an aluminum and other related components producing
enterprise, it becomes germane to undertake a study on the role of small and
medium scale enterprises (SMEs) in an economy. It is worthy mentioning that the
Federal Government of Nigeria has made some initiative to promote indigenous
entrepreneurship in small and medium scale businesses.
1.2 STATEMENT
OF THE PROBLEM
Its has
been established that small and medium scale enterprises are the backbone of
the industrial, sector of any economy. However, despite the contributions made
by this sector in Nigeria,
SMEs still face some problem which have manifested in the operation of Eddison
Aluminum Company, Apapa.
Oresotu
(1985) contributing his opinion in a sub-heading titled "Limitations and
Short Comings of Small Scale Business in Nigeria" identified the major
problems of small-scale industries as: finance, organization and technology.
The finance problem derives from the fact that it cannot raise capital from
organized capital market like the stock exchange. Borrowing from the financial
institutions like banks is very difficult. This is the critical predicament
facing Eddison Aluminum Company, Apapa. Just as Samuel Taylor Colaridge said in
the rhyme of ancient marine "Water, Water, everywhere, but not a drop to
drink" that is the case of most small and medium scale enterprises in Nigeria
to day. Very many banks and finance houses everywhere in major cities and
commercial centers of Nigeria
today, but no fund for SMEs.
In
addition, management problems constitute the most important problems for small
and medium scale business like Eddison Aluminum Company, Apapa. These problems
manifest in poor record keeping, poor credit management, poor inventory
control, poor working capital and raw materials planning, poor marketing/sales
management.
Mostly,
partly due to financial constraints, a small industry cannot afford to recruit
and/or retain highly skilled personnel. This is partly responsible for the
inefficient operations witnessed in the 'industry, which Eddison Aluminum
Company is not an exemption. The above scenario present a barrier to the wheel
of progress of SMEs in Nigeria.
1.3 PURPOSE
OF THE STUDY
Small
and medium scale enterprises have been recognized as the foundation for the
attainment of accelerated economic growth and development. In specific terms
the purpose of the study include the following:
·
To evaluate the role of small and medium
scale enterprises in Nigeria
economy.
·
To evaluate the impact of SMEs both
positively and negatively on the economy.
·
To examine the contribution, made by Eddison
Aluminum Company in the manufacturing sector of Nigeria economy.
·
To examine the problems and prospects of
small and medium scale enterprises in Lagos.
·
To evaluate government effort toward
promoting small and medium scale businesses
·
To offer suggestions on how to' improve the
fortunes of SMEs in Nigeria.
1.4 STATEMENT
OF RESEARCH QUESTION
·
What has been the role of small and medium
scale enterprises in economic development in Nigeria?
·
What are the opportunities open for SMEs in Nigeria?
In what ways have the various levels of government supported the growth of SMEs
in our country?
·
What are the problems facing small and medium
scale enterprises in Nigeria?
·
What prospects do the SMEs have in achieving
their goal?
1.5 STATEMENT
OF RESEARCH HYPOTHESIS
Ho: Small
and medium scale enterprises do not play any significant role in the Nigeria
economy.
Hi: The
small and medium scale enterprise play a significant role in the Nigeria
economy.
Ho: There is no prospect for survival of SMEs in
Nigeria.
Hi: There is prospect for survival of SMEs in Nigeria.
1.6 SIGNIFICANCE
OF THE STUDY
Small and medium scale enterprises play a key role in generation of new idea, jobs and the
encouragement of entrepreneurial skills. The relevance of SMEs can never be
over emphasized especially in a developing country like Nigeria. SMEs are primarily '
expected to serve as bedrock of supply of promising entrepreneurs who would be
ready to take chance on ,the exploration of new ideas or favourable market
development. SMEs create more jobs. In most developing economies, unemployment
is the greatest threats to. economic growth.
Hence,
the proliferation of SMEs and development could be an antidote to large scale
unemployment in these economies.
Other
areas in which SMEs are of significance are mobilization of local resources,
mitigation of rural urban migration, distribution of industrial enterprises.
Thus, SMEs would not only encourage indigenous technology but also promote the
establishment of import substitution industries. They are known to contribute
to gross domestic product (GDP), and a source of sustenance of means of
livelihood of many citizens.
Finally,
they are expected to produce for exports thereby generating additional foreign
exchange that would strengthen the Nigerian balance of payment position.
1.7 HISTORICAL BACKGROUND OF EDDISON ALUMINIUM
COMPANY APAPA, LAGOS
Established
in ].989 at No.3 Cardoso Street Apapa, Lagos
with an (initial capital outlay of N250,000. Eddison, Aluminum is in the manufacturing
and sale of Aluminum `profiles accessories and glasses. In the 1990s, Edditson
Market by the production, marketing and sales of these products were booming.
It had a significant market share in the construction and sales of aluminum
doors and windows within the industry at Apapa and its environs.
The
company also had a large pool of skilled workforce including apprentice in the
production department, which had good motivational package. Today however, things
have fallen apart with the organization. In the face of economic downturn in Nigeria
especially with the devaluation of
Aluminum
Company could not meet her factory demands for basic raw materials which are
imported from abroad. This often led to her use of inferior basic raw materials
which resulted to customer complaint and loss of her most customers to
competitors.
Simultaneously,
most of her skillful workers resigned because of cut or irregular payment of
their salaries. Her inability to meet other short term debts compounded the
situation as her creditors who are private lenders always besiege the company
premises asking for their repayment.
Owing
to her incapability to borrow from the banks or other financial institutions
because of lack of collateral security, but in view of the effort made by the
federal government in 2001, in setting up small/medium industries equity
investment schemes (SMIEIS), the plight of Eddison Aluminum Company, Apapa
could be overcome.
1.8 SCOPE
OF THE STUDY
The
current study will cover Eddison Aluminum Company at Apapa Lagos. It will
embrace the operations of the company since its inception including the role
the firm had played in the past eighteen (18) years of its existence.
1.9 METHOD OF DATA COLLECTION
The
research study requires the collection of both primary and secondary sources of
data.
Primary
sources of data would come mostly from the questionnaires. Also oral interview
within the-company premises would constitute another source of primary data.
The
Secondary sources on the other hand include Journals, Textbooks, case study and
some documented records by the organization.
1.10 DEFINITION
OF TERMS
a.
A System: A system is simply a set of entities
that interact, inter-depend and function together for a purpose.
b.
Capital Market: This is the market where
companies raise funds on long-term basis by issuing securities i.e. shares to the
general public.
c.
Devaluation: This means increasing the rate
at which local currency exchanges for foreign currency – Olawale & Folorunsho
(1984).
d. Effectiveness:
This is the ability to choose appropriate objectives or means for achieving a
given objective or as Peter Drucker put it "doing the right thing".
e. Efficiency:
This is the ability to get things done correctly or as Peter Drucker put it
"doing things right", it is the maximization of output to input ratio.
f. Financial
Institution: This is any institution that deals in money or money instrument.
It involves the creation, protection, transfer, lending and borrowing of money.
g. Gross
Domestic Product (GDP): This refers to the values of all the goods and services
produced by people resident in a country - Essang & Olayide (1974).
h. Market
Share: The portion of total market or sales which occurs or belongs to a
particular organization.
i. Working
Capital: Money needed for carrying on a business -Advance Learners Dictionary.
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