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Product Category: Projects

Product Code: 00002643

No of Pages: 65

No of Chapters: 5

File Format: Microsoft Word

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The project focuses on Effect of Government Financing on Small Scale Business in Nigeria. The objective of this project is to find out how the government assists small scale enterprises, to look at the various facilities put at the disposal of small scale enterprise by that the project was sued from secondary source of information. The work dealt with the impact of finding small scale enterprises on the economy. It was revealed that many owners of small scale business lack proper managerial skills and effective management of their business. Also many entrepreneurs are unaware of government planned policies programmes that are geared towards assisting the industries. On the basis of the above, the following recommendation are made that the government should enlarge the small scale industrial enterprise promotion board (SSIGPB) in various states, of the federation to includes dissemination of ideas, plans policies and programmes among small business holding in Nigeria.     






Title page

Certification         ---      ---      ---      ---      ---      ----     ---      ---                i

Dedication ---      ---      ---      ---      ---      ----     ---      ---                ii

Acknowledgement         ---      ---      ---      ---      ---      ---                iii

Table of Contents          ---      ---      ---      ---      ---      ----     ---                iv

Abstract      ---      ---      ---      ---      ---      ----     ---      ---                vi


1.1            Background to the study         ---      ---      ---      ---      ---                1       

1.2            Statement of the problem        ---      ---      ---      ---      ---                4

1.3            Research Questions       ---      ---      ---      ---      ---                5

1.4            Objective of the Study---         ---      ---      ---      ----     ---                5

1.5            Statement of  Hypotheses ---   ---      ---      ---      ---                6       

1.6            Scope of the Study---     ---      ---      ---      ----     ---                6

1.7            Significances of the Study---    ---      ---      ---      ---                7       

1.8            Limitation of the study---        ---      ---      ---      ----     ---                7

1.9            Operational Definitions of Terms --- ---      ---      ---                8


2.1     Small Scale Business --- ---      --       ---      ---      ----               10     

2.2     Starting a Small Scale Business  ---  ---      ---      ---                13     

2.3     Characteristics of Small Scale Business--- ---      ---                14

2.4     Sources of Finance ---      ---    ---      ---      ---      ---                16

2.5     Importance of Small-Scale Business--        ---      ---      ---                20

2.6     Nature of Business Finance --- ---      ---     ---      ---                22

2.7     Problems of Small-Scale Business in Nigeria ---  ---                25

2.8     Lending Procedures and Criteria ---  ---      ---      ---                27

2.9     Government Policies/Incentives for the Support of Small-Scale

          Business ---          ---      ---      ---      ---      ---      ---                33


3.1     Research Design---         ---      ---      ---      ---      ---                37

3.2     Population of the Study ---      ---      ---      ---      ---                37

3.3     Sample/Sampling Techniques ---      ---      ---      ---                37

3.4     Instrumentation ---                  ---      ---      ---      ---      ---                38     

3.5     Methods of Data Collection ---         ---      ---      ---      ---                31

3.6     Method of Data Analysis        ---      ---      ---      ---      ---                33


4.1     Data Presentation ---      ---      ---      ---      ---      ---                41     

4.2       Test of Hypotheses      ---      ---      ---      ---      ---                44




5.1     Summary--- ---      ---      ---      ---      ---      ---      ---                52       

5.2     Conclusion ---      ---      ---      ---      ---      ---      ---                54     

5.3     Recommendations         ---      ---      ---      ---      ---      ---                54       
































1.1     Background to the Study

Globally it is acknowledge that finance sourcing is a big problem for small –scale business. However, the main consideration in going into a business venture is the amount of available resources and the actual funds needed. The development of small –scale business in Nigeria data’s to post independence years. Due to the recognition of the importance of small –scale business in Nigeria therefore, the government has decided to initial various polices and schemes to facilitate the development of this sub-sector of business enterprises. Some of these schemes are the federal loan board, the regional corporation which is extinct and the industrial development centre (IDC).

Generally, as a matter of fact, the federal government policy regard small –scale business as the most important factor towards the achievement of self reliance and economic compliance which gives a nation the stability necessary for internal peace and command international respect. The government recognizes that small –scale business plays important role in accelerating the pace of economic development and the generation of employment, promotion of initiative and entrepreneurship development of exports. Government therefore has been definite in its bid to encourage this sub- sector. It was in pursuit of this that led to promulgation of the Nigerian enterprise promotion decree which reserved for Nigerians equity participation between 40% and 60%.

In the second national development plan, total of N5.9 million was voted for small –scale business by both the federal and state government. This loan was to be made available to financial institution like Nigeria industrial Development Bank (NIDB) for lending small –scale industrials. It was increased to N48.587million in the third National plan (1975 -1980) out of which the federal government was to provide N20 million. Since then subsequent National development plans have given much more noticeable encouragement in terms of financing small and medium enterprises of local values.

Despite post attempt directed at assisting the small –scale business, the achievement of sustained financial sourcing was listed as one of the challenges facing many of our entrepreneurs; it seems there is still much to be done. The government has further initiated new schemes /policies to butter up the existing avenues of financial opening to the small –scale business. As at 1990 the central Bank of Nigeria monetary guidelines had revised commercial and merchant bank total credit to small –scale industries from 16% to 20% enabling funds. The National economic reconstruction fund (MEFUND) The people banks that are been established by you memento for The purpose of sustaining the small-sealed enterprises (Mosko 1990). Despite These noticeable efforts by you government at assisting The small- scale business. It is a matter of opinion whether it has done enough every activities of an ousting business necessitates consideration of funds needed to implement it. For instance to survive, a farm might need to diversifying its product lines thereby putting its eggs in many baskets. By so doing failure in one area will not mean total failure in all other area and so the firm might decides to increase its promotional activities to increase its market needs and funds needed for financing. The activities of business but also sources from which the fund will be raised

A business has the discretion of using sources of finance which are more preferred than others in financing has project or business. The important thing however is that if the business man want to operate on full –scale then he has to make the fullest of all financing sources that are within his reach and not depends on a number of factors including his knowledge of existing sources, the case with which he can obtain finds from different sources and so forth. The objective of this research is to explore and reveal all the sources of financing available to small –scale business, their associated constraints or difficulties.

1.2     Statement of the Problem  

From a comprehensive view small –scale enterprise face a lot of problems but this research is directed at major issues in the financing of this sub-sector of business enterprises.  The main concern of this work is the problem associated with the various sources of finance available to the small –scale business. In Nigeria for example most of the small –scale business do start their business with their own saving or loans from friends or relations. They operate in the most competitive of the economy and maintain inadequate records of their financial transaction. This effects their financial ability to raise equity capital and maintain adequate level of working capital hence they always complain of capital shortage.

Most small-scale business are not able to raise equity capital by selling shares due to the nature of their business and the fear of loss of control long –term loans from financial institutions are also not available to them because they are generally unable to provide the necessary collateral security and inadequate commitment to long-term survival  of the business and poor management practices to maintain satisfactory relationship with commercial banks because they have not acquired the habit of following simple accounting procedures. In addition due to ignorance or illiteracy on the part of owners of small –scale businesses they are not aware of some sources of finance available to them. In spite of the government effort directed towards establishing schemes to assist them to obtain finance.

1.3     Research Question

The following were the questions established for the research work. They include:

1.     So small –scale business occupy a very important place in the activities of Nigeria economy?

2.     Do small businesses have any influence in terms of development of the economy as regard the reconstruction of the capital base?

3.     Do a consumers view the performance appraisal system as a vital way of the company?  

1.4     Objective of the Study

The main objectives of the study include

1.     To highlight the various sources of financing available to small –scale business.

2.     To identify the problems associated with avenues for financing small –scale business.

3.     Also to determine the extent to which these sources are being used by small –scale business and the adequate funds provided by them.

4.     To ascertain whether there is capital shortage problems facing small –scale business or is it mere illusion as in must literature.

5.     To suggest possible solutions to be problems associated with the identified sources.

1.5     Statement of  Hypotheses

(1)     Small –scale firms are unable to maintain a satisfactory relationship with commercial banks because they have not acquired the habit of the following simple account procedures.

(2)     Small –scale business owners do not prefer full ownership and control to be the general overseers of their businesses and control to dilution owner through the issuance of shares.

(3)     Most small business owners are not aware of the available sources of finance through the various government schemes.

1.6     Scope of the Study

The research is on the problem of financing small- scale business. This study will cover the areas of the role of financing in small –scale business. The types of sources managerial schemes and skills to be used and the various problems of financing it also cover the scope of planning and financing small –scale businesses.

1.7     Significance of the Study

The essence or importance of the study is that at its completion. The researcher will be able to ascertain whether capital shortage is really a problems facing small –scale business or capital shortage is mere illusion. The study will benefit the owners of small –scale business and for those who will intend to start small –scale business it will enable them to know the available sources of fund open to them. This will invariably eradicate the ignorance of not knowing where to get the necessary finance. In addition, the study will reveal the problems associated with the various small –scale businesses.

Finally, the research would given suggested solution to both authorities concerned and the small –scale business operators on better ways  to finance this business sector.

1.8     Limitation of the Study

This study is limited to final Touch Barbing Saloon, Auchi, it will cover the sources of finance available to small –scale business as reveled from studies and research into relevant literatures.

The study will analyze the adequacy of the sources of finance available to small –scale businesses and the constraints associated with these sources. The study was constrained by time and cost as a result of the entire population of small-scale business in Benin City was not examine. Rather A Case Study of Final Touch Barbing Saloon, Auchi was used.

1.9     Operational Definition of Terms

Finance:- This is also known as capital which is used to carry on or start up any business  the finance function is vital for the profitable management of every business enterprise. (Lawal, 2001).

Trade Credit:- This refers to buying goods to take them away before paying cash i.e. when a trade collects goods he or she goes and sells before he /she comes bank to pay at a promised date.

Commercial Papers:- These are financial assets or instruments usually short –term. These include bills of exchange certificate promissory note and treasure bills (Nwakoby, 2008).   

Financing Inventories:- Inventories are stocks and also financial assets. The Britain people call it stock while the American people call it inventories as it is much more known in the business world (Horby, 2002). 

Standing Order:- This is when a current account is debited as installment payment when loan been borrow is due.

Bank Credit:- This is a short term loan given by bank to customer for financing business, as a financial assistance. (Ahmed, 1993).

Overdraft:- A system whereby depositor may write check in excess of their balance with the banks automatically extending loans to cover the shortages over draft interest is calculated on the total amount approved for the customer from the approval date.  (Prest, 2008).

Loans:- This is money borrow from friends or relatives. These personal loans are frequently made to get small business started and although they can be handled as formally as bank loan, they often times are not, they may not have any definite rate of interest or time are not. They may not have any definite rate interest or time for repayment. The following are types of loans.

Bad Debt:- This is a kind of debt which cannot be recovered. Some debtors cannot pay their debts and such the chances of getting the debts are doubtful for this reason some debts are written off and they are know as bad debts.

Business:- Business is defined as all the commercial and industrial activities that provide goods and services to maintain and improve our quality of life (Braimah, 2003). 

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