This project research was carried out
with the sole aim of providing an insight into the effect of SMEEIS on the
performance of SME's in Lagos.
Small and medium scale enterprises
arc indispensable instrument that contributes to the accelerated industrialization in developing countries as well as many countries of
the world. It also serve as sources of inputs for
large production concerns in big and developed economies in other to achieve
the attainment of accelerated economic growth development of nation.
Based on the significance role played
by those enterprises industries, the government throughout the world favourable disposed towards the
idea that help to promote the growth.
In the course of this research, the primary and
secondary sources of data was adopted in selecting the sample size in which the
prepared questionnaires were administered. The data obtained was analysed using
the Chi-square method of data analysis.
After, the data has been analysed, it
was found that inadequacy of funds for the implementation and growth of the SMG's was responsible for the
failure of SME's development in the country.
Government should provide enabling
environment and improved quality management practices are recommended for SME's to play
their roles in sustainable development of the country.
TABLE OF CONTENTS
Table of Contents
1.1 Background of the Study
of the Problems
1.3 Research Questions
l.4 Objective/Purpose of the Study
1.5 Statement of Hypothesis
1.6 Significance of the Study
1.7 Research Methodology
l.8 Scope and Limitation of the Study
1.9 Definition of terms
of the Study
2.1 Definition of SMEs
2.2 Characteristic of Small and Medium Scale Enterprises
2.3 Significance of SMEs to the Development of the Economy
2.4 Problem Faced by Small and Medium Scale Enterprises in the
2.5 Roles Played by SMEs in the Economy Development
between Small and Large Enterprises Industry
2.7 Country Experiences in SMEs Development
2.8 Government Policy
2.9 What is SMEEIS
2.10 The SMEEIS Definition to SMEs
2.11 Element of the Small and Medium Enterprises Equity Scheme
2.12 Why SMEEIS was introduced
2.13 Objectives of SMEEIS
2.14 Eligible SMEs
2.15 Activities Covered by the Scheme (SMEEIS)
2.16 SMEEIS Operation Investment in Nigeria
3.1 Restatement of Research Questions and Hypothesis
3.3 Sampling Design and Procedures
3.4 Characteristic of Study Population
3.5 Data Collection and Instrument
3.6 Pilot Test including Validity and Reliability Test
3.7 Administration of Data Collection Instrument
3.8 Procedure for Processing and Analysis of Data
3.9 Limitation of the Methodology
AND INTERPRETATION OF RESULTS
4. 0 Introduction
4.1 Data Analysis
4.2 Chi Square
4.3 Preliminary Analysis and Respondents
Characteristic and Classification
SUMMARY, RECOMMENDATION AND CONCLUSION
5.2 Summary of
1.1 BACKGROUND TO THE STUDY
There is no gain saying that small and medium enterprises play a dominant role in a nation's
economy since they facilitates the achievement of social and economic policy
objectives of a country.
According to business information
website Okafor (2000) small-scale enterprises generate amongst other benefit,
the following: employment generation, value added production, feeding industry
services, high potential for rapid industrialization etc. However, small and
medium enterprises industries are generally regarded as the engine driving the growth of any economy.
In Nigeria, small and medium
enterprises industries have been confronted with the problem of obtaining
finance from their continued existence, over years several scheme had been put
in place to drive the development and growth of small and medium enterprise
industries in Nigeria, these scheme, appear not to have achieved much due to
various reasons ranging from policy disconnect and lack of conducive business
However, the policy framework in
Nigeria for the support of small and medium enterprises industries is in its
infancy while the funding institutions are
not favourably disposed to small and medium enterprises, this is adduced to
same reasons such as: High risk associated with lending small and medium
enterprises, low returns on small and medium enterprises due to high operating
Ibru 2006, the CBN launched the
micro-finance institution (MFI), which is considered to be actually, and
appropriately suited to small and medium .enterprises industries financing at
the grass root level.
In addition, adequate finance is the
engine of growth and development for business enterprises especially the small
and medium enterprises industry In Nigeria. Successive government in Nigeria
have for the past three decades had greater interest in financing of small and
medium enterprises industries by establishing specialized banks and other
This study will examine the effects
and challenges of small and medium enterprises industries scheme on the
performance of small and medium enterprises in provision of micro-credit to
small and medium enterprises in Lagos.
1.2 STATEMENT OF THE PROBLEM
As one walks along the street in any
commercial city in Nigeria today, one is greeted by numerous one-man business
of different forms: barber's shop, cobblers, art studios, bakeries, soap making
mini-factories, electronics· repairs shop etc. something you stop to wonder how
well-organized are these small business? What is their capital structure like?
What of infrastructural support do they enjoy from government and agencies? In
co-ordination this, quite a lot of effects were made by the government and CBN
to promote small and medium scale enterprises in Nigeria, one such effort was
to use the credit guideline in the 70s to subtly compel commercial and merchant
banks to channel credit facilities to SMEs that constitute the Nigeria economy
to assist SMEs as its contribution.
However, there have been the problem
of unemployment that has been rising in Nigeria, other country contribute substantially
to the development of their country e.g. the Macmillan report discovered in the
United Kingdom in 1931 is yearly
visible in Nigeria today whereby there is shortage in the inflow of long-term
capital to small enterprises.
The SMEs played important role of
employment generation mobilization of local saving, investment and utilization
of raw materials. They faced a whole lot
of problem, which is why they not contribute much to the country economy.
The fact that has emerged from the
appraisal of the various past policy initiatives of government to promotion of
SMEs is that despite all assistance, the major problems is still inadequate
financing constraint to the development and effective performance of SMEs in
Nigeria. Previous efforts by the government to finance SMEs through institution
of scheme like the National Economic Reconstruction Fund (NERFUND), Nigeria
export and SMEs loans scheme administered by CBN were not particularly
The CBN with the introduction of SMEs
is by bankers committee top support and fund SMEs programmes, the CBN also
orders commercial banks to give out ten percent (10%) of its profit before tax
to set aside to fund SMEs because SMEs need finance and they get from various
sources, the most important is the personal savings money from family members.
This project will now assess the
performance of access to SMEs contribution to SMEs.
1.3 RESEARCH QUESTIONS
i. What are the critical factors
in small and medium enterprises development?
ii. What are
the major challenges or problems to SMEs financing?
iii. Have SMEs scheme and its institution
achieved their objectives in providing micro-credit to SMEs industry?
iv. What can be done to incorporate such
factors for growth and survival of this sector?
v. Do SMEs
comply with the loan requirement of SMEs?
vi. Does lack of adequate financing constitute
the major problem of SMEs in the country?
vii. Is the cost
of administering micro-credit high in Lagos State?
1.4 OBJECTIVE/PURPOSE OF THE STUDY
The primary objectives of this study are to examine the economic and problem faced by
small and medium scale enterprises in Lagos. It will investigate what has
hindered the small .and medium enterprises from excessive micro-credit under
the various specialized funding scheme and proffer strategies to overcome such
However, the specify objectives are
i. Examine operation of small
and medium enterprises equity investment scheme (SMEEIS) over small and medium
ii. Determine the contribution of
SMEEIS on employment generation on SMEs in Lagos-State
the contribution of SMEEIS on SMEs production
iv. Examine the strategies SMEs adopted
in overcoming financial barrier they faced.
v. Examined the various problem faced
by SMEEIS, hindering it on effectively fund SMEs in Nigeria.
1.5 STATEMENT OF HYPOTHESIS
The following are the hypothesis to
be tested in the course of this study:
Ho: There is no significant relationship
between the high-risk Profile of SMEs and the amount of micro-credit provided
H1: There is a
significant relationship between the high-risk Profile of SMEs and the amount
of micro-credit provided to them
Ho: There is
no significant relationship between the costs of handling small loans by SMEEIS
and the amount of Micro-credit provided to SMEs.
H1: There is a significant relationship
between the costs of handling small loans by SMEEIS and the amount of
Micro-credit provided to SMEs.
1.6 SIGNIFICANCE OF THE STUDY
This study is to look at the effect
of SMEs on the performance of SMEs, its importance and how it is being
operated, funding of SMEs, how loan is being granted to them and the procedure
that is being follow, more light will also be thrown on the strategies employed
in granting SMEs application for loan and the problem or challenges faced by
SMEs in Lagos State.
1.7 RESEARCH METHODOLOGY
This research will adopt across sectional survey of SMEs
in Lagos and also focus on the adoption of both primary and secondary of data
collection that will lead to possible solution to the research problem. Primary
source of data collection can be said as administering self-questionnaire while
secondary is through the means of telephone calls, interviews, e-mail etc, and
through the analysis of some published reports on SMEs. Analysis will be done
by the use of chi-square method.
1.8 SCOPE AND LIMITATION OF THE
This study will be limited to address
the contribution of SMEEIS on SMEs and the problem they encountered by SMEEIS
in providing loans, helping to established and start their business because not
less than 70% in Nigeria population basically
engaged in Agriculture and SMEs remain excluded from access to financial
services. The study will also be localized within Lagos state and put into
consideration on how they are being assisted by SMEEIS.
1.8 DEFINITIONS OF TERM
SMEEIS: - It is an acronym for small and medium enterprises
equity investment scheme, the CBN and the bankers committee 24th Annual meeting
introduced it, to help in funding and supporting of SMEs programme by assisting
them to establish their business.
SMEs:-It is an acronym for small and medium enterprises, it
is small business that is being established with the little capital to start up
with and help in promoting self-employment.
Micro-Finance Institutions:- These are
banks that are established to finance and grant loan to small and medium
Profit after tax:- This can be said as money set aside as gain made
by a company or banks to fund small-scale business after paying of tax, the banks
would have removed such amount of money out of their total profit left.
NIDB:- Nigeria Industrial Development Bank, they are
industrial banks established to support and fund business that are just coming
up it merged with Nigeria bank of commerce and industry to form bank of
Adoption: - This can be said as the means employed or taken in
1.9 ORGANIZATION OF THE STUDY
The organization of this is to
critically address the problems and challenges of the effect of SMEEIs on the
performance of SMEs Lagos state will serve as a case study for the purpose of
this research and the project will be structured in five chapters.
The topic is introduced on chapter
one given a details on the value and performance of SMEEIS on SMEs and also
pointing out objectives for which this study is to attain, at the end of
chapter one are the definition of term used in the study. Chapter two deals
with the literature review of the topic, discussing the very important aspect
of the topic itself, the effect, impact, usefulness and contribution of SMEEIS
Subsequently, the method of data
collection, identifying the population and hence determining its sample size
shall be discussed in chapter three. General appraisal will be conducted with
the use of chi-square statistical tool.
In chapter four, hypothesis shall be
tested, data will be presented using chi-square statistical tool. The concluding
part is chapter five which will contain as summary of
each of the chapters, conclusion and findings based on the research topic.