ABSTRACT
The main purpose of this study is to
identify the problems and prospects of small and medium enterprise in Akoko-Edo
LGA. To do this, data were collected from both primary and secondary sources.
The main instrument of data collection was the questionnaire. The data were
presented in tables as frequency, distribution in the data analysis, the
techniques of percentages frequencies were used. The hypothesis were tested
with z-test technique at 5% significance level. Having analysed the data the
following were the major findings; Most of the operators of small and medium
enterprise in Akoko-Edo LGA make an average daily turnover of N15,000 and profit of about N15,000
daily. There has been a phenomenal growth in the dimensions and nature
of small and medium enterprise in Akoko-Edo LGA. The growth is mainly on
account of people’s desire to be self employed. The problems of establishing
and managing small and medium enterprise include lack of capital, lack of
managerial skills, lack of business ideas, high cost of operational facilities,
scarcity of accommodation, lack of efficient preservation, system and poor
environmental and sanitation.
TABLE OF CONTENTS
Title Page
Dedication
Acknowledgement
Abstract
Table of Contents
CHAPTER ONE: Introduction
1.1
Background to Study 1
1.2
Statement of research Problem 2
1.3 Research Questions 3
1.4 Objectives of the Study 4
1.5 Statement of Hypothesis(es) 4
1.6 Significance of the Study 4
1.7 Scope of the Study 5
1.8 Limitations of the Study 6
1.9 Definitions of Terms 7
CHAPTER TWO: Literature
Review 7
2.1 Introduction
7
2.2 Concept
of Small and Medium Enterprse 11
2.2.1 Types
of Small and Medium Enterprise 15
2.2.2 Roles
of Small and Medium Enterprise in Edo State
Metropolis
in Job Creation and Poverty Eradication 16
2.2.3 Importance
of Small and Medium Enterprise in Nigeria 18
2.2.4 Problems
of Small and Medium Enterprise Akoko-Edo LGA 22
2.2.5
Prospect of Small and Medium Enterprise Akoko-Edo LGA
23
2.2.6 Challenges in Facing Small and Medium
Enterprise in
Akoko-Edo LGA 25
2.2.7 Small and Medium Enterprise Credit
Scheme: Case Study
Of Akoko-Edo LGA 26
2.3 Empirical
Framework 30
2.3.1 Ways
of Encouraging Small and Medium Enterprise to
Enhance
National Development in Akoko-Edo LGA 35
2.3.2 Government Refund on Small and Medium
Scale and
Means of Administration 37
2.3.3 Limitation
of the Study 38
CHAPTER THREE
Research Methodology 40
3.1 Research
Design 40
3.2 Area
of Study 40
3.3 Source
of Data 40
3.4 Sample
Size Determination and Sampling Techniques 41
3.5 Instrument
41
3.6 Data
Collection Procedure
.7 Method
of Data Analysis 42
CHAPTER FOUR
Data Presentation of Analysis 44
4.1 Analysis
and Interpretation of Data 44
4.2 Test
Hypothesis 59
CHAPTER FIVE
Summary, Recommendation and
Conclusion 63
5.1 Summary
of Findings 63
5.2 Conclusion
64
5.3 Recommendation
64
Bibliography 66
Questionnaire 67
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND TO THE STUDY
In recent years, particularly since
the adoption of the economic reform programme in Nigeria in 1986, there has
been a decisive switch of emphasis from the grandiose, capital intensive, large
scale industrial project based on the philosphy of import substitution to small
scale industries with immense potentials for developing domestic linkages for
rapid, sustainable industrial development. Apart from their potential for
ensuring a self reliant industrialization, in terms of ability to rely largely
on local raw materials, small scale enterprises are also in a better position
to boost employ raw materials, small and medium enterprise, are also in a
better position to boost employment, guarantee a more even distribution of industrial
development in the country, including the rural areas, and facilitate the
growth of non-oil exports.
In Nigeria, the
definition of small and medium enterprises also varies from time to time and
according to institutions, for instance, the Central Bank of Nigeria’s (CBN)
monetary policy circular No:27 of 1988 define small scale enterprises
(excluding general commerce) as enterprises in which total investment
(including land and working capital) did not exceed #500,000 and or the annual
turn-over did not exceed #5.0 million.
Medium enterprise
(excluding general commerce) as enterprises in which total investment and not
exceed #1,000,0000 (1 million) and the annual turnover did not exceed #1.2
million. Small scale enterprises is one of the modern strategies underdevelop
countries are employing to break into the “league” of developed countries.
Fasua (2006:85) categorized business that fall under small scale as follows
firewood supply, plantain production, restaurant services, small scale poultry
raising, operating a nursery for children, home laundry services and host of
others. Business grouped under medium scale according to fasusa are ; soap
production, hair/body cream production, chemical production, commercial
poultry, profession appractes (law, accountancy, education) food and beverage
production among others.
Consequently, both the
federal and state governments and recently, local governments, have stepped up
efforts to promote the development of small scale enterprises through increased
incentive scheme, including enhanced budgetary allocations for technical,
assistance programmes. New lending schemes and credits institutions for
technical assistance programme New lending schemes and credit institutions such
as the National Economic Reconstruction found (NERFOUND), World Bank-assisted
small-scale enterprises loan scheme (SMES), Nigeria Export and Import Bank
(NEXIM), the people’s Bank of Nigeria (PBN) and the Community Bank have also
emerged at both the national and local levels to boost the flow of development
finance of small scale enterprises which have so far depended largely on
personal funds and credit. From informal sources for both their investments and
working capital.
Unfortunately, all these
formal credit scheme have not been able to adequately redress the fundamental
problems which have constrained small scale enterprises access to credit. The
low credit rating of this class of
enterprises, is attributable largely to their weak capital, base, high
mortality rate, low productivity and shortage of managerial skills. Indeed, the
problem of weak capital base, high mortality rate, low productivity and
shortage of managerial skills. Indeed, the problems, of weak capital base, and
poor access to finance appear to have developed into some vicious circle,
leading to slow growth, stagnation and even rapid demise of the small scale
enterprises. The impact of all existing credit scheme interms of providing
funds for meaningful and sustained development among the small scale
enterprise, had medium enterprise to serve the expected role of catalyst for rapid industrial
development, there is need for a more innovative strategy for improved access
to development finance for the small and medium enterprise that would address
their inability to provide collateral securities for loans formal credit
institutions.
1.2
Statement of the problem
Small and medium enterprise are
mostly in managed by owners and
relations. The financing in most cases in normally provided by the owners. The
owners fail to realize the importance of external source of capital in order
affect expansion in the business. In most cases, the by the owner, members of
the family and friends in most cases.
In another development,
small and medium enterprise experiences difficulties in raising equity capital
from the finance houses or individuals. Even when the finance house agrees to
provide equity capital, the conditions are always dreadful. All the result to inadequate capital
available to the sector and thus lead to poor financing. This is the bane of
most cottage industries in Nigeria. About 80% of small and medium enterprises
are stifled because of this problem of poor financing and other problems
associated with it (Chukwuemeka, 2006). The problems that emanated from poor
financing include:
a)
Lack of competent management which is the
consequence of inability of owners to employ the services of experts.
b)
Use
of obsolete equipment and methods of production because of owner’s inability to
access new technology.
c)
Excessive
competition which resulted from sales which is a consequence of poor finance to
cope with increased competition in the
industry.
Inspite of the different
measures since 1960 to increase industrialization, small medium enterprises are
still facing hard conditions. This is as a result of some constraining factors.
1)
The
high cost of available raw materials affects the prices of good food. This only
has adverse affect on the turnover of the enterprise but also on the
profitability.
2)
To
what extent has the finance house strict conditions affected the development of
small scale.
3)
Does
poor financing actually affect small and medium business operation.
1.3 Research
Questions
1)
What
are the factors influencing small and medium enterprise in Nigeria?
2)
To
what extent does finance house strict conditions have affected the development
of small and medium enterprise in Nigeria?
3)
To
what extent does poor financing has affect on small and medium business
operation in Nigeria?
1.4 Objectives
of the Study
The
specific objectives of the study are:-
i.
To
determine factors influencing small and medium enterprise in Nigeria
ii.
To
determine the extent finance house strict conditions have affected the
development of small and medium enterprise in Nigeria
iii.
To
assess the extent poor financing has affected small and medium business
operation in Nigeria.
1.5 Statement of Hypothesis
The following hypothesis are
formulated to provide the lead for this study:
Hypothesis One
Ho: The phenomenal growth in the number of small
and medium enterprise is not due to quest for self employment.
HI: The phenomenal growth in the number of
small and medium enterprise is due to quest for self employment.
Hypothesis Two
Ho: The profitability of the business has not
encouraged people involved in the business.
HI: The profitability of the business has
encouraged people involved in the business.
1.6 SIGNIFICANCE OF THE STUDY
At
this time of the nation, questions for economic recovery and self-reliance, the
role of small-scale business in this regard can not be overemphasized. There is
no doubt that the result of this research will be useful to prospective and
existing small-scale firms in Nigeria by equipping them survival strategies in
a period of economic hardship.
Both
public and private sector hopefully find this work useful in all areas of
financial management. Moreover,
potential investors and other individual wishing to establish small-scale
business will also see this work as a useful guide.
Furthermore,
the study shall be beneficial to the commercial banks and other financial
institution as a reference frame in the formulation of credit policy
guide-lines towards the financing of small-scale business. Commercial bank and
government will also benefit from this work since it will help them to review
their existing criteria for granting loan.
Finally,
if they are properly applied, small-scale investors would have a significant
step towards self-reliance in industrial drive.
1.7
SCOPE OF THE STUDY
The
scope of this study includes; Objectives, sources of finance and problems of
encounter
1.8 LIMITATIONS OF THE STUDY
The
limitations to this study are;
Finance was
in fact the most limited factor and this constitute a major problem in carrying
out effective and efficient research, for this reason, the job is limited.
Time is
another problem of the researcher, because the time short for the completion of
the project work was not sufficient. This was done to the facts that with in
this short time Limit, others academic work were carried out side by side with
the project.
Finally,
the school system has make it difficult for student to go out in search for
information by granting exert for student.
1.9 DEFINITION OF TERMS
The following
terms are gotten from published materials and journals.
a.
Loan Credit: A sum of money lends to somebody to
be repaid with interest.
b.
Scale: A set of numbers or standard for measuring or comparing.
c.
Profit: This is the money gained from trade
d.
Occupation: Business, trade which any human done
to either living, it could be permanently or temporally.
e.
Problems: These are difficulties in business
that needs attention.
f.
Finance: It is the provision and management of
money in a business enterprise.
g.
Capital: money needed to start a business
h.
Bank: This is a place where money are kept
for the purpose of transaction.
i.
Asset: The property of a company owned by
the company e.g building.
j.
Liabilities: This is the amount of debt, which a
business owes e.g loan.
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