THE IMPACT OF SMALL AND MEDIUM SCALE ENTERPRISES ON THE ECONOMIC DEVELOPMENT OF NIGERIA: (A CASE STUDY OF ZOO ROAD FURNITURE INDUSTRIES, KANO MUNICIPAL LOCAL GOVERNMENT, KANO STATE)

The study examines the impact of small and medium scale enterprises on economic development in Nigeria, using Zoo road furniture industries as the case study, the research made use of questionnaires and interview as method of collecting data using 20 samples of individuals in Zoo road furniture firms. frequency distribution tables and percentage were used to analyse the information collected from the subjects, the findings of the result shows that there is an impact in the use of small and medium scale enterprises towards the development of the Nigerian Economy, the  study recommends that government should as matter of urgency assist the small and medium scale enterprises to have access to finance and necessary information relating to business opportunities, modern technology, raw materials, market, plant and machinery which would enable them to reduce their operating cost and be more efficient to meet the market competitions.

Title page ----------------------------------------------------------------------------------i

Declaration -------------------------------------------------------------------------------ii

Certification -----------------------------------------------------------------------------iii

Approval Page---------------------------------------------------------------------------iv

Dedication -------------------------------------------------------------------------------v

Acknowledgments----------------------------------------------------------------------vi         

Abstract ----------------------------------------------------------------------------------x

Table of Content -----------------------------------------------------------------------vii

List of tables----------------------------------------------------------------------------vii

Table 4.2---------------------------------------------------------------------------------35

Table 4.3---------------------------------------------------------------------------------35

Table 4.4---------------------------------------------------------------------------------36

Table 4.5---------------------------------------------------------------------------------37

Table 4.6---------------------------------------------------------------------------------37

Table 4.7---------------------------------------------------------------------------------38

Table 4.8---------------------------------------------------------------------------------38

Table 4.9---------------------------------------------------------------------------------39

Table 4.10--------------------------------------------------------------------------------39

Table 4.11--------------------------------------------------------------------------------40

Table 4.12--------------------------------------------------------------------------------40

Table 4.13--------------------------------------------------------------------------------41

Table 4.14--------------------------------------------------------------------------------42

Table 4.15--------------------------------------------------------------------------------42

Table 4.16-------------------------------------------------------------------------------44

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

1.2 Statement of the Research Problem------------------------------------------------4

1.3 Research questions-------------------------------------------------------------------6

1.4 Objectives of the research ----------------------------------------------------------6

1.5 Significance of the study------------------------------------------------------------6

1.6 Scope and limitations of the Study-------------------------------------------------7

1.7 Organization of the study -----------------------------------------------------------7

2.1 Introduction---------------------------------------------------------------------------9

2.2 Concept of Small Scale Enterprise------------------------------------------------9

2.2.1 Economic Growth and Economic Development------------------------------13

2.2.2 Experience of Small Scale Industrial Revolution----------------------------13  

2.3 Contribution of small scale industries to the economic Development of Nigerian economy-----------------------------------------------------------------------16 

2.4 Problems Facing Small Scale Enterprise in Nigeria ---------------------------20

2.5 Nigeria Government Programmes for Promoting Small Scale Industries---23    

2.6 The Role of the Central Bank-----------------------------------------------------24

2.7 Furniture Making Industries in Nigeria------------------------------------------25

2.8 Review of Empirical Literature---------------------------------------------------26

2.9 Theoretical Framework------------------------------------------------------------27

3.1    Introduction------------------------------------------------------------------------32

3.2    Research Design------------------------------------------------------------------32

3.3    Population of the study----------------------------------------------------------32

3.4    Sample Size-----------------------------------------------------------------------32

3.5    Sampling Technique-------------------------------------------------------------33

3.6    Data Collection Instrument------------------------------------------------------33

3.7    Data Analysis Method------------------------------------------------------------33

4.1    Introduction------------------------------------------------------------------------34

4.2    Features of the sample-----------------------------------------------------------34

Table 4.1 sex distribution---------------------------------------------------------------34

Table 4.2 age distribution---------------------------------------------------------------35

Table 4.3 marital status-----------------------------------------------------------------35

Table 4.4 level of education------------------------------------------------------------36

Table 4.5 number of years in business------------------------------------------------37

Table 4.6 registered business-----------------------------------------------------------37

Table 4.7 ownership structure of the respondents-----------------------------------38

Table 4.8 methods used by the respondents------------------------------------------38aa

Table 4.9 job opportunity by the respondents----------------------------------------39

Table 4.10 percentage of income on tax----------------------------------------------39

Table 4.11 the initial capital invested-------------------------------------------------40

Table 4.12 number of employees in the workshop----------------------------------40

Table 4.13 reasons for participation in the business--------------------------------41

Table 4.14 tribe of the respondents---------------------------------------------------42

Table 4.15 contribution to the economy---------------------------------------------42

Table 4.16 source of finance of the respondents------------------------------------44

5.1    Summary---------------------------------------------------------------------------45

5.2    Conclusion-------------------------------------------------------------------------46

5.3    Recommendations---------------------------------------------------------------48

References------------------------------------------------------------------------50

 

This study attempts to evaluate the impact of Small and Medium Scale Enterprises on the economic development of Nigeria using furniture industries in Zoo road, Kano municipal local governmentas a case study.

In global context, a general definition of small scale enterprise using size and scale of operation is not easy, it may be relatively vague. At the 13th council meeting of the national council on industries held in July 2001, small scale industry was defined by the council as an industry with labour size of between 11-100 workers or a total cost of not more than N50 million including working but excluding cost of land. But what we regard as small scale in Nigeria might be big or even larger in other West African countries and even the advanced world economy. Likewise what we might call big scale industry might be small in countries like Japan, United State and other developed western countries.

Globally, Small and Medium Scale Enterprises (SMEs) are tools for empowering the citizens and economic growth. SMEs are associated with rapid economic growth of countries in Asia and North America (Schaper 2002). Among developed countries such as the USA, SMEs still plays enormous role in the country’s economy (Aranoff et al. 2010). Available evidence points that, SMEs occupy an important and strategic place in economic growth and development in all countries (Abor&Quartey 2010) constituting as high as 90% of enterprises in most countries worldwide. SMEs are the driving force for large number of innovations and contribute to the growth of the national economy through employment creation, investments and exports. Owing to the success of the Asian tigers interest is running SMEs particularly in developing countries that are in the rat race to meet and reduce the economic and development gap, the Chinese and foreign experts estimate that SMEs are now responsible for about 60% of China's industrial output and employ about 75% of the workforce in China cities and towns (Schaper, 2002). These SMEs creates jobs for workers who have been laid off from state-owned enterprises due to the steady transition from communism to a market based economy.

According to Cook &Nixon (2000) interest in the role of Small and Medium Scale Enterprises (SMEs) in the development process continues to be in the forefront of policy debates in developing countries. In view of the relevance of SME’s, in 2006 the government of Taiwan launched a $61 million "branding" initiative, which aimed to propel the economy from being production-based to knowledge-based (Lin 1998; Onuorah 2009; SAN 2006). According to the report in English language version of the online edition of Electronic Engineering Times-Asia print magazine, formerly Asian Sources Electronics Engineer (EE Times Asia) in August 2006, the so-called "Branding Taiwan Plan" is a seven-year program designed to help promising small-to-medium enterprises (SMEs) in developing their own brand, according to the Taiwanese government. This was initiated with the view of SMEs ability to boost the economy particularly in the medium term. Small businesses employ 72,000,000 people (Schaper, 2002). More than 90 per cent of the industries in Indonesia, Philippines, Thailand, Hong Kong, Japan, Korea, India and Sri Lanka are small enterprises (Cook &Nixson 2000).

In Africa, the SMEs are the dominant sector and accounts for almost 90% of all the enterprises in rural and urban areas. SMEs are a major employment avenue to people and stimulate the development of the countries by promoting entrepreneurial and business skills amongst communities (Giovanna & Marco 1999). In Sub Sahara Africa, SMEs are considered very important propellers for obtaining national development goals, such as poverty alleviation and economic growth (Zoltanacs 2006). For example, in South Africa, the SMEs account for about 46% of the total economic activities and 84% of private employment. It is also estimated that about 80% of the formal business sector and 95% of the total business sector are considered to be the SMEs (Axel Volkery& Klaus Jacob 2004).

The performance and effectiveness of Small and Medium Scale as an instrument of economic growth and development in Nigeria has long been under scrutiny. This intense scrutiny has been against the backdrop of the low performance and efficiency that characterized Small and Medium Scale Enterprises particularly in assessing its role on economic growth and development. Despite government institutional and policies support to enhancing the capacity of Small and Medium Scale Enterprises, small and medium scale has fallen short of expectations. This has generated serious concern and skeptics on whether SME can bring about economic growth and national development in Nigeria. The concern is even more disturbing when comparing SME in Nigeria with other countries particularly where SME has become harbinger of economic reconstruction and transformation (Ihua, 2009). In the case of Nigeria Small and Medium Scale Enterprises have performed at very extreme level this low performance has further exacerbated hunger, unemployment and low level of living in a country whose economies is ailing. This problem has undermined the capacity of the economy and Small and Medium Scale Enterprises are seen as mechanism for intervention to addressing these long term problem of the economy.

The challenge and low performance of Small and Medium Scale Enterprises are tied to some economic variables and the challenges that generally characterized the nation's economy. These challenges include high level of unemployment, high poverty incidence, and low industrialization capacity, lack of finance, inconsistence government policies, inadequate infrastructure and insecurity of the business climate among others.

Every   nation   is   keen   on   reviving   development   because development is the basis for political independence as well as economic and social perspective. However, not all nations are able to achieve development especially the 3rd world nations. In most of the industries of the developed countries Small and Medium Scale Enterprises (SMSEs) are assumed to play an important role in the area of economic development. Also it is very crucial that these SMSE should be encouraged to grow and expand.

In Nigeria, the role of the small scale enterprises has been stated by the Federal Government where it was said that the objectives of the government industrial development program shall be to achieve an accelerated goals of these industries.

Whatever may be written on small scale enterprises is recognized that the development of the sector is going to be a resolution to the current important role in the area. For Nigeria to achieve and attain development, one of the sure ways is to enhance the capacity of its SMEs. 

Small scale industries are important vehicle for meeting the growth and objectives of developing countries. They make positive impact on the economics of both developed and developing nations.

In Nigeria and other developing countries, small scale enterprises play a vital role in the industrialization process. They form the main pivot of industrialization. However, Nigerian economy does not seem to have the advantages obtainable from the small scale industries in the past.

The small scale enterprises have been subject to neglect and lack of government interest. The small scale enterprises do nothing to attract national after. This is because they are being dominated by large scale industries, (Ishola, 2008).

The problem of small and medium  scale are as many the number of these businesses one could count, most of them  have  inherited problems to which solutions have not been found, as a result of insufficient information regarding operations. Thus, some problems are to some extent caused by the entrepreneurs themselves due to ignorance and lack of partnership spirit at the stage of infancy, partners in many small scale businesses pursue individualistic goals at the expense of overall interest of the small and medium scale business and mistrust among the owners.

Besides these we have regulatory environment, political stability, inadequate infrastructure, misuse of resources which has also lead the state and the country in general losing its position of status of promising developing nation.

Also the reasons why Small and Medium Scale Enterprises have been battling with serious problems ranging from shortage of manpower, financial indiscipline, and poor management practices thus have not been able to improve due to transparent organization set up, succession plan, entrepreneurial skills, strategic business plan etc.

However, this research will examine the contribution of Small and Medium Scale Enterprises to economic development with particular reference to furniture making industries. A furniture making industry is generally a labour intensive and so offers more employment especially because of recent contribution and development that this sector is experiencing than industries based on large scale unit. Thus they can provide an immediate and sustain solution to the socio-economic problems of employment in this sector and Nigeria in general.

The aim of this study is to assess the impact of Small and Medium Scale Enterprises on the Nigerian economy using zoo road furniture industries as a case study. While the following specific objectives were pursued

It should be noted that small scale enterprises do not constitute an independent development strategy, but also they do play important roles in the development process.

Firstly, the research establishes the impact of small scale enterprises to the economic development of Nigeria which indicate the significant on how the individual can operate small scale businesses as an instrument for the achievement of macro-economic variables.

Secondly, the research will help government and other economic units in assessing the problems faced by small scale enterprises and therefore formulating better policies.

Thirdly, the study will also help industries recognize their internal problems and poor management.

The scope of this study covers the role of Small and Medium Scale enterprises on the economic development of Nigeria, with a particular reference to furniture industries in Zoo road, Kano municipal local government. The limitation of the study is due to the nature of scope of study and this could be attributed to the fact that the time used in writing this project is very limited and as well as the financial cost constraint also adequate data is not available due to confidentiality of some information’s during research . So I decided to conduct it as much as I could be able to cover.

Chapter one: it entails general introduction, statement of the problem, objectives, significant of the study as well as research questions, scope and limitation of the study and finally organization of the study.

Chapter two: the second chapter concerned with literature review and theoretical frame work as well as empirical study.

Chapter three: This chapter concerned with research methodology which comprises of research design, population of the study, sample size, sampling techniques, data collection instrument and finally data analysis method.

 Chapter Four: - This chapter analysis the data.

Chapter Five: The last chapter gives the summary of findings, draw conclusions and recommendations.