TABLE OF CONTENTS
CHAPTER ONE
INTRODUCTION
1.0
BACKGROUND OF THE STUDY
1.1
PROBLEMS
OF SMES
1.2
STATEMENT
OF THE PROBLEM
1.3
PURPOSE
OF THE 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
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 NIGERIAN ECONOMY.
2.5 EFFORTS
MADE TO FACILITATE FINANCING AND PROMOTING OF SMES IN NIGERIA
2.5.1
WHAT IS SMEIS?
2.5.2
TOTAL FUNDS SET ASIDE SINCE
INCEPTION OF SMEs
2.5.3 ARGUMENTS
AGAINST SMEs PROVISIONS
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 QUESTIONS
3.2
RE-STATEMENT OF 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
PRESENTATION, ANALYSIS AND
INTERPRETATION OF DATA
4.0
PREVIEW
4.1 SECTION A: ANALYSIS OF PERSONAL
DATA
4.2 SECTION
B
4.3 TESTING
OF HYPOTHESIS
CHAPTER FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATION
5.1 SUMMARY
5.2 CONCLUSION
5.3 RECOMMENDATIONS
APPENDIX
QUESTIONNAIRE
CHAPTER ONE
INTRODUCTION
1.0 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
resources. 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 “reinventing 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, UK etc, small and medium scale businesses have been recognized as the
appropriate production units for the transformation of locally produced,
agricultural and other products which serve as in puts for large scale
industries.
Development
economists are of the opinion that labour intensive industries like the SMEs
can enhance employment generation, advance development 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 drift. 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 five hundred thousand naira (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 two hundred million
naira (N200m) excluding land and working capital, and with the number of staff
employed by the enterprises not less than 10 and more than 300.
In
view of the operational efficiency of Eddision Aluminum Company, 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 enterprises.
1.2 STATEMENT OF THE PROBLEM
It
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 Eddision Aluminum Company, Apapa.
Oresptu
(1985) contributing his opinion in a sub-heading titled “Limitations and
short-comings of small scale businesses 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
organization 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
Coleridge 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 today. Very many banks and finance houses everywhere in major cities
and commercial centres of Nigeria today, but no fund for SMEs.
In
addition, management problems constitute the most threatening problem for SMEs
like edition Aluminum Company, Apapa. These problems manifest in poor
record-keeping, poor credit management, poor inventory control poor working
capital and raw material planning, poor marketing/scales 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 in
efficient operations witnessed in the industry, which Eddision Aluminum Company
is not an exemption. The above scenario presents a barrier to the wheel of
progress of SMEs in Nigeria.
1.3 PURPOSE OF THE STUDY
WHY STUDY THE ROLE OF SMES IN AN
ECONOMY
Small
and medium scale enterprises have been recognized as the foundation for the
attainment of accelerated economy growth and development. In specific terms,
the purpose of the study include the following:
Ø To
evaluate the role of SMEs in Nigeria economy.
Ø To
evaluate the impact of SMEs both positively and negatively on the economy.
Ø To
examine the contribution made by Eddision Aluminum Company in manufacturing
sector of Nigeria economy.
Ø To
examine the problems and prospects of small and medium scale enterprises in
Lagos.
Ø To
evaluate government effort toward promoting SMEs.
Ø To
offer suggestions on how to improve the fortunes of SMEs in Nigeria.
1.4 STATEMENT OF RESEARCH QUESTIONS
·
What has been the role of SMEs in
economic development in Nigeria?
·
What are the opportunities open for SMEs
in Nigeria?
·
In what ways have the various levels of
government country?
·
What are the problems facing small and
medium scale enterprises in Nigeria?
·
What prospects do 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.
H1: The small and medium scale enterprises play a significant role in
the Nigeria economy.
H0: These is no prospect for survival of SMEs in
Nigeria.
H1: These is prospect for survival of SMEs in
Nigeria.
1.6 SIGNIFICANCE
OF THE STUDY
SMEs
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 threat to economy growth. Hence, the proliferation
of SMEs and development could be an antidote to large scale unemployment in
these economies.
Other
areas in which SMEs and 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 Edditional foreign
exchange that would strengthen the Nigerian balance of payment position.
1.7 HISTORICAL
BACKGROUND OF EDDISON
Aluminum
Company, Apapa, Lagos.
Established
in 1989 at No 3 Cardoso Street, Apapa, Lagos with an initial capital outlay of
two hundred and fifty thousand Naira (N250,000), turning and sale of Aluminum
profiles accessories and glasses. In the 1990s, Eddison, market on the
production, marketing and scale of these products were booming. It had a
significant marketing 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 dept,
which had good motivational package. Today however, things have fallen apart
with the organization. In the face of economic down turn in Nigeria especially
with the devaluation of naira Eddison, Aluminum Company and not meet her factor
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 low many 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’s
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 (SME’s) the plight of Eddison Aluminum company 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
enteritis that interact, interdependent and function together for a purpose.
(b) Capital market: this is the market when
companies raise funds on long term basis by issuing the securities i.e share to
the general public.
(c) Devaluation: This means increasing the rate
at which local currency exchanges for foreign currency. Olawale and 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 things”.
(e) Efficiency: This is the ability to get
things done correctly or according to Peter Drucker “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 and Olayide (1974).
(h) Market Share: The portion of total
market or scales which occurs or belongs to a particular organization.
(i) Working Capital: money needed for
carrying on a business-advance Learner dictionary.
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