CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Many economic analysts in Particular have described government incentive schemes towards small-scale business in Nigeria and Enugu metropolis as a well development especially in this period of low level of economic activity and slow rate of growth of the economy as well as its devastating effects on the demand for labour. Undoubtedly the slow rate of economic growth in the state explains why few job opportunities are available. In most parts of the world, the importance of small scale business enterprise is not over emphasized in the process of socio-economic development of the country. It has become sufficiently clear that large scale enterprises have not and cannot alone play the dynamic role that they are supposed to play in the rapid growth and development of the economy, and prominent among these rates is employment creation and technological development. Therefore the need for small-scale enterprises which will supplement the effects of the large scale business. Small-scale are those business that required very little capital to set up and to produce goods that will carter for the needs of the growing population. It is in the light of importance of small-scale business in Enugu metropolis that government incentive scheme towards small-scale business will be appreciated. Incentive in a literal sense implies that which has motivating influence and serving to incite actions. These incentive schemes instituted by government provide other non-financial and financial assistance in the form of loans at affordable interest rate and grants. It is in the light of the above that nation economic reconstruction fund (NERFUND) and Nigeria bank for commerce and industry (NBCI) and other development banks were created.
However, small-scale enterprises have been defined by various authors in various ways but OSA20 (1984) defined small-scale business as a productive enterprise which is owned, managed and controlled by one or two persons or family which influences the decision making and a well has undifferentiated organization structure but has a small share of the market with less than fifty (5)) employees. While central Bank of Nigeria annual report and statement of account (1975) defined small-scale business as those enterprises with annual turnover not exceeding N5,00,000.00 Statement of problem In spite of the recognition of the role of small-scale enterprises in fortering economic development through the promotion of indigenous technology, employment generating activities and bordering the production base of the economy, the impact has not been given adequate recognition. They have been restricted access to institutionalized credit because banks see them as high risk ventures (Orji 1996) with the introduction of structural Adjustment programme (SAP) in 1986 and the inevitable devaluation of Naira, Many small-scale enterprises found it very difficult to cope with the attendant high production costs as a result of high cost of imported input and high interest rates. Therefore, to bridge this observed gap in gap in banks lending to small-scale enterprises, the Federal government set up the national Economic Reconstruction Fund (NERFUND in 1989 with aim of providing soft loans on medium and long term basis to small-scale enterprises wholly owned by Nigerians.