ABSTRACT
This project work focuses on influence of small and medium scale enterprise and economic development in Nigeria. The small and medium scale enterprises are essential element in providing a solid base for a country economic development; unfortunately, these enterprises have been facing a lot of problem from government, policies and funding facilities available to them.Chapter one of this research work deals with the background of the subject matter and defines small and medium scale enterprises after which it present a very clear development.Chapter two also deals with the meaning and definition of small and medium scale enterprises its role which among others includes; production of good and service for both end and intermediate users, and also utilizes low capital cost for creating job especially in a past growing service sector of the economy. It also highlights the contributions of these enterprises to Nigeria economy. Chapter three of the research work deals with the methodology and design as well as population and population simple, it also deals with the method of data collection and method of data analysis used in the research.Chapter four deals with the presentation and analysis of data and also test only deals with discussions, recommendations, conclusion, and suggestion for further research.
CHAPTER ONEINTRODUCTION
1.1 BACKGROUND OF THE STUDY
Small and medium enterprises in Nigeria can be defined according to asset base and number of staff employed. The criteria are an asset base between N5 million and N500 million, and a staff strength between 20 and 300 employees.The development of Small and Medium Enterprises (SMEs) via effective financing options have stem debate and growing interest among researchers, policy makers and entrepreneurs, recognizing the immense contribution of the subsector to economic growth. Small and Medium Scale Enterprises (SMEs) constitute the driving force of such industrial growth and development. This is basically due to their great potential in ensuring diversification and expansion of industrial production as well as the attainment of the basic objectives of development. SMEs utilize local raw materials and technology thereby aiding the realization of the goal of self-reliance. Also, governments at various levels (local, state and federal levels) have in one way or the other focused on the performance of Small and Medium Scale Enterprises for economic gains. While some governments had formulated policies aimed at facilitating and empowering the growth and development and performance of the SMEs, others had focused on assisting the SMEs to grow through soft loans and other fiscal incentives in order to enhance the socio-economic development of the economy like alleviating poverty, employment generation, enhance human development, and improve social welfare of the people.Empirical evidences have shown that prior to the late 19th century, cottage industries, and mostly small and medium scale businesses controlled the economy of world giants like Europe and America. The industrial revolution changed the status quo and introduced mass production. The Small and Medium Scale Enterprises (SMEs) development facilitates the mobilization of human and capital resources towards economic development, in general, and the rural sector, in particular. They have been identified as a vehicle for employment generation and providing opportunities for entrepreneurial sourcing, training, development and empowerment.Developing nations such as Nigeria characterized as low income earners by the World Bank, value small and medium scale enterprises (SMEs) for several reasons. Viewed in static terms, the main argument is that SMEs, on average achieve decent levels of productivity especially of capital and factors taken together (that is, total productivity factor) while also generating relatively large amount of socio-economic development. In dynamic terms, the SMEs sector is viewed as being populated by firms most of which have considerable growth potential. SMEs in developing countries achieve productivity increases to a great extent simply by borrowing from the shelf of technologies available in the world (Christopoulos and Tsionas, 2004).However, there is no denying the fact that the sector is a sine qua non in ensuring the attainment of the goals of the federal government’s (Pakistan Journal of Business and Economic Review Vol. 2, Number 1 2011).SMEs are critical agent of economic transformation as they account for more than 50 percent of GDP of developing economies, are main source of innovation and technological development, source of supply of both human capital and raw materials to larger businesses and main source of entrepreneurship and enterprise Sanusi (2003) and PECC (2003). Each of these roles are critical for the economic growth and development of a country, Schumpeter,(1973), Van-Den-Berg (2001), Garba (2002) yet there is just scanty evidence that SMEs have had any direct impact on development of any nation Franck and Huyghebaert (2008 ).What distinguish, small and medium scale enterprises (SMEs) from the larger enterprises are the high entry and exit rates and their flexibility relative to the latter. SMEs are highly valued, especially in developing economies, for many reasons. One of such is that SMEs achieve decent levels of productivity especially of capital and all factors taken together than large firms (Christopoulos & Tsionas, 2004). The abundance of capital and the range of technologies available in the world expand, SMEs need productivity increases through adequate financing if they are to maintain or increase their contribution to overall socio-economic development in developing countries like Nigeria. However, this signifies the importance of capital and its cost of sourcing for SMEs development, among other factors like infrastructure and enabling environment, cheap source of funds, availability of production equipment, efficient manpower, disciplined management and availability of markets (both local and international) that enhance their operations in ensuring sustainable socio-economic development. Nevertheless, set of factors hinders the performance of SMEs for maximum contribution to the economy. In this regard, we can identify ten key factors and variables that have been have been branded to influence SMEs’ failure in Nigeria. These include disasters, competition, infrastructure, taxes, accounting, management, marketing, economic condition, planning and finance. In Nigeria, poor economic conditions, which also implies poor finance and inadequate infrastructure, have been identified as the most crucial factors (Ihua, 2009). This position is corroborated by other studies which identified financial support as one of the main factors responsible for small business failures in Nigeria (Abereijo & Fayomi, 2005; Okpara & Pamela, 2007).The case study of this research work is Y2K Pub in Asaba, Delta state, Nigeria. Y2K pub which is a medium scale business and would be used as a benchmark for all Small and Medium scale Enterprises in Nigeria.
1.2 STATEMENT OF PROBLEM
One major problem working against the small and medium scale enterprises (SMSE) is the inadequacy of finance capital. This is a critical problem failing many small and medium scale enterprises which has affected their scale of operation. Majority of them have limited access to foreign exchange as well as institutional credit. In addition, small and medium scale enterprises (SMSE) in Nigeria are confronted with multiple taxes, several changes on loans on importation etc. Coupled with their ever charging dimensions which pose very serious challenges inimical to their growth. Also availability of infrastructural facilities is grossly inadequate in Nigeria. These are mainly in the areas of access roads electricity water supply and telecommunication. Private provisioning of these facilities is usually at great cost reduces the finds available to their activities. Lastly low entrepreneurial skill is another factor hindering the smooth operation of most small and medium scale enterprises organizational success in manning hugged in entrepreneurial skill / management. Unfortunately many small and medium scale enterprises lock exposure to management theories / practice which impact negatively on their performance.
1.3 OBJECTIVE OF THE STUDY
From all that has been written above, it is the aim of this study to take a segment of the small and medium scale enterprises and study its influence on the development of Nigeria economy. Such influence among others include:
i. Production of goods and services for both end and intermediate users.
ii. Creation of employment/job opportunities.
iii. Serving as local ground for entrepreneurs.
iv. intensive users of basic raw materials.
To this end the researcher will also make recommendation that would influence small scale and medium scale enterprises in the development of Nigeria economy.
1.4 RESEARCH OF QUESTION
It is the objective of this study to know:
i. What part the small and medium scale enterprises play in the Nigeria economy?
ii. How small and medium scale enterprises produce goods and services for both end and intermediate users.
iii. How small and medium scale enterprises produce employment for up to 50% of the countries population.
iv. The way which small and medium scale enterprises serves as training ground for local entrepreneurs,
v. How small and medium scale enterprises utilize low capital in its cause of production.
vi. How small and medium scale enterprises survive in the face of large enterprises.
1.5 RESEARCH HYPOTHESIS
i. H0: Small and medium scale enterprises does not provide employment for up to 50% of the countries population.
H1: Small and medium scale enterprises provide employment for up to 50% of the countries population.
ii. H0: A small and medium scale enterprises utilizes high capital in its cause of production
H1: A small and medium scale enterprises utilizes low capital in its cause of production1.
6 SCOPE OF THE STUDY
The scope of the study is limited to activated of small and medium scale enterprise (SMSE) in the development of Nigeria economy in the course of the study, we focused on the activities of the small and medium scale industries.
1.7 JUSTIFICATION OF STUDY
The justification of the study is to height the contribution of small and medium scale enterprise in economic development of Nigeria, in order to alert private sector and government agencies in promoting small and medium scale enterprises.In addition, the study would encourage school leaves to becoming enterprises, thereby reducing the rate to unemployment.
1.8 LIMITATIONS OF THE STUDY
This study brings to light how small scale business to finance their business. This limitation is as follows:
i. This project work was constrained by time and academic work, which prevented me from going into many details.
ii. Some of the conservative business men were unable to disclose their source of fund, in which they used in setting up the business which deceived the research work.
iii. Difficulties in obtaining information from the respondents.