CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Small and medium-sized businesses (SMEs) are often recognized as the lifeblood of any country’s economic progress and as justifiable way of accelerating global development. SME’s are labor-intensive as well as capital-efficient business enterprises. They have the potential to empower people and create billions of new jobs around the world (Abeh, 2017a,b; Kadiri, 2012). They are also seen as important drivers of economic development and poverty reduction (Agwu & Emeti, 2014). SMEs have an important role in linking, strengthening, and enhancing a country’s development. Their achievements and expansion in industry, agriculture, and services, among other areas, have been cited as drivers of the Nigerian economy. Growth that is both sustainable and improves the performance of SMEs creates a level of competitiveness that allows new opportunities to emerge.
Nigeria’s independence in 1960 represented a turning point in the growth and development of SMEs, leading to a lot of focus on SMEs as a panacea for poverty reduction and joblessness or unemployment in Nigeria as a whole. The 1986 Economic Reform Program (ERP) signaled a critical move away from large-scale, capital-intensive industrial projects centered on import substitution and toward small-scale companies with significant potential for developing indigenous linkages for long-term economic and industrial development (Agwu & Emeti, 2014). As a result, SMEs play a critical role in the Nigerian economy (Eniola & Ektebang, 2014). Despite the hurdles, SMEs have flourished in Nigeria throughout the years.
Dr. Ade Oyedijo is a financial specialist who specializes. These include, but are not limited to, a very high unemployment rate, which is likely to rise as a result of continuing public sector reforms, a high unemployment rate, a high poverty level, disease, hunger, and other issues. Dr. Oyedijo also mentioned a drastic shift from the production of non-oil traded goods (mostly agricultural) to traded goods, while about 95 million Nigerians are said to be living in poverty, while 19 of her citizens are listed among the 500 wealthiest men in the modern capitalist economy, as characteristics of our nation’s economy that aggravate the problems of Nigerian SMEs. He also stated that the main thrust of Nigeria’s development methods and objectives have been the growth of industrialization, education, and a strong economy since independence. Entrepreneurial skills enable businesses to gain a long-term competitive edge, which leads to increased profitability and growth (Man et al., 2002). Tehseen and Ramayah (2015) emphasized the need of understanding the importance of entrepreneurial competences, particularly in developing economies, because entrepreneurial abilities are critical for business survival, performance, and success. However, depending on the context, prediction, and assumption, the measuring of entrepreneurial competencies differs (Mitchelmore and Rowley, 2010). According to numerous scholars, the leading competencies-related obstacles that lead to poor performance and failure of businesses in Nigeria are a lack of or ineffective innovation, unfavorable marketing strategies, and a lack of distinctive entrepreneurial traits (Duru, 2011; Eneh, 2010; Onugu, 2005; Adeoti, and Adeoti, 2005; Adeoti, and Adeoti, 2005; Adeoti, and Adeoti, 2005; Despite the fact that SME’s exist in every sector of the economy, they are most prevalent in trade (54 percent), followed by services (36 percent) (34 percent ). Micro and small businesses are vital to people’s livelihoods as well as the country’s overall economy and advancement. They produce jobs for relatively little money per job, make use of and contribute value to local resources, promote equitable income distribution, and are better positioned to address local demands in small markets. Even for persons with limited education and expertise, the technologies they utilize are easier to acquire, transmit, and use. Through partnerships and subcontracting ties, they have the ability to supplement large corporations. Micro and small businesses are also good places to learn about entrepreneurship and management (Olomi, 2006).
STATEMENT OF PROBLEM
In order to run successful SMEs in Nigeria, managers must be efficient and effective. Many SMEs lack the fundamental skills, procedures, and aptitude required to run a successful firm. The managerial abilities and skills required for efficiently planning, organizing, directing, and regulating both human and material resources are critical components of running a firm. Because of their small size and limited capital, SMEs, according to Ololube and Uzorka (2008), are unable to employ and retain highly trained individuals. Because of financial difficulties, skilled employees such as accountants and managers who are supposed to work for SMEs are not hired. As a result, SMEs in Nigeria have endured poor accounting and financial management practices. Beckman (2008) also claims that the majority of SMEs’ challenges are external, citing capital shortages, taxation and regulations, product liability patents, and franchising abuses as examples. Inadequate working capital, stiff competition from larger companies, difficulties sourcing raw materials, low capacity utilization, lack of management strategies, poor educational backgrounds of operators, and huge financial problems are among the internal problems of SMEs in Nigeria, while external problems include policy inconsistencies, multiple taxation, harsh regulatory requirements, and trade groups.
OBJECTIVES OF THE STUDY
The study’s major goal is to discover the issues that SMEs face in Nigeria. More specifically, the study aims to:
1. Learn about the issues that SMEs face in Nigeria.
2. Examine the impact of the challenges on SMEs’ growth in Nigeria.
3. Determine the elements that influence SMEs’ growth in Nigeria.
4. Propose a remedy to the Nigerian SME dilemma.
RESEARCH QUESTIONS
1. What obstacles do SMEs face in Nigeria?
2. Do the obstacles have a substantial impact on the growth of SMEs in Nigeria?
3. What factors influence the growth of small and medium-sized businesses in Nigeria?
RESEARCH HYPOTHESIS
Ho: The challenges have had no substantial impact on the expansion of SMEs in Nigeria.
Hello, the issues in Nigeria have a substantial impact on the growth of SMEs.
SCOPE OF THE STUDY
The scope of this study is confined to 15 SMEs in Lagos, Nigeria, who were chosen at random. Their replies are expected to reflect the views of all SME operators in Lagos, Nigeria.
DELIMITATION OF THE STUDY
Obtaining funding for general research activity will be difficult during the course of studies.
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