Problems And Prospects Of Small-scale Industries In Nigeria

Problems And Prospects Of Small-scale Industries In Nigeria

Abstract

In Nigeria the recognition of the profitable significance of small- scale enterprises is only a recent miracle. Heretofore, the espoused industrialization strategy, which began in the social period, encouraged the undistracted use of imported raw accoutrements to produce import backups. To the extent that this strategy was poisoned towards large- scale product conditioning, it always undermined the growth and development of indigenous diligence, utmost of which are small medium scale in size. The major criteria used in the description of small- scale enterprises include member of workers, deals value, relative size, original capital disbursement, fiscal strength, compassion power and type of assiduity.

This study examines the subjects through relative delineations of small/ medium and large enterprises and states the purposes of small- scale enterprises in the task of erecting an economically feasible in Nigeria. The myriad of problems faced by small and medium enterprise are bandied considerably.

To successfully cover this particular aspect of the design, both primary and secondary sources of acquiring the demanded data are employed and the gathered data are sorted, organized, and arranged under different heading for a proper assaying using a simple percentile system.

still, of an the colorful Challenges of small scale business stressed sounds consummate because of a number of reasons, first, the peculiar situation small- scale diligence innately suggests a weak capital structure and constraints in respect of access to capital requests. Second, small- scale diligence traditionally suffer demarcation in the distribution of credits in the conventional loan requests.

Incipiently, inspite of policy affirmations and measures in favour of small- scale diligence by the government, misgivings faced by fiscal institutions both public and private still lead them to concentrate lending on low- threat, large scale, commercial borrowers.

Table Of Contents

Chapter One

Preface

Background of Study

Problem of Study

Exploration Question

Means of Obtaining Data

Limitation of Study

Description of Term

Purpose of Study

Significance of Study

Compass of Study

Organization of Study

Chapter Two

Literature Review

Preface

description of Small-Medium Scale Enterprise

Features of Small-Medium Enterprises

places of Small and l4edium Scale Enterprises

Problems of Small-Medium Scale Enterprises

Financial Problem

Deficient Entrepreneurial Capacity and Poor Business Orientation

Failure to take Advantage of Management Consultancy Services

Shy Physical structure

Competition

High Cost of Business coffers

Deficits of Technical Manpower

Public Relations

Deficit installation

Advertising and Promotion

Characteristics, Values and Problems of Small Scale Enterprises

SMEs and Backing System

Backing Problem of Rural Small Enterprises

Examining the Problems of Financing Rural/ Small Enterprises.

Chapter Three

Exploration Methodology

Preface

Thesis Testing

Paraphrase of Research Question

Characterization of Study Population

Research Instrument

Procedures and data

Chapter Four

Analysis And Donation Of Data

Preface,

Description of Repliers

Chapter Five

Summary, Recommendation And Conclusion

Summary of Findings

Recommendation

Conclusion

Bibliography

Excursus

Introductory Letter

Questionnaire

Chapter One

Preface

Background Of Study

Small scale diligence are vital sources of employment generation, development of indigenous technology; indeed disbandment of artificial set­- ups if increases product of manufacturing exports, and adding original content of artificial affair by fostering forward and backward artificial liaison to enhances the general position of profitable exertion.

Since the alternate National Development Plan( 1970- 1974) and third National Development( 1975- 1980), emphasis has been placed on the development and proliferation of small-medium scale enterprises( SMEs) for the purpose of using them as veritable machines for profitable growth and development.

From the 1970s, thus different description have been given as to what should be regarded as a small of medium scale assiduity. The Central Bank of Nigeria( CBN) discuses small scale enterprises, in its credit guidelines to banks as those enterprises with periodic development not exceeding N500.000 in the guidelines to marketable banks and enterprises with capital investment not exceeding N2 million banning cost of land; or with a maximum development not exceeding N5 million in the’ case of guidelines to’ trafficker banks. also, the civil ministry of assiduity’s guidelines to the Nigerian bank for commerce and assiduity( NBCI) regard small scale diligence as those enterprises cost of land, but including working capital. In practice, the Nigerian Bank for Commerce and Industry accepts small scale diligence as those enterprises with capital not exceeding N 750,000 banning the cost of land but including working capital.

The Nigerian Industrial Development Bank( NIDB) regards small scale enterprises as those design cost, i.e. investment and working capital not exceeding N750, OOO and medium scale enterprises as those with design cost ranging between N 750,000 and N3 million.

The Center of Industrial Research and Development( CIRD) at the Obafemi Awolowo University, Ile- Ife defines small scale enterprises as those with total means in capital not exceeding N 250,000 and employing not further than 50 full time workers.

From the colorful delineations one will notice that emphasis has frequently been placed on certain fiscal ceilings in capital investment.

The frequence of conformation( and death) of small- scale enterprises are generally explained by the solicitations of the proprietor- director to enjoy his particular business. therefore, the small- scale enterprises being the dragged shadow of its proprietor reflect his or her strength as well as sins. therefore; the small- scale enterprises entrepreneur begins to its unique vitality, capacities, work experience, advantages and stations. In tum, the performance of the small scale is determined by the personality characteristics of the possessors, viz responsibility, vigour, action, continuity and health thinking capability, mortal relation capability, communication capability and specialized knowledge.

Government in both industrialized and developing countries give a wide variety of programmes to help small and medium scale enterprises. Despite the success of SME strategies in a many countries(e.g. Taiwan Northern Italy and Ireland), and maturity of developing countries have set up impact of their SME development programs on enterprise performance has been lower satisfactory. Underpinning the hunt for stylish practice are some introductory question

What’s the defense for pubic intervention on the first place?

ii. Why should SMEs be singled out for backing?

, what form should that intervention take?

If there’s defense for government intervention.

Problems Of Study

The problems of facing small-medium scale enterprises in Nigeria aren’t invincible since Nigeria is well placed to give the sources to break these problems. In the main, the problem range from shy backing, lack of responsibility to lack of structure.

utmost small business are a one- man procurement and the owner, through having to give his attention to colorful directorial function in his business soon loses full grip. This is why it makes for effective operation to spread the liabilities within the business or seek the external backing of a operation adviser . The small-medium scale enterprises also always bear a high specialized inputs and the cost of this specialized inputs and the cost of this specialized moxie is generally high.

The issues of shy backing generally decide form shy procurement equity participation. A strong capital base and fiscal outlook are needed for a successful business. It thus makes for sound fiscal operation to seek for further business mates who could bring in further finances to finance the conditioning of the enterprises. still, small scale enterprises are generally reticent to bring in mates, indeed at the threat of under capitalization. The underfunding of small- scale enterprises has led government to formulate measures aimed at aiding this sector. Loan packages of the World Bank, National Directorate to employment and in further finances to finance the conditioning of the enterprises. still, small- scale enterprises are generally reticent to bring in mates, indeed at the threat of under capitalization. The underfunding of small- scale enterprises has led government to formulate measures aimed at aiding this sector. Loan packages of the World Bank, National Directorate to employment and NERFUND are among similar backing scheme. The one- man procurement pattern of small scale enterprises isn’t only sad for their fiscal profile but can also discourage responsibility which is the foundation of a successful business. Responsibility ensures acceptable control over the applicable fiscal strategies.

The small- scale enterprises indeed not shielded form or vulnerable to the lack of structure, which is the bane of all businesses in Nigeria. On the negative, small medium scale enterprises given further under the weight generating factory, high cost of telephone and electricity. Dispensable to say, no business can survive without their installations.

Purpose Of Study

The major purpose of this study are

1. To review how small- scale possessors can make for effective operation by spreading the liabilities within the business of the need to seek the external backing of a operation adviser .

2. estimate the issue of threat of under capitalization and related this to the disinclination of possessors to bring in mates or acceptable backing.

3. Suggest ways by which the government could ameliorate the infrastructural base of the frugality similar that the cost of development of small- scale enterprises would be reduced.

4. Overview the situation where government could make foreign exchange affordable to small medium scale enterprises and allow the naira to float to find its true value.

5. Review the strategy to be espoused by SMEs in espousing a valorous approach to developing new ideas.

6. dissect the incapability of the possessed- director to admit his own weakness and tap the coffers of bents of workers.

Exploration Question

The conditional exploration questions the study finances answer to are

1. To what extent has shy backing affected the growth and development of small- scale enterprises in Nigeria?

2. To what extent has the one- man procurement pattern of small- scale enterprises of a successful business?

3. To what extent has small- scale enterprises being affected because of the lack of structure which stymie their position of development and growth?

4. To what extent have the complexity and frustration involved in sourcing for foreign exchange to take care of the import needs lead to high rate of business?

5. Failure to small- scale enterprises?

6. To what extent have low productivity, poor operation, poor account records and fiscal indiscipline have should the extent at which small- scale enterprises can go?

Statement Of Suppositions

This exploration tends to test the following suppositions

HO Backing small scale business in Nigeria has a lot of problems which isn’t profitable.

HA Backing small- scale business Nigeria has prospects of which is profitable.

HO There’s no defense for government intervention in the growth of SMEs.

HA There is defense for government intervention in growth of SMEs.

Styles Of Data Collection

There are two types of exploration data videlicet, primary and secondary data from primary secondary source.

Primary data These are data collected specifically for the exploration needs. The sources of these data for the study are administration of questionnaire given to a person about a content of the exploration, canvassing person in applicable fields and particular observation of same conditioning and records kept by some small and medium scale enterprises. This source of data is profitable because first and information is attained and explanations are attained concerning answer to question.

Secondary data These are those data attained from applicable reviewed literature which for the purpose of this hunt include text and journals operation and backing of small and medium scale enterprises and other applicable publications.

Limitation Of Study

The methodology employed in this study faces some lapses. These include shy and gratuitous detention in responses, incapability to have direct access to some of the replier cost of administering longer number of questionnaires.

The study also encountered slice error because it isn’t everybody in the population is tried . Response error is also a serious debit to the study because repliers gave an insincere arid in applicable response to enable- the ascertainment of the line position of thing considering the prospects, problems and position of small- scale enterprises in the country.

Significance Of The Study

The study is important because several advantages accrue to the macro society form small scale enterprises. These include the development of the entrepreneurial spirit, employment generation for entrepreneurs; creation of savings implicit and investment rate. Skill culture is increased as further people seek internship in medication for tone- employment.

The study is also important as it proposals ways to which original law accoutrements use are increased as low capital base might hamper the purchase of imported raw accoutrements attained at the foreign exchange request( FEM) as resemblant request.

The study also affords the druggies the stimulant of developing original backups, and strengthens the capacity to estimate and supply societal and artificial requirements through backward integration.

Compass Of The Study

The study covers the problems accruing to the backing responsibility, operation, marketing and polities of small scale enterprises in Nigeria, bringing in practical illustrations as much as possible.

The study also delves into the problems which are brazened by SMEs in Nigeria ranging from behavioural, political, artistic, socio profitable and country related.

The study doesn’t extend to the backing, responsibility, operation marketing as well as the programs of large- scale enterprises as that advantage much further than what this study can conceivably address. Hence, the study covers the conditioning of some small- scale enterprises around Lagos megalopolis, which are aimlessly named to cover the study centers of the design.

Association Of Study

The study is divided into five chapters. Chapter one is the introductory part of the study which includes review of rearmost literature, problems of study, background of study, exploration questions, means of carrying data, thesis testing, limitation of study, description of terms, purpose of study, compass of study, significance of study.

Chapter two is captured” Literature Review” where several part works the subject matter are several reviewed to cover a well detailed theoretical frame of the study.

Chapter three is the exploration methodology of the study. It covers the exploration design employed, the exploration instrument, paraphrase off exploration question, data collection procedure and data analysis ways.

Chapter four is the analysis, donation of data using a simple percentile system of analysis.

Chapter five is the summary of findings, recommendation of the study as well as conclusion of the study. At the end of the study, suggestion for farther study is offered for interested druggies and compendiums .

Description Of Terms

It’s well given fact that progress in organizing opinion about a subject is showed down until the language that’s used means the same to all concerned. Whereas small business defies easy description, nonetheless, for the receiver to have a meeting of minds on this subjects matter requires the fulfillments of some delineations scores. It’s the contention of Siropolis( 199704) that generally we apply the term “ small business” to some type of stores similar as neighourhood groceries and caffs . generally, we apply” big business” to similar titans as Dupont and General motors. But within, these two axes full these businesses that may be considered medium size depending on the mark and at off point used to measure size, among these common barometers for determining business are

Monthly deals profit and

ii. figures of workers

Siropolis,( 187705) argues further that important that each yard stick has to advantages, the number of workers has further in its favour than any others for the following reasons;

originally, it’s the affectation evidence, and it’s affected by changes in the purchasing power of the currency.

Secondly, it’s similar, that is, it allows for good comparison of size between businesses of the same assiduity group. Fourthly, this available that in, it’s easy to get from business people.

In Nigeria, delineations of small- scale business haven’t been static. Rather they’ve constantly been revised from time to time in response to changing profitable terrain. But basically, the delineations have emphasized the investment factors of business and the number of workers.

The functional description of small- scale enterprises, in the environment of study, are those specified by the Central bank and those espoused by the NERFUND. The Central bank considers an enterprises seeing small if it has capital investment of N2 million. still, National Economic Reconstruction Fund( NERFUND) stimulates capital investments with limits of N10 million in fixed means( banning cost of land) to cover medium enterprises.

No hand and fast sovereign can guide the description of SMEs; for illustration the running affectation, the government changing financial policy and financial programs, the dwindling value of naira the raising cost of raw accoutrements and labour and the constant change in technology and among similar factors that will continue to militate against any attempt at establishing static description for what’s small and what’s medium enterprises in the country.

According to( Ex/ Former) Governor of Central Bank of Nigeria, Chief(Dr.) Joseph Sanusi The generality and description of SMEs is dynamic in character and values with time and also values among institutions and among countries still, the introductory description parameters are the same and include the number of workers, asset base; development, fiscal strength, relative size, among others.

Current delineations are grounded on a blend of original condition and valuables determine the choice of parameters to use in formulating a suitable description.

For case, the Central Bank of Nigeria Monetary Policy indirect No. 22 of 1988 defined small scale enterprises as an association whose investments( including land and working capital, don’t exceed = 5m). In 1989 Nigerian Industrial Policy defined small scale diligence as those with total investment of between N 100,000 and N2 million, banning land but including working capital. Micro and cabin diligence Were also defined as those with investments not exceeding N banning land but including working capital.

Also, the decree establishing the National Economic Reconstruction Fund( NERFUND) in 1989, defined SMEs as these with fixed asset other than land but exceeding cost of investment design not exceeding Nl0 million. presently, under SMEs, and SME is defined as an enterprise with an asset base not exceeding N200 million banning land and working capital; and with a staff strength of not lower than 10 and not further than 300. All these are the colorful delineations put forward by the different original institutions.­ The SME department of the World Bank Group prescribes the following description

Micro Enterprise

workers 10 or lower

Total Asset N 100,000 or lower

Development N 100,000 or lower

Small Enterprise

workers 10- 50

Total Asset N 100,000 to N3 million

Turn over N 100,000 to N3 million

Medium Enterprise

workers 50- 300

Total Asset N3 million to N5 million

Turn over N3 million to N5 million

Distinguished actors, I’ve taken the trouble to go through the colorful definitional perspectives to accentuate the dynamic nature as well as- the variability are common to all the delineations similar as the number of workers; total means and the development. What has also surfaced from these delineations is that numerous of the businesses that are presently regarded as small businesses in Nigeria are actually micro enterprises. And this is why’ some of the programs that had been put in place haven’t been beneficent to maturity or the businesses in this order.

Some introductory parameters are common to all the description as explained similar as the number of workers; total means and the development. What has also surfaced from these delineations is that numerous of the businesses that are presently regarded as small businesses in Nigeria are actually micro enterprises.

Entrepreneurship

This is an aspect of the complex operation processes involved in the operations and summing of a company. It can be seen as operation decision- making under situations of great query of results, of outgrowth; it applies to both large and small association is dynamic and complex business associations.

Entrepreneurship Development

This order of business can be defined as demonstrated excellent capability to induce business, ideas, cost effective operation, specialized and directorial capacities as well as marketing know- style. Small-medium scale enterprises give goods medication ground for the development of indigenous entrepreneurs, which decide the wealth creation process at all situations.

Domestic Savings

This could be defined as savings that collectively couldn’t have been made, available for investment.

Flexibility Operations

This operations or their operation are fluently acclimated to changing request conditions i.e.( the inflexibility and diversification of artificial product).

Intervention Options

This is the usable way to prop the development of small-medium scale enterprises and some of these models could be considered for relinquishment. These include the credit guarantee scheme, input attachment, mandatory and effective sanctioned patronage,inter-firm liaison, duty and impulses, tariff concession, policy and. institutional support, development of business premises with structure, creation of foreign direct investment and technological accession,macro-economic stability and an effective Small and Medium diligence Agency( SMIDA).,

Credit Guarantee Scheme

This could be defined as a threat mollifying medium, which will make it more accessible for the banks to grant credit to the small medium enterprises. This scheme will be the small medium enterprises fellow of the agrarian credit guarantee scheme, which, is presently being managed by the central bank.

SMEIS

This scheme is an action from the bankers’ commission to support the small medium enterprises through equity participation.

To note As at April 2003, the sum of N14.6 billion has been set away under the scheme out of which only N3.5 billion has been bared. This is a remarkable intervention novelty by the banks.

Business Parks With Architectures

Banks, insurance companies and all turns of government should as a rule unite to development of business premises in all original government areas of the country, The term business premises with architectures are explained or surely note as corridor that should have necessary infrastructural installations similar as electricity, water force transportation, telecommunication, road waste operation, storehouse, storehouse installations etc. These premises induce husbandry of scale for the small medium enterprises and always bring down operating cost.

Duty And Tariff Concessions

This is the undisciplined levied quantum of plutocrat form the government on small medium enterprises, which has to be a considerable bone . SMEs should be given duty and Tariff concessions on their law accoutrements input, ministries, profit etc. Capital allowance should be greatly enhanced and there should be capital subventions for small medium enterprises, this will help bring down the operating cost of SMEs small medium scale enterprises and also enhance their competitiveness.

Finance

This is the capital realized( either through the following tip shares or share capital loan, investment of equity capitaletc.) for the establishment or conformation of small-medium scale enterprises.