The Impact Of Small And Medium Scale Industries On The Economic Growth Of Nigeria (1986 – 2010)

The Impact Of Small And Medium Scale Industries On The Economic Growth Of Nigeria (1986 – 2010)

Abstract

The study investigates the impact of small and medium scale diligence on the Nigerian frugality, gauging from 1986 to 2010. The study espoused Ordinary Least Forecourt( OLS) Linear Specification model. Using unit root test, the work shows that small scale diligence significantly contributed to the profitable growth in Nigeria despite poor backing by marketable banks. The work recommends among others that government should ameliorate its financial programs so as to reduce to an respectable position, the rate of interests charged by marketable banks as well as encouraging pastoral grounded industrialization, whereby investors are encouraged to establish small and medium scale diligence that would be grounded entirely on original raw accoutrements , machines and accoutrements .

Chapter One

Preface

Background Of The Study.

In recent time, the fortune of small scale and medium scale diligence attracted the attention of government world-wide and therefore has been the focus of general interest and exploration, especially in developing Countries due to the significance of small scale and medium scale diligence.

Their significance can not be over emphasized as they constitute a whole mannish vehicle for the generation of vast product of labors and job creation. They’re also act as catalyst for restructuring and diversifying the productive base of an frugality and for the Industrial frugality and for the Artificial frugality take- off and growth of such an frugality. The small and medium scale diligence are seen to hold the key to unborn expansion of the Industrial sector.

In Nigeria, substantiation has shown that in 1986, small scale and medium scale diligence reckoned for 70 of all enterprises, employing millions of Nigerians( first Bank of Nigeria report, 1987). By the end of 1979, over 80 of all establishments certified under the plant act were small and medium scale diligence( Onwuala, 1987). This made the significance of this profitable unit to be unelectable.

Small scale and medium scale Assiduity in its widest sense implies the critical response to the challenges of developing countries, of which Nigeria isn’t an exception. Small and medium scale diligence should be rehearsed with due respects to the significance of available original raw accoutrements in its environs because the challenges facing small and medium scale Industrialist are enormous.

The significance of small and medium scale diligence to the profitable development of any country, whether developing or developed, have been extensively conceded and accredited. They’re considered as there stimulate to private power and entrepreneurial chops, induce employment, promote artificial disbandment and pastoral-civic migration.

Clive carpenter( 2001), said that across the world, small businesses are pivotal for profitable growth, poverty relief and wealth creation.

Uayatudeen( 2001) said that across the world, small businesses have such a pivotal part to play in the development of an frugality and that can not be ignored. According to William and David, utmost enterprises and small and medium scale diligence are compared with companies that economist generally study. But economists have concentrated on large scale diligence. The leading handbooks in economics have title conversations on small and medium scale business or entrepreneurs.

The partial combinations of small and medium scale diligence on the Nigerian frugality are; creation of wealth, poverty eradication and employment generation as reprised in the public profitable commission development strategies( requirements)

still small and medium scale diligence are racked by multitudinous challenges which have hampered its development and growth and also its combination to public development. To this end, government has introduced colorful programs to address the challenges and constraints facing small and medium scale diligence growth. The programs and institutions Include

Setting up and launching of artificial estates.

Establishment of public directorate of employment( NSE)

Establishment of the Nigerian bank of commerce and assiduity( NBC), the public profitablere-construction fund( NERFUND), the Nigerian Industrial bank( NIDB) which has intermingled in to one agency in the bank of assiduity, the world supported small scale enterprises loan scheme( SNEX), the Nigerian import and import bank( NEXIN)etc.

Setting up a small and medium scale enterprises development agency of Nigerian( SMEDAN); an agency whichCo. ordinates development in small business sector.

Unfortunately, all these formal credit schemes haven’t been suitable to adequately address the abecedarian problems which have constrained small scale enterprises access to credit; and any other enterprise establishing a small and medium scale assiduity requires capital to take off survive and ultimately expand.

Nigeria’s major manufacturers produce food and potables, cigarettes, fabrics and apparel, detergents and cleansers, footwear, wood products, motor vehicle corridor, chemical products and essence while small and medium scale manufacturing engage in leather timber, flesh timber and wood figure. The lower diligence are frequently organized in craft attendants involving particular families who pass the skill from generation to generation.

People have lived in what’s now known as Nigeria since at least 9000BC, substantiation indicated that since at least 5000BC, some of them have rehearsed settled husbandry. In the early( centuries( announcement), fiefdoms surfaced in the drier northern champaign, prospering from trade with north Africa. At roughly the same time, the western and southern forested areas yielded megacity- state and looser coalitions sustained by husbandry and littoral trade. These systems changed radically with the appearance of the Europeans in the late 15th century, the rise of the slave period in the 16th Century through the 19th Century. Nigeria achieved independence in the 1960, but has ago been agonized by an unstable distribution of wealth and affectation.

The first well proved area was the Yoruba area, which was observed between the 11th-12 th centuries. Over the coming many centuries, they spread their political and spiritual influence beyond the borders of its small megacity countries. Its crafters were largely professed, producing among other effects, citation castings of heads in a veritably natural style. Terra- cotta, wood and Ivory were the common media instruments used.

Shortly after the 12th century, the area of Benin surfaced in themid-western south region. Although it was separate from the Yoruba fiefdoms; Benin legends claim that the fiefdoms first autocrats were assignee from an Ife prince. By the 15th century, the Benin area was large, wood designing was what sustained the megacity’s trade( both within the region and latterly with Europe). Its heritage includes a wealth of elaborate citation pestilences and statues recording the nation’s history and glorifying its autocrats.

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From the below paragraphs, it can be noted that small and medium scale diligence are indeed necessary for the development of any frugality. Small and medium scale diligence act as the major stepping gravestone to profitable growth. In Nigeria moment, small and medium scale diligence are common but have no efficiently achieved or attained her pretensions.

thus, to encourage original businessmen and institutions in buying small and medium sized businesses, the government established the Nigerian bank for assiduity and commerce, which had an original operating capital of 50 million naira. There was some concern in Nigeria that Nigerians might not be suitable to raise enough capital to take over the foreign possessed businesses affected by the decree and that there might not be enough Nigerians with the specialized and directorial chops necessary to replace liberate labor force.

Statement Of The Problem

The small and medium scale diligence check conducted in 2005 by the central Bank of Nigeria( CBN) provides some substantiation that piecemeal from the acute short of technology, directorial chops, poor operation,

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adverse terrain, and change in policy, capital is a source of great concern to the entrepreneur in the sector. Since one of the microeconomic pretensions of the Nigerian government is profitable growth, we can assume that the government aims at the expansion of small enterprises.

In a mainland where finance is a major constraint on development, the problem defying the private sector in Nigeria above all small and medium scales diligence name.

Most large scale diligence in Nigeria have reduced their borrowings due to high interest rates and the short term nature of available loans. At the same time, banks are unintentional to advance to the small and medium scale sector with its high perceived rises. In this case, lending isn’t effective to the real sector and loanable finances are presently used to finance primary consumer significances and to separate in foreign exchange requests. The exploration question from the below experience is therefore; will small and medium scale contribute much to profitable growth in Nigeria when they aren’t duly funded.

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Objects Of The Study.

The end of this exploration work is to examine the significance of small and medium scale diligence on the Nigerian frugality in order to ascertain how small and medium scale is employed in product using the available raw accoutrements and coffers with a view to achieve gradational formalization in the guest for public industrialization. Meanwhile, the specific objects are

a. To determine the impact of small and medium scale enterprises.

To examine the effect of small and medium scale enterprises.

Statement Of Thesis.

For the purpose of this study, the exploration developed the following thesis.

Ho Small and medium scale diligence aren’t catalyst for profitable development and growth in Nigeria.

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Hi Small and medium scale diligence are catalyst for profitable development and growth in Nigeria.

Significance Of The Study

The significance of the study is to establish an extent of growth and development and to expose the immense benefit derivable from small and medium scale diligence.

Also, this study will help to requital the belief of the society that small and medium scale diligence can bring about profitable and development in Nigeria.

Compass And Limitation Of The Study.

The study encompasses the places and benefactions of small and medium scale diligence on the Nigeria frugality from 1986- 2010. The base of covering this period of time is to ascertain whether there have been any significant impacts of small and medium scale diligence on the

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Nigerian frugality. And also, this study doesn’t consider the medium and large scale diligence.

In writing this design, the experimenter encountered some limitations, which were; lack of information from applicable quarter, time constraints, transportation, lack of finances, power outrage etc. still, in malignancy of all the odds, the experimenter was suitable to come out with a standard work. The design still, contains information which in dependable and authentic.