CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
The role of small and medium enterprises in boosting foreign investment in Foreign Direct Investment (FDI) has increased dramatically in the Least Developed Countries (LDCs), including African countries, in recent decades, mostly in countries with larger markets and natural resources. Lagos is definitely Nigeria’s commercial capital, with numerous businesses relocating to the city, notably to Eti Osa Local Government Area, due to land availability and a favorable business environment. Micro, Small, and Medium Enterprises, on the other hand, play a critical role in every country’s economic development.
Micro, Small, and Medium Enterprises play a critical role in the growth of an economy, and this cannot be overstated. Micro, Small, and Medium Enterprises (MSMEs) serve as training grounds for local entrepreneurs and skills, and they may also function as distribution outlets. According to (Cook & Nixson 2000), policy debates in developing nations continue to focus on the role of small and medium-sized firms (SMEs) in the development process.
Because of the importance of SMEs, Taiwan’s government began a $61 million branding project in 2006, with the goal of transforming the economy from one based on production to one based on knowledge (Lin 1998; Onuorah 2009; SAN 2006). According to a report published in August 2006 in the English language online edition of Electronic Engineering Times-Asia print magazine, formerly Asian Sources Electronics Engineer (EE Times Asia), the “Branding Taiwan Plan” is a seven-year program designed to assist promising small-to-medium enterprises (SMEs) in developing their own brand, according to the Taiwanese government. It all began with this.
SME’s play a critical role in determining the economic and social performance and prospects of countries all over the world, particularly in emerging countries. There has never been a country that has grown without trade. However, trade’s contribution to development is highly dependent on the context in which it operates and the goals it seeks to achieve. In recent years, several other developing countries, notably the least developed, have begun on unilateral trade liberalization, with mixed results in terms of enhanced GDP and development.
Recently, the World Bank has emphasized the importance of SME engagement in international trade. Small and medium-sized businesses (SMEs) must be actively involved as direct recipients of international trade projects. As a result, UK businesses are well positioned to flourish.
STATEMENT OF PROBLEM
Small and medium-sized businesses (SMEs) have played an essential role in the development of most industrialized countries, and they have shown to be one of the most viable sectors with high growth potential. The achievements of governments in this area are the consequence of high priority considerations and future returns from continued investment in this industry. In any economy, the extent to which SMEs’ potential are exploited and their contributions maximized is determined by the enabling environment produced by the supply of necessary infrastructure. Roads, telecommunications, power, ports, and the establishment and implementation of policies like concessionary financing that stimulate and strengthen the growth of SMEs are among them.
In Nigeria, however, the SMEs sector has thrived.
OBJECTIVES OF THE STUDY
The study’s main goal was to look into the role of small and medium businesses in attracting foreign investment in the Eti Osa Local Government Area of Lagos State, Nigeria. The following were among the specific goals:
I To find out how SMEs contribute to foreign investment in the Eti Osa Local Government Area of Lagos State.
ii) to determine the factors that entice international investors to set up shop in the Eti Osa Local Government Area of Lagos State.
iv) to comprehend the challenges that SMEs face in bringing international investors to Nigeria?
RESEARCH HYPOTHESIS
The following research hypotheses will be tested:
I There is no statistically significant link between SMEs and foreign investment.
ii) There is no statistically significant link between foreign investment and development in Lagos’ Eti Osa Local Government Area.
iii) In the Eti Osa Local Government Area of Lagos State, there is no substantial association between SMEs and foreign investment growth.
RESEARCH QUESTIONS
The following are some of the questions that this research will attempt to address:
I What role do SMEs play in attracting foreign investment in the Eti Osa Local Government Area of Lagos State?
ii) What are the factors that entice international investors to set up shop in the Eti Osa Local Government Area of Lagos State?
iii) What are the challenges that SMEs face in bringing international investment to Nigeria?
SIGNIFICANCE OF THE STUDY
This study is crucial since the SMEs sector is critical to the country’s economic progress. When the SMEs sector is well-developed, effective, and efficient, it produces jobs, lowers poverty, and reduces inequality among society’s members. It also draws international investors, resulting in the speedy and rapid development of our economy. Also, this study will benefit the government because it will reveal whether or not SMEs have been able to properly carry out their tasks, and if not, what the reason(s) are. This will aid policymakers in determining how to handle the difficulties highlighted.
SCOPE OF THE STUDY
The study looked at the role of SMEs in attracting foreign investment in the Eti Osa Local Government Area of Lagos State, Nigeria, and so covered SMEs in the Eti Osa Local Government Area.
LIMITATION OF THE STUDY
The most difficult aspect of this investigation was the time constraint. This study was conducted while the researcher was also working on other academic projects. As a result, the amount of time spent on research was reduced.
DEFINITION OF TERMS
During the research, the following terms were used:
Foreign investment entails the transfer of funds from one country to another in exchange for large shares in domestic businesses and assets.
Foreign investors are individuals who own a firm in a country other than their own.
SME stands for Small and Medium-Sized Enterprises.
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