FACULTY OF BUSINESS ADMINISTRATION … GODWIN PG.pdf · Department of Management, ... (MBA) in...

1

ARUA GODWIN M.

PG/MBA/09/54506

THE ROLE OF GOVERNMENT TOWARDS IMPROVING THE

SUSTAINABILITY OF SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

Okey ijere Digitally Signed by: Content manager’s Name DN : CN = Webmaster’s name O= University of Nigeria, Nsukka OU = Innovation Centre

2

THE ROLE OF GOVERNMENT TOWARDS IMPROVING THE

SUSTAINABILITY OF SMALL AND MEDIUM SCALE BUSINESS

IN NIGERIA

BY

ARUA GODWIN M.

PG/MBA/09/54506

A RESEARCH PROJECT PRESENTED IN PARTIAL

FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF

MASTER OF BUSINESS ADMINISTRATION IN MANAGEMENT

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

AUGUST, 2011

3

APPROVAL PAGE

This project titled; THE ROLE OF GOVERNMENT TOWARDS

IMPROVING THE SUSTAINABILITY OF SMALL AND

MEDIUM SCALE BUSINESS IN NIGERIA written by ARUA

GODWIN MATHEW with registration number

PG/MBA/09/54506 has been certified and approved as meeting the

standard required in partial fulfillment for the award of Master of

Business Administration (MBA) in Management of University of

Nigeria.

………………… ……………...

PROF U.J.F EWURUM DATE

SUPERVISOR

………………… ……………...

DR C.A EZIGBO DATE

HEAD OF DEPARTMENT

…………………. …………….

EXTERNAL EXAMINER DATE

4

ii

CERTIFICATION

I Arua Godwin Mathew, a postgraduate in the

Department of Management, faculty of business

administration, University of Nigerian Enugu Campus, with

registration number PG/MBA/09/54506, has satisfactorily

completed the requirement for the written course work and

project for the award of master of Business Administration

(MBA) in Management.

The project report is original and has not been submitted

in part or full for any other postgraduate or bachelor’s Degree

of this or any other University.

……………………………… ARUA GODWIN M.

PG/MBA/09/54506

5

DEDICATION

To God Almighty who for his infinite mercy and kindness

made it possible for me to see the end of this struggle.

I equally appreciate the effort of my sponsor Mr. and Mrs.

Anthony Arua to enable me complete this programme.

6

ACKNOWLEDGEMENT

I acknowledge the good Lord for making this project a

success. I also express my profound gratitude to my lecturer

and supervisor Prof. UJF. Ewurum for the knowledge

transferred. I will not fail to appreciate the effort of some other

lecturers and my friends Mr. S.N. Kodjo and Nwonu Chijioke

for their kind gesture.

I am greatly indebted to all of you for God will pay you

back.

7

TABLE OF CONTENTS

Certification - - - - -- - - - -i

Approval - - - - - - -- - - -ii

Dedication - - - - - - - - -iii

Acknowledgement - - - - - - - -iv

Abstract - - - - - - - - - -v

CHAPTER ONE

Introduction - - - - - - - - -1

1.1 Background of the Study - - - - - -1

1.2 Statement of Problem - - - - - -5

1.3 Objectives of the Study - - - - - -6

1.4 Research Questions - - - - - - -6

1.5 Hypothesis - - - - - - - -7

1.6 Significance of Study- - - - - - -8

1.7 Scope and Limitation of the Study - - - -9

References - - - - - - - -10

CHAPTER TWO

Literature Review - - - - - - - -11

1.1 Definition of Small Scale Enterprise - - - -11

1.2 Definition of Medium Scale Enterprise - - -15

8

2.3 Type of Small business activities - - - -16

2.4 The Role of Government in Small and Medium Scale

Enterprises - - - - - - - -19

2.5 Essential requirements for successful small scale

business operations - - - - - - -20

2.6 Problems/causes of failure of Small and Medium Scale

Enterprise (SMEs) in Nigeria - - - - -22

2.7 Essential of Financing Small Scale Business - -27

2.8 The Economic Imperative of Small Business Development

in Nigeria - - - - - - - - -29

2.9 The Importance of Small Scale Business

Enterprises - - - - - - - -30

References - - - - - - - -34

CHAPTER THREE

RESEARCH METHODOLOGY - - - - - -38

3.1 Source of Data - - - - - - - -38

3.2 Sample size Determination - - - - -39

3.3 Method/Instruments of Data collection - - -40

3.4 Questionnaire distribution analysis - - - -41

3.5 Data Analysis Techniques - - - - -42

9

3.6 Validity and Reliability of Data - - - - -42

CHAPTER FOUR

Data Presentation and Analysis - - - - - -43

4.1 Data Presentation - - - - - - -43

4.2 Data Analysis - - - - - - - -53

4.2.1 Testing of Hypothesis - - - - - -58

4.4 Analysis of Relevant Programmes and Agencies - -67

References - - - - - - - -86

CHAPTER FIVE

Finding, Conclusion and Recommendations - - -87

5.1 Summary of Finding - - - - - - -87

5.2 Conclusion - - - - - - - -88

5.3 Recommendations - - - - - - -89

Bibliography - - - - - - - - -90

Journals/others - - - - - - - -92

Appendix questionnaire - - - - - - -94

10

1.8 ABSTRACT

This project deal on the level of Government involvement towards the improvement of small and medium scale business in Nigeria. It stipulates the type of agencies provided by the Government that deal with the small and medium term business. It equally state the problem encountered by the small and medium term enterprise sand equally proper solution towards solving the problems. It goes ahead to show the type of small and medium scale business, their important, problem and their relationship with the Government. It deals on the most people regarded as small business, this is because, the definition of small and medium scale business are not globally accepted. The essential requirement for successful small and medium scale business is equally deals on. Problems cause of failure of small and medium scale enterprise (SMEs) in Nigeria are equally seen in this work. The agencies that help in improving (SMEs) in Nigeria, like the small scale industries credit (SSICS), the National Economic Reconstruction Fund (NERFUND), the Central Bank of Nigeria (CBN), the Nigeria Export and Import Bank (NEXIN), the Small and Medium Enterprises Development Agencies of Nigeria (SMEDAN), the National Directorate of Employment (NDE) and other agencies were formulated as a catalyst by the Government to reduce the level of poverty in the county. Finally, the findings equally revealed that, owing to its positive impact on the economy, Government has provided funds for some form of research into these industries, creating Small Scale Industry (SSI) divisions or department as well as Small Scale Credit Schemes (SSCS) in some states and at the federal level. The implementation of this programme is for the effective development, and sustainability of the operation of small and medium scale enterprises in Nigeria by the Government. In a nut-shell therefore, small and medium scale enterprise provide financial opportunity and a chance to develop wealth.

CHAPTER ONE

11

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Government has done a lot toward improving the standard of small

and medium scale business in Nigeria through the establishment of many

ministries parastatals and agencies. In Nigeria small scale business are

falling due to some problems, like poor funding, poor infrastructural

development, high taxation and others. Small and medium scale business

have come to stay in this country and to some extent have increased the

standard of living and economy of this country.

Government has implemented a lot of programme and equally set up

some agencies in Nigeria like the small scale industry credit scheme

(SSICS). The National Economic reconstruction fund (NERFUN) Central

Bank of Nigeria (CBN), the Nigeria Export and Important bank (NEXIM),

the work bank facility for the Small and Medium Scale Enterprises loan

(SMEX LOAN), the National Directoriate of Employment (NDE), the Small

and Medium Enterprises Development Agencies of Nigeria (SMEDAN).

All this agencies are effort made by the government to reduce the

effect of poverty in Nigeria. But the fact still remain that some of this

agencies are not doing what they are meant to do due to corrupt practices,

favoritism and untrained personnel that work in those parastatals.

Our small and medium enterprises when compared with the outside

world, has a lot of discrepancy in terms of maturity, level and standard.

What we call big business in this country are been regarded as small

business in other countries.

Therefore, it will be of great interest that the government not only set

those agencies but they should also provide capable and competent hands

12

that will man it, discipline those that are corrupt and make it possible for

small and medium scale business to excel in Nigeria.

From the above study, economic analysts all over the world agree that

output performance in the less developed countries is rather disappointing

with little or no hope of appreciation, to a level that would engender self-

reliance. This was precisely because the major indices of economic

performance rather looked downwards. The index of manufacturing output

posted losses in real terms with the bleak consequences in employment

generation. On a macro scale, the effect was disastrous with failures in

macro economic planning.

The experience in developing countries with large scale industry was

worsened by financial shortage and fraud, as a result of which gigantic

projects were abandoned. In addition, the technological gap existing

between the developed therefore agreed and obvious that the “big-push”

theory of large scale industry cannot of finance, technology and manpower

availability.

The concentration of large industrial concerns in the urban cities has

long been criticized because of the rural urban drift which has generated

imbalance between the rural and the urban areas in Nigeria today, Leon

(1998:132). Faced with this kind of problem and given the constraints,

economic thinkers are now focusing attention on small and medium scale

enterprises (SMEs). Small and Medium scale enterprises consist of

endeavours in manufacturing, handicraft and small pockets of maintenance

and repair.

In effect the definition of SMEs may vary from place, time and

purpose, the commonest criteria used according to Ihyembe (2000:42),

include the number of employees, sales (or turnover), financial strength

13

(mainly in terms of capital outlay and working capital), as well as the

structure of the ownership. The SMEs concept evolves from the type of

opportunities available in the market which is matched with the locally

available skills and financing. This type of industry is one that is

characteristically managed as a small business either by a sole proprietor or

combination of small investors who have gathered their resources together.

The Nigerian economy appears to have been reaping the advantages

obtainable from small and medium scale enterprises. These include

stimulation of indigenous entrepreneurship, transformation of traditional

industry, etc. As would be shown later, the experiences in many parts of the

world point to the director that small and medium scale enterprises can make

positive impact on the economies of many nations both developed and

developing.

It is for this reason that the government of Nigeria (Federal and State)

started showing interest in Small Scale Industries (SSIs) from the 70s to

date. Some of the positive actions taken by government in this regard

include providing funds for some form of research into these industries,

creating SSI divisions or departments as well as small scale credit schemes

in the various states and at the federal level. The implementation of the

programmes that have been outlined for the development of the small and

medium scale industry in the past have often been hampered by the lack of

information concerning the industry, most especially with the constraints to

their development, what motivates them, their economic contributions and

so on.

Hence, the need for adequate research into them to provide the basic

data for planning effectively for them. Detailed and extensive nationwide

research on these industries in Nigeria have generally been lacking until the

14

pioneering work of the industrial research unit of the University of Ife now

Obafemi Awolowo University Ife in the early 1970s.

The first in the series of surveys carried out by the Ife unit on SMEs,

covered the then western states, Kwara state and former mid- western state.

A survey of SMEs in the former north eastern states was also carried out by

the unit. The University of Zaria now Ahmadu bello University Zaria also

carried out similar studies in the remaining states of the country at that time.

The objectives of those studies were similar and were meant to study

and analyze the structures of the SMEs, the pattern of ownership

management and control in the SMEs as well as the size of employment,

marketing procedures as well as the level of education and training in the

industries. The studies also sought to examine the extension services

available to the industries and the impact of public policies on their general

performance.

The analyses of all these factors were at assessing the role of SSIs in

the nation’s economic growth. The research carried out an enumeration

exercise on SME’s in the states and attempted to measure and analyze

certain variables and factors that were relevant to the achievement of the set

objective.

These variables include the level and sources of capitalization,

ownership structures, age, level of education of entrepreneurs, employment

management practices etc, the analysis of such other factors, impacts etc.

A few years ago, the Federal Ministry of Industry commissioned

some consulting firms and other groups to carry out a nationwide survey of

SMEs. These studies were aimed at assessing the impact of the existing

SMEs on the development of the economies of each state. They were also to

examine the linkage effects of outputs of small manufacturers on bigger

15

industries and vice versa. In addition, the studies equally determine the

impact of federal government assistance to the states for the development of

SMEs credit and other schemes.

Finally, the project was also aimed at determining the potentialities

possessed by the states for the establishment, growth and development of

small scale establishments in the states. While these studies and research

undertakings could have been said to have provided a very useful insight

into the operations and potentials of the SMEs, they equally left some

unanswered questions.

1.2 STATEMENT OF PROBLEM

Despite the fact that there is an increase in the number of small and

medium scale enterprises in Nigeria, the country still witness under

industrialization. Unemployment has been a common phenomenon with the

institutions of higher learning producing fresh graduates each academic year

without appropriate job opportunities for a lot of them.

Capital is a major problem facing SMEs as well as industrialization.

Shortage of capital has induced many industries to delay their projects. The

banks and other financial institutions are often blamed for inadequacy of

credit and loan facilities to this sector. The excuse often given by banks is

that he entrepreneurs do not usually repay loans as and when due. They

accuse the industrialists of being dishonest, and also not having the ability to

satisfy the bank(s) with their feasibility studies. At times loans meant for the

establishment of a certain business is diverted to unprofitable ventures.

Government on the other hand has been accused severally of not

doing enough to promote and sustain programmes aimed at uplifting and

enhancing the operations of the SMEs. This is where the problem of this

16

study lies. It constitutes an inquiry into ascertaining the various ways

through which government has been and is still contributing towards the

promotion/sustenance of small and medium scale operations in Nigeria.

1.3 OBJECTIVES OF THE STUDY

The basic objectives of the study are as follow:

1. To provide an analysis of the concept of small and medium scale

enterprise.

2. To examine past efforts of government aimed at

promoting/sustaining small and medium scale enterprise

operations.

3. To also examine what constitutes the elements of government’s

present efforts/approach towards small and medium scale

enterprises operations, promotion/sustenance.

4. To present a resource material/source of reference in this regard in

future.

1.4 RESEARCH QUESTIONS

To direct investigation, the following research questions were put forward.

(i) What constitutes the need/relevant for the establishment of small

and medium scale enterprises?

(ii) Through what ways/means had government promoted/sustained

small and medium scale enterprises operations in the past?

(iii) What constitutes government’s efforts in this regard presently?

(iv) Is there a need to have a resource material/source of reference in

this regard in future

17

1.5 HYPOTHESIS

The hypotheses put forward for the research are as follows:

1 Ho: The establishment of small and medium scale enterprise would

not contribute to national economic growth and development

H1: The establishment of small and medium scale enterprise would

contribute to national economic growth and development

2 Ho: Government has not been promoting /sustaining the operations

of small and medium scale enterprises in the past, and present.

H1: Government has been promoting /sustaining the operations of

small and medium scale enterprises in the past, and present.

3 Ho: The growth and development of SMEs in the country presently

is not dependent on government’s effort, promotion and

sustenance of its operations.

H1: The growth and development of SMEs in the country presently

is dependent on government’s effort, promotion and sustenance

of its operations.

4. Ho: There is no need to have a resource material/source of reference

like commercial bank as regard the improvement of SMEs in

the future.

H1: There is every need to have a resource material/source of

reference like commercial bank as regard the improvement of

SMEs in the future.

18

1.6 SIGNIFICANCE OF THE STUDY

Significantly, SMEs form an integral part of the entire economic

sector. In developed economies, the private sectors holds the key of SMEs

and contribute immensely to the strength of the micro economy and

alleviating much of the economic and social problems of the lesser class.

The government of these countries understands this and formulate

policies that are quite favourable to their existence and effective

performance. There is the linkage effect between the big manufacturing

firms and the small enterprise which are unable to undertake the

manufacture of certain inputs in the production process.

The small scale concerns will be positioned to fill such gaps in the

linkage structure. To this effect, the establishment of a functional

industrialization programme is a gateway to the SMEs sector.

The relevant of small and medium scale business to economic growth

and development makes it imperative for any nation that wants to develop

economically to encourage the development of strategies that will make

SMEs boom in their nation(s). Unfortunately, if there is stagnation or

outright failure of this vital economic section, it denies such nation(s) the

goodies derivable from having them.

However, some of the crucial problems in formulating and

implementing a meaningful small scale industrial policy include the issue of

mission, which has to be unambiguously defined, promotion, as well as that

of financing. This must be done in the context of the macro economic

planning which is currently taking place in Nigeria today, after decades of

planlessness.

19

It is in line with the afore-mentioned that a proper analysis of the

study such as this one targeted at analyzing government efforts, aimed at

promoting/sustaining small and medium scale enterprises operations in the

country is considered to be paramount significance.

1.7 SCOPE AND LIMITATION OF THE STUDY

The scope of the study encompasses the analysis concerning the

relevance of the small and medium scale enterprises towards the growth and

development of a nation’s economy, together with the definitions,

characteristics, as well as some other elements associated with small and

medium scale enterprises. It also entails the efforts on the part of

government through such means as policies, programmes, etc. towards

promoting/sustaining SMEs operations in Nigeria, with emphasis on the

Small and Medium scale Enterprises Development Agency of Nigeria

(SMEDAN), as well as some other related/relevant establishments both past

and present through which government has been handling the issue.

However, the limitations of the study exists in such area as the time period

involved for the execution of the research, difficulties in obtaining most of

the date/information required for the study, as well as transportation and

some other logistic problems encountered in the process of carrying out the

research.

20

REFERENCES

Akintola A. (1984): Manufacturing and Directing Public Policy in South

Western Nigeria NISER, Ibadan.

Akpala Ageu (1990): Management; An Introduction and the Nigerian

perspective; Department of Management faculty of Business

Administration, UNEC, Enugu.

Ihyembe R. (2000): “SMEs and the Development of Nigeria Capital

market”, Business Times: Daily Times Nigeria Plc. Lagos.

Len I. (1998): Small Scale Industries: Concepts, Strategies and Policy

Options; key bee Publishers, Owerri.

21

CHAPTER TWO

LITERATURE REVIEW

The concept of small scale business has perhaps enjoyed more

controversy in the literature than possibly any other concept could boast of.

Economists, management consultants, government agencies etc, are at

variance at what parameters or criteria should be used in delineating which

businesses are small and which ones are big. The growing want of uniform

criteria for identifying small business led scholars to define it with one or

more of the following:

• Number of employee

• Capital outlay

• Asset base

• Market size

It is necessary at this point therefore, to review some of the literatures

related to this topic.

2.1 THE DEFINITION OF SMALL SCALE ENTERPRISE

Though there is no universal acceptable definition of small scale

enterprises, as the basis for measuring their size is debatable. The term

small scale enterprises or small businesses may be used freely as if it had a

universal interpretation because the classification of business into small,

medium or large is a subjective and quantitative judgment, Chibundu

(1989:27).

The meaning of the term small scale enterprise varies from one

country to another and from one industry to another even within the same

country, accordingly, such various definitions were based on parameters

such as installed capacity utilization, output, employment, capacity, type of

22

industry or other criteria which have more relevance to the industrial policies

of the specified country. According to Uzor (1984:62), the commonly used

quantitative criteria of determining sizes of enterprises include number of

employees, asset employed, networked, value added sales turnovers etc.

Consequently, some people would undoubtedly consider all

businesses that had no more than a specified number of employees (5 or 10)

to be small. Others would believe that a small business is one that operates

only in the local market area. Still others would classify businesses as small

by the kind of firm such as local drug store, dress shop, food processing

outfit/firm, service stations, barbing and hair dressing salon and their likes.

This concept is usually accurate enough for general purposes of most small

concerns of this nature, opined Bosa (1987:94).

Most people would agree that the neighboring beer parlor and

provision stores at the corner of a residential area are small businesses, while

the Nigerian breweries Plc and the group of companies is big business. One

would probably generate little argument about what is “big” or “small”

between these two extremes since size is a relative concept. What appears

small in a particular establishment in terms of employees or sales may be big

in another establishment. In distinguishing between big and small business,

some criteria that are used are relative size, type of customers, financial

strength and the number of employees. Controversy arises then as to where

to draw the line between big and small. Or put in another way or expression,

how big is small?

According to Lewis (1975:6), the definitions change overtime

depending on the circumstances and specific objectives of government and

institutions. The small business Act of USA (1953), provides that a small

23

business concern is one which is independently owned and operated and not

dominant in its field of operation Broom and Longnecker (1986:11).

Steplanek (1988:31) described small scale enterprise in Indonesia as

those employing less than one hundred (100) fulltime workers. Similarly,

Libhold and Chuttas (1990:45) defined small scale enterprises in Sierra-

Leone as those employing less than fifty (50) persons. But in Britain, an

attempt was made to define small businesses by adopting a payroll approach

by looking at the number of workers on the payroll. By this definition those

firms employing up to two hundred (200) workers maybe regarded as small.

The 1989 Industrial Policy of Nigeria defined small scale industries as

those with total investment of between one hundred thousand naira

(N100,000) and two million naira (N2,000.000), exclusive of land but

including working capital Jegede (1990:19).

Also, the Central bank of Nigeria credit policy currently defines a

small scale enterprise for the purpose of commercial and merchant banks

loans as one whose total cost excluding cost of land but including working

capital is above one million naira (N1,000,000), but does not exceed ten

million naira (N10,000,000).

The small scale industries division of the Federal Ministry of

Industries defined small scale enterprises as enterprises having investment

capital (investment in land, building, machinery, equipment and working

capital) of up to sixty thousand naira (N60,000), and employing not more

than fifty (5) employees. This definition was later revised to embrace all

manufacturing units with a total capital and paid employment of up to fifty

(50) persons, Ayuba (1989:8). Thus, such an establishment must be wholly

Nigerian-owned (all companies in schedule 1 of the 1977 Nigerian

Enterprises Promotion Decree). In addition, manufacturing units exceeding

24

the limit of investment and employment as stated therein may still be

considered a small business if the scale of output is relatively small

compared to prevalent sizes of plans, and the technology is fairly labour

intensive.

The Nigerian Bank for Commerce and Industries (NBCI) for the

purpose of its revolving loan scheme for small scale industries, defined

small scale enterprises as those investing not more than five hundred

thousand naira (N500,000), excluding the cost of land but including working

capital. Nevertheless, the bank’s official definition since 1985) has been

firms whose capital cost does not exceed seven hundred and fifty thousand

naira (N750,000) including working capital but excluding land.

The Industrial Research Unit of Obafemi Awolowo University Ife,

defined small scale business as one whose total assets in capital, equipment,

plant and working capital are less than two hundred and fifty thousand naira

(N250,000), and employing fewer than fifty (50) fulltime workers, Oresotu

(1985:17).

However, small scale enterprise or business is not limited to

institutional definitions alone. Ekpenyoung (1989L71), defined small scale

enterprise as those enterprises that have relatively little capital investment,

that produce in small quantities and as a result control a small share of the

market, that employ not more than fifty (50) workers and in which

management, marketing and entrepreneurial functions are vested in the

proprietor.

Nwakobi (1988:11), is of the opinion that the definitions of small

scale enterprise especially those given by Nigeria institutions are not healthy

25

2.2 THE DEFINITION OF MEDIUM SCALE ENTERPRISE

It is important to recall that the term medium scale is fairly recent in

Nigeria. Because of this, there is limited number of medium scale

enterprises definitions in Nigeria.

However, Ogbe (1985:2), after reviewing the prevailing definition of

small scale enterprises in Nigeria claimed that we all know that a medium

scale enterprise is bigger than a small scale enterprise but not large enough

to be classified as large. However, for an enterprise to be eligible for

assistance under the Nigeria bank for commerce and Industries (NBCI)

World Bank assisted loan scheme for small and medium scale enterprises, its

total assets should not exceed one million naira (N1,000,000).

For the Nigeria Industrial Development bank (NIDB), medium scale

enterprise is one whose project cost (investment plus working capital) are

above seven hundred and fifty thousand naira (750,000), but not greater than

three million naira (N3,000,000).

Also Jegede (1990:9), citing the 1989) Industrial Policy of Nigeria,

defined medium scale enterprise as those with total investment of between

two million naira (N2,000,000) and five million naira (N5,000,000),

exclusive of land but inclusive of working capital.

He (2003:457), proposed that a medium scale enterprise should be

defined as any enterprise whose total investment or total assets are above ten

million naira (10,000,000), but not greater than twenty million naira

(20,000,000) and having a labour force that is above one hundred (100), but

not more than two hundred (200). In view of the developments in the

Nigerian economy, which has raised costs? He proposed that the definition

would appear to be more appropriate for the time being.

26

2.3 TYPES OF SMALL BUSINESS ACTIVITIES

Nearly every product or service known can be provided by one small

firm or another. Goods are manufactured and distributed, wholesalers

collect products from many sources and then provide them to their

customers in usable quantities, retailers bring together a huge assortment of

products at a store convenient to the customer, and an amazing number of

small firms export to other countries. While some firms serve only the local

community, other firms operate in the national and international markets.

While many small firms concentrate on selling material product, an

increasing number of firms provide services. Although most service firms

operate in local markets, some services, such as management consulting

medial services, technological assistance and even education are exported.

(i) Product Production Firm

Manufacturing and Assembly firms are producers of final products.

They use raw materials to manufacture physical items, or they assemble

components developed by other firms into consumer products or industrial

products; that is. They make them usable by the ultimate consumer. These

products are then distributed to the final user either directly or through

various types of wholesalers, agents, brokers and sometimes retailers.

Mining and drilling firms extract raw materials from the earth. Many

of these firms process what they extract, while others all the material to

neither manufacturing nor refining firms for processing or to dealers who

then sell the material to final users. For example, some salt mining also

process what they mine, while a small oil drilling company would sell the

crude oil it pumps out to a refinery for processing.

27

Forestry or lumber companies harvest timber from the forests. Some

then process it into lumber or lumber related products, such as plywood or

even paper, while others all the trees as raw materials and some even export

the raw logs to other countries. Fishery firms harvest fish and other seafood

from seas, lakes or rivers, and then prepare it for human consumption or sell

their catch to other firms for processing.

Agricultural firms come in all sizes and produce all kinds of plant

based food stuffs, including a broad spectrum of grains, hundreds of

different vegetables, dozens of fruit varieties, and numerous kinds of nuts.

Farms and ranches also produce beef, pork, and other kinds of meat. Herbs,

wool, medicinal plants, hides, fur, cotton, flax, fibers, ornamental plants,

shrubs, flowers, bulbs exotic animals and plants, and many other items are

grown agriculturally.

(ii) Providers of Services

While service firms are numerous and varied, they share the

characteristic that what they provide is not a consumable product but a

special non material service. Suppliers of services include doctors, dentists,

consultants of all kinds, accountants, travel agents, electricians, plumbers,

etc. There are also services firms that work on products that are owned by

their customers. These are also service firms that work on product that are

owned by their customers. These include companies that repair TV sets or

household appliances and companies that dry-clean clothes. The amount of

money spent by clients for services has been growing steadily for the past

several years and currently it’s assumed to represent more than fifty (50)

percent of all consumer expenditures.

28

Finance firms are often small. They include commercial banks,

finance companies, mortgage companies, discount houses, savings and loan

associations and loan companies of various kinds. These small financial

organizations are often prime providers of cash and operating funds, as well

as other related financial services to many of the nation’s small business.

Every business needs a financial institution to aid its operations. They need

banking facilities such as checking accounts, and they may need loans to

finance inventories, carry receivable, purchase equipment and fixtures,

handle international transactions, and meet financial deadlines. Small

corporations may also require the facilities of a securities banker to sell

common and preferred stocks to provide a sound financial structure for their

firm.

(ii) Providers of products and service combination

Wholesale firms distribute both consumer and industrial goods to

other business and in the process, handle physical products and provide the

delivery service as a package. Wholesaling activities are of great economic

value to both the producers of the products and the retail firms that sell the

products to the consumer. The various lapses of wholesaler including full

service and limited service wholesaler, brokers, agents and jobbers.

For example, consider a small seafood cannery attempting to

distribute its product to all the individual stores that would like to have it on

their shelves. Another example such as vegetable oil can be cited. By using

wholesalers, both firms can greatly reduce the costs of distribution. In

addition, the wholesaler can provide a wide variety of other canned goods

and other grocery products that will give the retail stores easy access to a

large selection of items it can sell. Retail stores represent the largest

29

percentage of all small firms. They sell all kinds of products and provide all

the support services needed to sell these products. Retailing is a popular

area with entrepreneurs, probably because they do it with other forms of

business. And it is relatively easy to operate due to its small initial capital

outlay and skill requirement.

Most retail firms buy their products from wholesalers, jobbers, or

other distributors in the form in which they will be used by the consumer.

The function of retailers is to give these products place utility; that is to add

to their value by making them available to the consumer at a convenient

location. Creation of place utility and the provision of other services are the

same for retail firms of all types and sizes.

2.4 THE ROLE OF GOVERNMENT IN SMALL AND MEDIUM

SCALE ENTERPRISES

Every government in developing as well as under developed economy

is fully aware of the importance of small scale enterprise in nation’s

development and prosperity, according to broom (1998:10).

In Nigeria, the colonial government’s policy was not to encourage the

manufacturing sector or food processing sector, but to supply the British

industries with essential raw materials from her colonies and provide a

market for her goods. All subsequent indigenous governments showed keen

interest in small scale enterprises and economic independence, Cobn and

Lindberg (1978:181). Cobn further emphasized that in order to achieve

these objectives. Various programmes and polices were introduced to

encourage these enterprises.

Ezeh (1994:65) opined that the primary role of government is to

provide the enabling environment, encourage and provide necessary

30

incentives for the participation of private enterprises in economic

development by both indigenous and foreign investors and entrepreneurs.

Besides setting up agencies and institutions, the government also set up

industrial estates and applied fiscal monetary measures to promote small

scale enterprises operations. A more detailed explanation of some of these

agencies and institutions as well as the measures are contained in later

chapters.

2.5 ESSENTIAL REQUIREMENT FOR SUCCESSFUL SMALL

SCALE BUSINESS OPERATIONS

According to Nwokoye (1988:35), these are some required characteristics

that the small scale entrepreneur must possess in order to succeed in his/her

undertaking. He further said that the responsibility of the entrepreneur is to

analyze critically the environmental business opportunities and exploit only

those that fall within his capabilities.

Kotler (1980:2), emphasized that every environmental opportunity has

certain requirements for success. Also every business enterprise special

capabilities or distinctive competence in performing certain functions.

Hence, an entrepreneur is likely to exhibit differential advantages in an area

of environmental opportunity, if its distinctive competence matches the

success requirements of the environments opportunity other than its potential

competitors.

Ethics which deals with what is good and bad, and with moral duty and

obligation as well as the study of people’s rights, duties, the moral rules that

people apply in making decisions and the nature of relationships among

people is a very important requirement.

31

Recalling that the maintenance of high integrity is an ethical

imperative, Ejiofor (1987:163), defined integrity as the aspect of one’s

character rooted in his conviction which serves to deter him or her from

taking advantage of his or her position or strength to gain at the expense of

his or her organization, customer, client or subordinates. The success of an

enterprise is therefore, dangerously dependent on the integrity of its key

managers and other personnel.

Vroom (1964:52), has theorized that the performance of an individual

in a particular job is a multiplicative function of his ability (A) and

motivation (M). But Ejiofor (1984:19), suggest that the performance of a

person is a function of his ability (A), motivation (M) and integrity (I).

According to him, in addition to the individual’s motivation and ability, his

integrity is an active viable in his performance. American performance

model propounded by Vroom missed it probably because the integrity of

their individual can still be taken for granted, and who doubts that the

problem of integrity in Nigeria is not getting out of order. The following

statements can help us to understand the issue more clearly.

Ojudu (1992:33), in an article captioned “Corruption in Nigeria”,

published by African Concord of 13th April, 1992, said that the rule is no

longer “thou shall not steal, but thou shall not be caught”, corruption is the

name of the game, he concluded by asking the question “is there a way out?”

Also, Diya (1994:4), was quoted to have asserted that it is difficult to see a

wealthy Nigerian today be he from the military, police, judiciary, public or

private sector that could account for his source of wealth.

32

2.6 PROBLEMS/CAUSES OF FAILURE OF SMALL AND

MEDIUM SCALE ENTERPRISES (SMES) IN NIGERIA

Factors which constitute problems as well as causes of failure of small and

medium scale enterprises in Nigeria are as many as they are varied some of

them include:

i. Under Capitalization: Money matters are not matters of fancy

virtually, all businesses need capital for its operations and growth. But

many of the small and medium scale business units are under capitalized.

They have limited sources of finance and this creates the problem of not

buying merchandise independently at best price, inadequate qualities cum

varieties e.t.c. Oshunbiyi (1989:10), also saw the key problem facing most

small and medium business in Nigeria as that lack of finance. According to

him, this lack is whether for the establishment of new industries or to carry

out expansion plans, the inability to attract financial credit has stifled the

growth of this sub-sector.

In his view commercial banks which were to be the launch pad for the

development of small and medium scale industries through the provisions o

loans have failed to give adequate support to them. Stiff collateral security

demanded by banks often means that small scale industrialists are unable to

meet these provisions, consequently losing the chance to obtain loans. In

addition, high interest rates charged on loans have scared off potential small

and medium entrepreneurs.

Banks on her own part, have argued that they are discourage to lend to

this sub-sector, since many potential and existing small and medium scale

entrepreneurs draw up feasibility reports that are not viable, lack managerial

33

skills and do not maintain adequate financial or accounting records about

their businesses.

Oladele (1985) added that commercial banks sometimes shun the

small abd medium business owners who on getting the loan soon divert the

funds into other uses while they avoid the banks and resist any investigation

into their activities.

ii. Poor Record Keeping: Some small and medium scale industrialists

believe that the maintenance of book of accounts and other business records

is costly and unnecessary. They feel they can defer the keeping of notes on

important business transactions, such as amounts due to be paid to suppliers

and amounts due from customers. Some people feel that keeping proper

records of accounts is inviting trouble from the tax authorities, while some

others feel that keeping records will be a source of leakage of business

secrets to others.

In fact, many small and medium scale business operators do not

understand the intricacies of maintaining adequate business records or

preparing financial statements. Financial data may be available but the

manager may lack the necessary knowledge of appreciation of their value to

interpret and use them effectively. Dickson (1974:4), agreed with this view

when he said that small and medium scale enterprises are plagued by

inadequacies and services misuses of business records and business

information.

iii. Lack of Enterprise: This relates to lack of experience in the line of

business which the small and medium scale business owners enter. They

may have experience in one line of business and do not in another due to

34

unfamiliarity with the specific problems of that particular new line of

business.

Most successful entrepreneurs had prior experience in their line of

work. Albert (1980:36) suggested ways to make up for experience

deficiencies of entrepreneurs working for someone in the kind of business

contemplated or taking on a partner with the needed experience.

iv. Poor/Wrong Location: The factors which usually influence the

location of business include nearness to source or raw materials, market,

power supply, as well as access to supply of labour and transport facilities

e.t.c.

Good location is extremely important as a factor for business success.

Poor location has caused the downfall of many small and medium scale

enterprises. One mistake some people make is to rent a store in a location

that has a history of failure. They often feel they will be able to turn the

situation around. According to Hastings (1968:135), the small businessmen

must analyse their unique situation before choosing the town and the actual

site for the business.

v. Inadequate Planning: Planning is defined as determining in advance

what to do, how to do it, when to do it, who to do it, and even why you

should do it. It encompasses setting objectives as well as making day to day

decision on how these objectives can be achieved. It involves the

determination of both ends and means.

In his published article Ojiako (1987:10), stated that one of the problems of

small and medium scale business is the lack of strategic planning. It should

be noted that sound planning precedes sound decision male. Most small and

35

medium scale businesses according to Roger (1964), see planning as a

luxury which could be afforded only by a large corporation. Even when

they plan the tendency is that they concern themselves only with short term

plan, while they, shy away from long term plan.

According to Rice (1980:63), the lack of use of modern method of

gathering and analyzing data constitutes a weak point in the small or

medium business strategic planning effort

vi. Neglect and Time Pressure: Since most small and medium scale

business owners are usually managers, they must guard their businesses

against personal neglect. Common reasons for neglecting the business

include bad habit, poor health, laziness, marital problems or apathy. Others

include too much devotion to community activities or politics, etc. these tend

to conflict with business profitability objectives.

vii. High Rate of Loan Diversion and Defaults: Both loans obtained

from government, banks and individuals are used to promote personal

aggrandizement, instead of the corporate objective of the business. Hence,

failure to repay the plus interest, Abdulkadir (1984:26).

viii. Wrong Choice of product or Service: Probably, one important

variable affecting the survival and success of a small and medium business

concern is the choice of product or service to be offered. The significance of

this initial key factor is inescapable as indicated by Murphy (1976:16), who

concluded from his study of 100 start-ups that the conclusion remained the

same.

36

ix. Poor Education and Lack of Required skills: Poor education and

lack of required skills was cited as another cause of business failure in

Nigeria. According to Edemereyor (1985:13), proprietors who have neither

adequate, education nor the required skills to manage such enterprises own

many small and medium scale industries in Nigeria. Consequently, the

management of such businesses are on the basis of trial and error, which

ultimately leads to business failure.

x. Poor Competitive Position: A frequently alleged problem facing

small and medium scale enterprises in Nigeria is intensity of competition

from large companies. Some small and medium scale companies are for

greater innovators than large companies, but their innovations sooner or later

face intense competition. Reid and Hazel (1971:64), puts it this way: “Too

often a small company pioneers a new product, a new process, does the

research and planning, sweats through production and the launch, does it all

well on a modest scale. Then the big boys move in, skirting patents if

necessary and steam roll the small companies into obscurity”.

Also Onuoha (1994:180), stated that it would amount to business

naivety to belittle the impact of the giant organizations in any industry.

They set the pace, their prices, products, internal and externals operating

methods/techniques have this pace-setting feature.

xi. Government Policies and Regulation: Another problem facing

small and medium scale enterprises in Nigeria is the effect of government

policies and regulation, some of which bring distortions in the structure and

management of these businesses. According to Marsden (1983:41), small

37

enterprises will thrive if they are economically efficient without the pethoral

of Government interventions.

Thus, the small and medium scale enterprises are not exempted from

the vagaries of business control as experienced other established business

units. They must operate in accordance with the federal, state and local

government laws. They must obey the monetary and fiscal policy measures,

some of which negatively affect their operations.

xii. Lack of Preparedness: Another cause of failure is unpreparedness of

small and medium scale business owners. Some launch a new venture

without adequate start-up capital. This cause of failure was stressed by

Williams (1982:85), who states that; some people put their heads in a cloud

and start businesses with less capital than they estimated or needed.

However, other problems of SMEs in Nigeria are poor business

accountability, lack of business knowledge, unplanned expansion,

inadequate credit control, incompetence of management, lack of proper

inventory control, disaster, inadequacy of infrastructure facilities, lack of

skilled manpower, lack of good advice cum unwillingness to accept good

advice, non conduction of feasibility studies, management succession

problems, etc.

2.7 ESSENTIALS OF FINANCING SMALL SCALE BUSINESS

Finance, which is general the art, science or system of dealing in,

supplying regulating or managing the money and credit of a nation, state or

private enterprise, plays a central role in the management of any business.

Almost every business action has a financial effect on the firm. A

manager’s ability to obtain and use funds effectively is a key to the success

38

or failure of his company. According to friend (1954:6), a firm’s success or

even its survival, its ability and willingness to maintain production and to

invest in fixed or working capital are to a very considerable extent

determined by its financial policies both past and present

According to Shubin (1957:21), the financing of business involves

accumulation of a capital through “investment”, the layout out of savings by

individuals and organizations for an expected profit. Each enterprise much

determine the amount and kind of capital it needs and then must plan its

financial structure, provide for expansion, and if it is a limited liability

company, sell its securities and avoid undue over capitalization or under

capitalization.

For all the required and necessary financing which had to be sourced

from various places while planning for the finance of a business particularly

a new one, the entrepreneur should be aware that there would be a time lag

between its date of commencement and that of the earning of revenue.

There will be a further time lag before money starts coming in faster than it

has to be paid out. This early period will have to be financed. This should

be reflected in the company’s financial requirement.

According to E.C. Ike, the then Managing Director of former orient

Bank Plc in one of the papers he presented at a conference organized by

National Association of Small Industries in June, 1998, the finance of a

business organization requirement is made up of three types of capital

namely:

- Initial capital

- Working capital

- Capital for expansion

39

He explained that initial capital includes all that is necessary to get the

business stated, while working capital is the amount required for the day to

day running of the business. Capital for expansion is fund needed to

increase the company’s productive capacity. With these necessary capitals

acquired, the entrepreneur or whoever that is charged with the responsibility

of managing the business will then be faced with the problem of adequately

allocating the finance and other organizational resources in their appropriate

measures to attain the company’s objective. The adage “no finance, no

business function”, becomes true of any business venture including the

small-scale industries.

2.7 THE ECONOMIC IMPERATIVE OF SMALL BUSINESS

DEVELOPMENT IN NIGERIA

Nigeria appears to be currently finding the right path to a possible

entrepreneurial venture into the 21st century. Since 1960, the country’s

development plans have laid a great deal of emphasis on public sector

control of the economy. We have a situation where the public/private sector

mix has increasingly titled towards public sector domination. For instance,

while in the first National Development Plan (1962-1985), only 12% of total

capital investment was accorded the private sector with the public sector

controlling a staggering 88%.

This trend has general distinguished the government as a major

investor in a lot of business which otherwise should have left to the private

sector, but this apparently wrong development planning did not pass without

adverse consequences. For the Nigerian economy, many of the public

enterprises in which government has invested about 23 billion naira (as at

1986), have been found to be mere drainage pipes through which the

40

dubious bureaucrats and the political class with the collusion of some private

sector emissaries have sucked the country dry.

However, the situation is changing presently. Bad economic

management on the part of past leaders has boomeranged on everybody.

The oil boom of the 70’s which dictated the entire frivolous and wasteful

attitude of the government and the people, including the relegation of the

agricultural sector and private initiative to the backgrounds has now given

way to hunger, squalor, spiral inflation, disease and mass unemployment.

The new emphasis on self employment is understood to be in line with the

foregoing consideration.

Government is basically de-institutionalizing with a lot of the public

enterprises sated for either full of partial privatization or commercialization.

The economy is being relieved of unnecessary government controls and

regulation, import restrictions and control mainly through the import system

and tight dictates of market forces. Consequently, a change of policy that

provides greater opportunities to similar business run by Nigerians is more

likely to increase than to reduce the rate of growth of industrial output.

2.9 THE IMPORTANCE OF SMALL SCAL BUSINESS

ENTERPRISES

The importance of small business enterprises in any economy cannot

be over estimated. First, the continuing growth in the economy of any

nation depends to a large extent on the start-ups and development of small

business. Even on a recessionary economy, small-scale enterprises are

legitimate viable components in any strategy for reconstructing the

economy.

41

Further, it is emphasized that the small scale enterprises make the

possibility of the equitable distribution of nation income more realistic by

providing employment on a large scale. By creating more employment

opportunities small business enterprises help in mobilizing capital and

human resources that would otherwise be left idle. While some small

business may meet untapped demand, some fill a niche in the market, yet

others provide some distinct services that cannot be marched by large

organization(s) in this wise, they contribute to the succession of large

businesses. In other words, if small businesses were suddenly removed from

the contemporary scene, big businesses would find itself saddled with

myriad of activities that could only be inefficiently performed.

The importance of the afore-mentioned observation can be seen in the

case of manufacturers and wholesalers. The effectiveness of manufacturers

would be impeded of wholesalers were not handy to enhances the

distribution process to the manufactured goods. It is evident too that such

professional services such as accounting, medical, legal, catering, e.t.c

which are rendered to big firms factor under the scope of small business and

most of them is owner-manager in nature.

Small scale businesses economize resources. Resources such as

capital technical and management skills are scarce and constitute the central

problem of under development. Small firms are more capital saving and

more labour using and are thus better suited for developing economies. The

capital that goes into the start up of small business is relatively easier to

come by and this is an advantage to a developing economy in view of the

limited amount of savings in such economy.

Small firms are also far less import dependent than large scale

businesses an often depend on locally fabricated machinery and local raw

42

material inputs. One can buttress this point further, by nothing that the less

dependence of small businesses on imported inputs reduces the demand

pressure on foreign exchange earnings in the economy. Consequently,

another importance of small business is in its considerable solution to

balance of payment problems resulting from less dependence on imported

inputs.

Small industries have a shorter gestation period and as a result, yield

quicker returns on investment. They facilitate balance industrial

development in that only such industries can easily be established in many

rural areas. In this regard, they also present a potent means of alleviating

rural-urban migration and the associated urban congestion and

unemployment. Innovation is another importance of small business

enterprises. One of the essential attributes of entrepreneurs (of small

business) is the ability to perceive profitable business opportunities, and a

willingness to act on what is perceived. In most cases, small business

owners who perceive the need for such services often introduce new

services.

Small scale enterprises promote competition and hinder monopoly.

The relative case with which small scale businesses are established and the

responsiveness of entrepreneurs to innovations are major factors for the

preponderance of small scale enterprises in any economy especially a

developing economy. Observation has it that the existence of many healthy

business firms in an industry constitutes a barrier against monopoly. The

importance of a competitive market to the consumer in particular and the

economy in general cannot be over-emphasized.

Small business also provides options for self-employment. Small

businesses constitute a vital source of self-employment for retired officers,

43

or retrenched workers or even older persons and others who are handicapped

and find it difficult to obtain gainful employment elsewhere. This advantage

is particularly obvious in Nigeria and other developing economies, which

have witnessed unprecedented retrenchment and employment, squeeze in the

public and private sectors of the economy.

Small business also serves as a training school for the indigenous

entrepreneurs and provides grounds for the acquisition of skills for a large

number of workers. They are about the most outstanding guarantee for a

speedy development of indigenous technology. Nigeria as a developing

country has particularly witnessed concrete evidence of small business

advantages or benefits derivable from small business.

In summary, hardly any major industry can succeed without the

services of small business enterprises. The relative strength of their

importance may vary from one industry to another. Small firms show their

greatest strength (compared to larger firms) in service industries, wholesale,

distributions, retailing and construction (jobbing) contracts, while they tend

to be dominated by big firms in the areas of public utilities, manufacturing,

communications and transportation. In Nigeria there are thousands of small

businesses which include farming, piggery, fishing, animal husbandry,

weaving and tailoring, printing press, poultry, wood and metal works, and a

host of others, which depend mostly on local raw material inputs.

The review of the importance of small business enterprises in any

economy cannot be exhausted, thus forming the main reason why any study

aimed at contributing to the improved performance of the sector should be

encouraged.

44

REFERENCES

Abdulkadir A. (1984): The Role of NIDB and Future Prospects of Industrial Development in-Nigeria, CBN Bullion Vol. 2, July.

Albert E. J. (1980): Straight Talk about Small Business; 2nd Edition,

Englewood Cliffs: prentice hall Inc, New Jersey. Ayuba S. (1989): Management Strategies on small Scale Business: The

Weekly Democrat; January 29. Bosa G.R. (1987): Financing of Small Scale Industries in Developing

Countries; Praeger Publications, New York. Broom H. N. (1998): Small Business Management: Vintage Press; New

York. Broom H.N. and Longnecker J.G. (1986): Small Management: 5th Edition,

South Publishing Company; Ohio. Chibundu E. E. (1989): “Problems and Prospects of Small Scale Business in

Nigerian Economy”. A paper delivered at a seminar on Finance for Small Scale Businesses, Victoria Island, Lagos.

Cobn T. and Lindberg R.A. (1978): “Survival and Growth: management

Strategies for the Small Scale Industries”. New America Library, New Jersey.

Dickson F.J. (1974): Successful Management of the Small and Medium

Sized Business, Englewood Cliff: Prentice hall Inc, New Jersey. Diya Oladipo (1994): “Diya’s Pontification” Editorial Opinion, Daily

Champion, April 15. Edemereyor M. (1985): Causes of Failure of Small Scale Industries in

Nigeria, Business, Times, September 2. Ejiofor Pita (1984): Making our Organizations perform: Public Lecture

Service Series No. 2, October.

45

Ejiofor Pita (1987): Management in Nigeria: Theories and Issues; Africana-Feb. publishers Limited Onitsha.

Ekpenyong S. (1989): The Cottage Industry in P.N. Ejiofor Ed. Foundations

of Business Administration: Africana-Feb Publishers Limited, Onitsha.

Ezeh C. (1994): “Effective Management Approaches; The private Sector

Experience”; Management in Nigeria October – December. Ezeh J.A. (1999): Fundamental of Small business Management; Glance

Ventures, Emene, Enugu. Friend I. (1954): “What Business can do to prevent Recessions”: Problem in

Anti-recession Policy, New York: Committee for Economic Development Cited in J. F. Wilson and E.F. Brigham; Essentials of Managerial Finance, New York: Hold Rinehard and Winston.

Hasting P.G. (1968): Fundamentals of Business Ownership; D. Van

Nostrand Company Inc. London. Ike R.C. (1988): “Private Limited Liability Companies Act of 1967 and

1984” in a paper presented at a conference Organized by National Association of small Scale Industries, June, 1988.

Ile N. (2003): Entrepreneurship Develop0ment: The Nigerian Perspective;

Chiezugo ventures, Enugu. Idemin I. (1990): Small Sale Industries in Nigeria ICON News, July 32. Jegede Charles T. (1990): The Development of the Small and Medium scale

industry in Nigeria; in Management in Nigeria, May/June. Kotler P. (1980): Marketing Management Analysis, Planning and Control;

Prentice hall Inc. Lewis G. (1975): Small Scale Enterprises in Development Process; Richard

D. Irwin books London.

46

Liehold W. and Chutta G. (1990): Effective Management of Small Scale Enterprises; Richard D. Irwin books London.

Marsden F. (1983): Problems of Small Business; Ododuma Business

Journal; No. 17. Murphy T.O. (1976): A business of your own: McGrew Hill Inc New York. Nwakoby C. (1988): Banks Financing of small Scale Enterprises business

Times, July 25. Nwokoye N. G. (1988): “Marketing Strategies for Business under SAP”;

Business Concord, May 13. Ogbe N.E. (1985): An Address presented at the first National Workshop on

the Promotion and Development of Small and Medium Scale Enterprises in Nigeria; ASCON Badagry, 4th March.

Ojiafor O.F. (1987): Problems of Small Scale Enterprises in Nigeria: The

Business Administrator, Vol. 15, UNEC , Enugu. Ojudu Babafemi (1992): “Corruption in Nigeria”, Africa Concord; 13th

Apeil. Oladele O. (1985): “why Commercial Bans shun Small Business:” Business

Times; August, Vol. 1 nos 3. Onuoha Chima B. (1994): Entrepreneurial Development: An Integrated

Perspective; Avan Global Publications, Okigwe. Oresotu F. O. (1985): A Strategy for the Development of small Scale

Industries in Nigeria: CBN Economic and Financial review, September, Vol. 23 No.3.

Oshunbiyi O. (1989): Ensuring Survival of Small Scale Industries: Business

Times; April 10. Reid A.S. and Hazel AS.C. (1971): The Survival of Small Companies; 1st

Edition; Business books Limited, London.

47

Rice G.H. (1980): Strategy Decision making in Small business; journal of General Management; vol.9. No. 1, Autumn 1980, in Hally P. (1983): Small Business Management; Wadsworth publishing Company. California.

Roiger G. (1964): A Practical Planning for Small business; harvest business

Review, vol. 42, Bo.5. Shubin John A. (1957): Business Management: An Introduction to Business

and industry; Barnes and Noble books, New York.

48

CHAPTER THREE

RESEARCH METHODOLOGY

This chapter deals with the description of the research design, the

mode of data collection e.t.c. The research in his efforts to analyze

government effort aimed at promoting/sustaining small and medium scale

enterprises operations in Nigeria, obtained data for the study from both

primary and secondary sources.

3.1 SOURCES OF DATA

(i). Primary Source

The researcher in an attempt to collect primary data necessary for the

research work, organized face for face discussions with some relevant staff

of the Small and Medium Enterprises Development Agency of Nigeria

(SMEDAN), the National Directorate of Employment (NDE), the centre for

Management Development (CMD), the National Poverty Eradication

Programme (NAPEP), the Central bank of Nigeria (CBN), some selected

commercial and micro-credit finance banks, as well as some SME owners

and operators.

The discussions afforded the researcher the opportunity of gaining

access to records of secured data on matters relating to government efforts

aimed at promoting/sustaining SMSs operations in the country.

(ii) Secondary Source

The secondary data that the researcher made use of in the study

consists of information obtained from:

� Relevant journals, textbooks, magazines, newspapers, etc

49

� The libraries more especially UNN libraries at Nsukka and Enugu

campuses respectively, National Library and the British Council

Library

� Workshops and Seminars organized by SMEDAN and other relevant

organizations.

� The internet.

3.2 SAMPLE SIZE DETERMINATION

For the study, the researcher made use of a known number of

populations of concerned interest, which was one hundred and sixty-eight

(168) relevant people. Then applying the yaro Yamani’s (1960:240) formula

for the determination of sample size, we have that:

n = N 1 + N(e)2

Where

n = Sample size

N = Total Populatioin (168)

e = Limited of tolerable error (0.05)

I = Constant

n = 168 1 + 168 (0.05)2

n = 168 1 + 168 (0.0025) n = 168 1 + 0.42

50

n = 168 1.42 n = 118

The sample size for the research = 118

3.2 METHOD/STRUMENTS OF DATA COLLECTION

The method/instruments used by the researcher for data collection are

as follows:

Questionnaires

The questionnaire is a formalized schedule for collecting data from

respondents. In designing the questionnaire for the research, the structured

pattern was adopted. Conscious effort was made to eliminate ambiguous

questions that could be misleading.

The questionnaire used for the research consists of two sections

namely sections A and B respectively. Section A consists of questions

directly pertaining to the respondents. In other words, the respondent’s

personal data. While section B contains questions concerning the research

proper. A total of one hundred and eighteen (118) questionnaires were

distributed for the research to the relevant persons. The questions fell into

the following categories.

(a) Multiple choice questions: These comprise arrays of suggested

possible responses, which the respondents will choose from.

(b) Dichotomous questions: This type of questions makes provisions

for either of two opposed answers (Yes or No), (True or False).

51

Observation

Observation was made on the activities taking place in SMEDAN, NDE,

NAPEP, as well ass other relevant establishments.

Orak Interview

The researcher conducted oral interview with some relevant staff of the

concerned establishments, this gave the researcher an “on the spot” response

from the respondents, while serving as a complimentary data to the

questionnaire.

3.3 QUESTIONNAIRE DISTRIBUTION ANALYSIS

Respondents

category

Numbers

of

questionn

aires

Number of

favourable

results

Percentage

of

favourable

results

Number

of failure

Percentage

of failures

SMEDAN

STAFF

20 20 100% 0 0%

NDE STAFF 20 20 100% 0 0%

CMD STAFF 15 15 100% 0 0%

NAPEP STAFF 10 10 100% 0 0%

CBN STAFF 10 10 100% 0 0%

Commercial

banks staff

10 10 100% 0 0%

Micro-credit

banks staff

15 15 100% 0 0%

SME owners &

operators

18 15 85% 3 15%

Total 118 115 97.4% 3 2.6%

52

3.4 DATA ANALYSIS TECHNIQUES

The data collected were subjected to simple statistical treatment.

Firstly, they were organized and presented in tables and percentages.

Also, the chi-square (X2) statistical test method was used to test the

hypotheses. Chi-square (X2) provides a means of comparing a set of

observed frequencies with a set of expected frequencies. The calculated X2

will be compared with the critical value(s) of X2. The difference will form

the basis for accepting or rejecting the null hypothesis.

Decision Rule

The rule is to reject Ho (null hypothesis), if the calculated X2 is

greater than or equal to critical value of X2, otherwise accept it. This means

that if the Ho (null hypothesis) is rejected, then the alternative hypothesis (H1

will be accepted and vise versa.

3.5 VALIDITY AND RELIABILITY OF DATA

The respondents answered the questionnaires distributed for the

purposes of the study research. The analysis and interpretation of data was

carried out based on the responses from the interviews and distributed

questionnaires

53

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

For the study, a total number of one hundred and eighteen (118) copies of

questionnaire were distributed, out of which one hundred and fifteen (115)

copies were correctly complied and returned. Thus giving a percentage of

97.4% while 3 copies were not returned, i.e just 2.6%.

4.1 DATA PRESENTATION

Question 1: What do you understand as small business?

Options Respondents Percentage

Business owned by a single individual 11 10%

Business owned by one or few people 20 17%

Business with a minimum capital

involvement

23 20%

All of the above 61 53%

Total 61 100%

Source: Questionnaire

Question 2: Are you in support of the establishment of SMEs in the country?


Yes 108 94%

No 7 6%

Total 115 100%


54

Question 3: Is it necessary for government to be promoting/sustaining

SMEs operations in the country?

Table 4.3:


Yes 106 92%

No 9 8%

Total 115 100%


Question 4: Does SMEs constitute an integral part of the nation’s

economy?

Table 4.4


Yes 105 91%

No 10 9%

Total 115 100%


Question 5: Is the growth and development of SMEs a threat to large scale

organization?

Table 4.5


Yes 17 15%

No 98 85%

Total 115 100%


55

Question 6: Does SMEs act as a catalyst for poverty

alleviation/eradication?

Table 4.6


Yes 110 96%

No 5 4%

Total 115 100%


Question: 7 most young people and school leavers including graduates now

take to small business establishment as a means of making ends meet

Table 4.7


True 89 77%

False 26 23%

Total 115 100%


56

Question 8: The high level of economic development attained by the

developed countries of the world is as a result of their greater emphasis and

attention to SMEs.

Table 4.8


True 94 82%

False 21 18%

Total 115 100%

Source: Questionnaires

Question 9: What approach is most preferable to you in venturing into small

business?

Table 4.9


Starting a new firm from the scratch 55 48%

Acquiring an existing business 38 33%

Operating a franchise 2 19%

Total 115 100%


57

Question 10: In which of the following economic sectors of the nation

does SME dominate

Table 4.10


Primary 56 49%

Secondary sector 15 13%

Tertiary sector 44 38%

Total 115 100%


Question 11: What do you consider the greater positive contribution of

SMEs to national economic growth and development?

Table 4.11


Job creation 51 44%

Poverty Alleviation/eradication 42 37%

Infrastructure attraction and development 22 19

Total 115 100%


58

Question 12: What do you consider the greatest obstacle hindering the

growth of SMEs in the country?

Table 4.12:


Poor financing 57 50%

Unfavourable business environment 35 30%

Insufficient incentives and infrastructures 23 20%

Total 115 100%


Question 13: How would you assess government efforts towards

promoting/sustaining SMEs operations in the country previously?

Table 4.13


Highly favourable - -

Favourable 38 33%

Slightly favourable 69 60%

Not favourable 8 7%

Total 115 100%


59

Question 14: How would you assess government efforts towards

promoting/sustaining SMEs operations in the country presently?

Table 4.14


Highly favourable - -

Favourable 76 665

Slightly favourable 31 27%

Not favourable 8 7%

Total 115 100%


Question 15: How would you assess the level of implementation of

CBN’s policy guidelines and directives towards SMEs presently?

Table 4.15


Highly 37 32%

Slightly above average 40 35%

Average 31 27%

Low 7 6%

Total 115 100%


60

Question 16: How would you assess the level of commercial banks

assistance in terms of financing to SMEs presently?

Table 4.16


Highly 17 15%


Average 35 30%

Low 19 17%

Total 115 100%


Question 17: How would you assess the level of effectiveness and

efficiency of SMEDAN towards assisting SMEs?

Table 4.17


Highly 51 44%


Average 19 17%

Low 12 10%

Total 115 100%


61

Table 4.18: How would you assess the level of effectiveness and efficient

of NAPEP towards assisting SMEs?

Table 4.18


Highly 46 40%


Average 20 17%

Low 15 13%

Total 115 100%


Question 19: How would you assess the level of effectiveness and

efficiency of NDE towards assisting SMEs?

Table 4.19


Highly 48 42%


Average 18 16%

Low 12 10%

Total 115 100%


62

Question 20: Government has been promoting/sustaining the

operations of small and medium scale enterprises in the past and

presently.

Table 4.20


Yes 107 93%

No 8 7%

Total 115 100%


Question 21: The growth and development of SMEs in the country is

dependent on government’s promotion/sustenance of its operations.

Table 4.21


Agree 312 27%

Strongly agree 71 62%

Disagree 8 7%

Strongly disagree 5 4%

Total 115 100%


63

4.2 DATA ANALYSIS

From table 4.1, it shows that 11 representing 10% of the respondents view

small business as a business that is owned by a single individuals, 20

representing 17% of the respondents understand it as a business that is

owned by one or few people, 23 representing 20% of the respondents

indicated that it is a business with a minimum capital involvement, while 61

representing 53% of the respondents agreed that it involves all the above.

This shows that small business is a business that is owned by a single

individual or few people, and also involves minimum capital.

From table 4.2, it shows that 108 representing 94% of the respondents are in

support of the establishing of SMEs in the country, while 7 representing 6%

of the respondents are not in support.

This shows that the establishment of SMEs in the country enjoys

tremendous support and encouragement.

From table 3.3, it shows that 106 representing 92% of the respondents are of

the view that it is necessary for government to be promoting/sustaining

SMEs operations in the country, while 9 representing 8% of the are not of

the same view. This shows that it is necessary for government to be

promoting/sustaining SMEs operations in the country.

From table 4.4, it shows that 105 representing 91% of the respondents

agreed that SMEs constitute an integral part of the nation’s economy, while

10 representing 9% of the respondents are of a different view.

This shows that SMEs constitute an integral part of the nation‘s economy.

64


indicated that the growth and development of SMEs constitute a threat to

large scale organizations, while 98 representing 85% of the respondents

indicated that it do not. This shows that the growth and development of

SMEs is not a threat to large scale organizations.


agreed that SMEs act as a catalyst for poverty alleviation/eradication, while

5 representing 4% of the respondents do not share the same view. This

shows that SMEs act as a catalyst for poverty alleviation/eradication

From table 4.7, it shows that 89 representing 77% of the respondents agreed

that most young people and school leavers including graduates now take to

small business establishment as a means of making ends meet, while 26

representing 23% of the respondents do not agree This shows that most

young people and school leavers including graduates now take to small

business establishment as a source of earning a living

From table 4 8, it shows that 94 representing 82% of the respondents believe

that the high level of economic development attained by the developed

countries of the world, is as a result of their greater emphasis and attention to

SMEs, while 21 representing 18% of the respondents are opposed to the

view This shows that the advanced level of economic development of the

world’s developed countries is dependent on their various governments’

high level of commitment and attention to SMEs.

65

From table 4.9, it shows that 55 representing 48% of the respondents prefer

starting a new firm from the scratch, 38, representing 33% of the respondent

prefer acquiring an existing business, while 22 representing 19% of the

respondents prefer operating a franchise. This shows that starting a new firm

from the scratch is the most preferable approach.

From table 4.10, it shows that 56 representing 49% of the respondents are

the view that SMEs dominate in the primary sector, 15 representing 13% of

the respondents believe that SMEs dominate in the secondary sector, while

44 representing 38% of the respondents gave an indication of SMEs

dominance in the tertiary sector. This shows that SMEs dominance is in the

primary sector.

From table 4.11, it shows that 51 representing 44% of the respondents are of

the view that job creation is the greatest positive contribution of SMEs to

national economic growth and development, 42 representing 37% of the

respondent believe that it is poverty alleviation/eradication, while 22

representing 19% of the respondents indicate infrastructure attraction and

development. This shows that job creation is the greatest positive

contribution of SMEs to national economic growth and development.

From table 4.12, it shows, that 57 representing 50% of the respondents

agreed that poor financing is the greatest obstacle hindering the growth of

SMEs in the country, 25 representing 30% of the respondents are of the view

that it is unfavourable business while 23 representing 20% of the

respondents believe that it is insufficient incentives and infrastructures This

66

shows that poor financing is the greatest obstacle hindering the growth of

SMEs in the country.

From table 4.13, it shows that none of the respondents indicated that

government efforts towards promoting/sustaining SMEs operations in the

country previously was highly favourable, 38 representing 33% of the

respondents believe that it was favourable, 69 representing 60% of the

respondents believe that it was slightly favourable, while 8 representing 7%

of the respondents are of the view that it was not favourable. This shows that


country previously, were slightly favourable.

From table 4.14, it shows that none of the respondents indicated that


country presently is highly favourable, 76 representing 66% of the

respondents believe that it is fayourable, 31 representing 27% of the

respondents believe that it is slightly favourable, while 8 representing 7% of

respondents thinks that it is not favourable. This shows that government

efforts towards promoting/sustaining SMEs operations in the country

presenting is favourable


agreed that the level of effectiveness and efficiency of NAPEP towards

addicting SMEs is high, 34 representing 30% of the respondents believe that

it is slightly above average, 20 representing 17% of the respondents think

that it is on the average level, while 15 representing 13% of the respondents

67

are of the view that it is low. This shows that the level of effectiveness and

efficiency of NA PEP towards assisting SMEs is high.


agreed that the level of effectiveness and efficiency of NDE towards

assisting SMEs is high, 37 representing 32% of the respondents are of the

view that it is slightly above average, 18 representing 16% of the

respondents believe that it is on the average level, while 12 representing

10% of the respondents think that it is low. This indicates a high level of

effectiveness and efficiency on the part of NDE towards assisting SMEs.


agreed that government has been promoting/sustaining the, operations of

small and medium scale enterprises in the past and presently, while 8

representing 7% of the respondent are of an opposing view. This indicates

that government has been promoting/sustaining the operations of small and

medium scale enterprises in the past and presently.


agreed that the growth and development of SMEs in the country is

dependent on government’s promotion/sustenance of its operations, 71

representing 62% of the responded strongly agreed, 8 representing 7% of the

respondents disagreed, while 5 representing 4% of the respondents strongly

disagreed. This shows that the growth and development of SMEs in the

country is dependent on government’s promotion/sustenance of its

operations.

68

4.3 TESTING OF. HYPOTHESIS

In this section, the hypotheses associated with the study will be tested. The

data already presented in this chapter will be used in testing the hypotheses.

Hypothesis I

Ho: The establishment of small and medium scale enterprise would not

contribute to national economic growth and development

H1: The establishment of small and medium scale enterprise would

contribute to national economic growth and development.

The establishment of small and medium scale enterprise would contribute to

national economic growth and development.

Table 4.22


Job creation 51 44%

Poverty alleviation/eradication 42 37%

Infrastructure attraction and

development

22 19%

Total 115 100%


Using chi-square: x2 = ∑(fo – Fe)2 fe Fe Where

Fo = observed frequency

Fe = expected frequency summation sign

69

∑ = summation sign

a = Level of significance 5% or 0.05

δ = Degree of freedom

The degree of freedom for the contingency table (2 x 2) is given by the

formula (R – 1) C – 1).

Where

R = number of rows

c = Number of columns

Hence (R – 1) (c – 1) = (2 – 1) = (1) (1) = 1

Degree of freedom (δ) = 1

From the critical values of the chi-square distribution, the critical value for 1

degree of freedom at 0.05 level of significance x 0.05 = 3.841

Decision Rule

If X2 ≥ critical value x2 0.05, reject the null hypothesis (H0) and accept the

alternative hypothesis (H1).

If X2 ≤ critical value X2 0.05, accept the null hypothesis (H0) and reject the

alternative hypothesis (H1)

Test of Hypothesis

X2 = ∑(fo – Fe)2 fe

70

fo = 51, 42, 22

fe = 51 + 42 + 22 = 115 = 38.33

3 3 Table 4.23

Fo Fe (fo – fe) (fo – fe)2 (Fo-Fe)

2/Fe

51 38.33 12.67 160.5289 4.1881

42 38.33 3.67 13.4689 0.3514 22 38.33 -16.33 266.6689 6.9572 11.49

X2 = 11.49

From table 4.23, since X2 11.49 > 3.841 reject the null hypothesis (H0) and

accept the alternative hypothesis (H1).

The establishment of small and medium scale enterprise would contribute to

national economic growth and development.

Hypothesis II

Ho: Government has not been promoting/sustaining the operations of

small and medium scale enterprises in the past, and present.

H1: Government has been promoting/sustaining the operations of small

and medium scale enterprises in the past and present.

Government has been promoting/sustaining the operations of small and

medium scale enterprises in the past and present.

71

Table 4.24


Yes 107 93%

No 8 7%

Total 115 100%


Using Chi-Square = X2 = ∑(Fo - Fe)2 Fe

Fe

Where

Fo = Observed frequency

Fe = Expected frequency Summation sign

∑ = Summation sign

a = Level of significance = 5% or 0.05.



formula (R – 1) (C – I)

Where

R = Number of rows

C = Number of columns

Hence (R - 1) (C – I) = (4 – 1) (2–1) = (3) (1) = 3


72


degree of freedom at 0.05 level of significance X23 0.05 = 7.815

Decision Rule

If X2 ≥ critical value X2 0.05, reject the null hypothesis (Ho) and accept

the alternative hypothesis (H1)

If X2 ≤ critical value X2 0.05, accept the null hypothesis (H1) and reject the


TEST OF HYPOTHESIS

X2 = ∑(Fo - Fe)2

Fe

Fo = 107,8

Fe = 107+ 8

2 = 115 2 = 57.5

Table 4.25


2/Fe

107 57.5 49.5 2450.25 42.61 8 57.5 -49.5 2450.25 42.61

85.22

X2

= 85.22

From table 4.25, since X2 85.22 > 7.815, we reject the null hypothesis (Ho)

and accept the alternative hypothesis (H1).

* Government has been promoting/sustaining the operations of small

and medium scale enterprises in the past and present.

73

Hypothesis III

Ho The growth and development of SMEs in the country presently is not

dependent on government’s effort, promotion and sustenance of its

operations.

H1 The growth and development of SMEs in the country presently is

dependent on government’s effort, promotion and sustenance of its

operations.

The growth and development of SMEs in the country is dependent on

government’s effort, promotion and sustenance of its operations.

Table 4.26


Agree 31 27%

Strongly agree 71 62%

Disagree 8 7%

Strongly disagree 5 4%

Total 115 100%

Source: questionnaire

Using Chi square = X2 = ∑(Fo — Fe)2 Fe

Fe

Where

Fo = Observed frequency

Fe = Expected frequency Summation sign

∑ = summation sign

a = Level of significance 5% or 0.05.


74


formula (R- 1) (C- I)

Where

• R = Number of rows

C- = Number of columns

Hence (R- l)(C - 1) = (4 - 1)(2 - 1) = (3) (1) = 3



degree of freedom at 0.05 level of significance X23 0.05 = 7.815

Decision Rule

If X2 ≥ critical value X2 0.05, reject the null hypothesis (Ho) and accept the


If X2 ≤ critical value X2 0.05, accept the null hypothesis (Ho) and reject the

alternative hypothesis (H1)

Test of Hypothesis

X2 = ∑(Fo — Fe)2

Fe

Fo = 31,71, 8,5

Fe = 31+71 +8+5 4 =115

4 = 28.75

75

Table 4.27


2/Fe

31 28.75 2.25 5.0625 0.18 71 28.75 42.25 1785.0625 62.10 8 28.75 -23.75 564.0625 19.62

81.88

X2 = 81.88


and accept the alternative hypothesis (H1)

* The growth and development of SMEs in the country is dependent

on government’s effort, promotion and sustenance of its operations.

Hypothesis IV

Ho: There is no need to have a resource material/source of reference like

Commercial Bank as regard the improvement of SMEs in the future.

H1: There is every need to have a resource material/source of reference

like Commercial Bank as regard the improvement of SMEs in the

future.

There is every need to have a resource material/source of reference like


Table 4.28


Highly 17 15%


Average 35 30%

Low 19 17%

Total 115 100%

76


Using chi-square = X2 = ∑(fo – fe)2 Fe Fe

Where

Fo = observed frequency

Fe = Expected frequency summation sign

a = level of significance 5% or 0.05


The degree of freedom fro the contingency table (4 x 2) is given by the

formular (R – 1) (C – 1)

Where

R = Number of rows

C = Number of columns

Hence (R – 1) (c – 1) = (4 - 1) (2 – 1) = (3) (1) = 3

Degree of freedom (δ ) = 3

From the critical values of the chi-square distribution, the critical

value for 3 degree of freedom at 0.05 level of significance X23 0.05 =

7.815.

Decision Rule

If X2 ≥ critical value X2 0.05, reject the null hypothesis (H0) and

accept the alternative hypothesis (H1).

If X2 ≤ critical values X2 0.05, accept the null hypothesis (Ho) and

reject the alternative hypothesis (H1).

77

Test of Hypothesis

X2 = ∑ (Fo – Fe)2 Fe Fo = 17, 44, 35, 19

Fe = 17 + 44 + 35 + 19 = 115 28.75 4 4 Table 4.29


2/Fe

17 28.75 -11.75 138.0625 4.8022

44 28.75 15.25 232.5625 8.0891 35 28.75 6.25 39.0625 1.3587 14.25

X2 = 14.25


and accept the alternative hypothesis (H1).

There is every need to have a resource material/source of reference like


4.4 ANALYSIS OF RELEVANT PROGRAMMES AND

AGENCIES

There is the wide spread belief that small scale businesses are confronted

with unusual problems. This has resulted in efforts by government and some

institutions to reduce or eliminate these problems. For several years,

government has assumed the role of custodian of the competitive system,

and one of the key elements in ‘such a system is a business climate

favourable to the formation of new competitive units where the need exits.

78

The federal government has adopted various policy measures to

promote/sustain the operations of SMEs. The federal government in 1971

established the Small Scale Industries Corporation, bestowed with the

responsibility of promoting small scale industries through the provision of

extension services and technical/managerial assistance, as well as meeting

the training needs of the small scale enterprises. Also government has over

the years, established a number of institutions to provide funds and other

forms of assistance to small and medium scale businesses. Some of such

institutions established include the following:

i. The Small Scale Industries Credit Scheme (SSICS)

The Small Scale Industries Credit Scheme was introduced in 1971, as a

revolving grant by the federal and state governments to assist in meeting the

credit needs of small scale enterprises. The objective is mainly to enable the

small scale businesses obtain financial accommodation on more liberal terms

than those offered by the conventional financial institutions. However, the

problem of inadequate funding of the scheme, coupled with mismanagement

of available funds contributed in crippling the scheme.

ii. The National Economic Reconstruction Fund (NERFUND)

With the introduction of the Structural Adjustment Programme (SAP) in

1986 and the resultant sharp appreciation of the naira, coupled with equally

sharp rise in interest rate. Many small scale enterprises found it difficult to

obtain loans to finance their investment needs. In order to bridge the gap in

bank’s lending to small scale enterprises, the federal government set up the

National Economic Reconstruction Fund (NERFUND) through decree No. 2

0f 9th January, 1989.

79

At the beginning of 1990, NERFUND projected that it would approve for

funding a total of 200 projects. However, by early August, 1990, only 61

projects worth N315 million had been approved for available funds. Total

disbursement early in August, 1990, comprised of U.S. $ 7.5 million plus

N3.6 million. With an expectation that the interest rate on NERFUND’s

.naira loan should be slightly lower than the prevailing commercial rates in

the country.

A total of 156 projects received loan approvals estimated at N1.4 billion

under the NERFUND as at June, 1992. of this number 77 were for agro

allied, 59 for manufacturing, 8 for textile milling, 4 for mining/quarrying

and 8 for industrial support service. Effective commitment of NERFUND is

terms of number of projects which actually received disbursement during the

same period was only 92 representing about 59% of the number of projects

which received approval. The amount disbursed was about N390.4 million

or about 28% of the loans approved.

iii. The Central Bank of Nigeria

The Central Bank of Nigeria as the apex financial institution of the country

has over the years introduced a number of schemes for promoting access to

credit for industrial development, particularly the small and medium scale

industries.

The main thrust of the banks programmes for assisting small and medium

scale enterprises can be grouped under two categories

80

(a) Credit guidelines in respect of loans to SMEs

(b) The Central Bank of Nigeria Rural banking programme

iv. The Nigerian Export and Import Bank (NEXIM)

The Nigeria Export and Import Bank was established in January,

1990, to manage a number of credit facilities introduced specifically to boost

Nigeria’s non oil export sector. It was also intended to support farmers and

other small scale exporters to have direct access to international markets.

The facilities offered by NEXIM include the Export Stimulation Loan

(ESL), the Foreign Input Facility (FIF), and the Refinancing and

Rediscounting Facility

(RRF).

The Export Stimulation Loan (ESL) scheme is funded through a $270

million loan from the African Development Bank (ADB), and it is devoted

to the acquisition of capital equipments required for export production rather

than foreign raw materials and spare parts. By the end of 1991, all the funds

had been fully disbursed.

The foreign Input Facility (FIF) is designed to give manufacturers of

exports access to foreign exchange required to import machinery (for their

establishments) and vital raw materials which cannot be procured locally.

The FIF loans are granted on moratoria of 2 years for capital equipments and

18 months for raw materials. As at the end of 1991 a total of N118.6 million

has been disbursed. The scheme i funded by the ADB. A total of $26.85

million dollars was disbursed between January and September 1992. The

number of projects which benefited dropped from 49 in 1991 to 14 in 1992.

81

v. The World Bank Facility for the Small and Medium Scale

Enterprises Loan (SMEK LOAN)

In order to promote the growth of small and medium scale enterprises,

the federal government negotiated further financial assistance with the

World Bank to compliment other sources of fund to the scheme. This

involves a loan of $270 million of which $26 million was to be made

available for onward lending through eligible participating banks. The

scheme experienced a lull in its operation in 1992. As a result of the

deregulation of the foreign exchange market on March, 1992, a number of

projects were re appraised by participating banks and found no longer

viable. Also some participating banks/promoters were unable to meet the 25

percent of the project cost required of them.

Consequently, the number of applications submitted for project

financing fell sharply from 94 in 1991 to 40 in 1992. Between 1990 and

1992 the cumulative number of applications received by the SME Apex unit

for project financing was 174 out of which 143 were approved. 43 projects

valued at $24.3 million were approved in 1992 compared with the 72 valued

at $34.9 million that were approved in 1991. As at December, 1992, the

cumulative value of projects approved under the scheme was reviewed in

1992 in view of the reduction of the initial loan form $270 million to $142

million in order to reduce commitment charges payable This became

necessary because although the numerical strength of participating banks

increased, their financial commitment to the scheme dropped significantly

because of the high risk involved in the scheme

82

vi. The National Directorate of Employment (NDE)

The unemployment situation in the country, coupled with government

initiative towards easing social tensions among unemployed youths,

necessitated the establishment of the National Directorate of Employment

(NDE) in the early 1990’s. The programmes of the NDE were intended to

lure a lot of unemployed Nigerians. Including graduates into self

determination through self-employment. Graduates and school leavers are

now realizing that government and the established private companies are not

ready to come to their aid directly, through paid employments, due to the

dwindling state of the economy.

Vision

To establish a structured and efficient micro, small and medium enterprises

sector to enhance sustainable development of Nigeria.

Mission

To facilitate the access of micro, small and medium entrepreneurs/investors

to all that is required for their development.

Justification for its Existence

Poverty, due to lack of access to income-earning opportunities and

lack of capacity to take advantage of the opportunities, is a social malaise

that is threatening global prosperity in general and national economic growth

and development in particular.

A well developed MSEs sector has proven to be one of the most

veritable channels of eradicating poverty. The establishment of SMEDAN is

therefore justified by the need to trigger the development of Nigeria’s

MSMEs in a structured and efficient manner. :

83

Power(S) of the Agency

In pursuance of section 8 of the act, the agency shall have power to;

(a) Demand and obtain relevant information, data and development of

small and medium scale industries from banks, research and

development institutions and other support organizations.

(b) Enter into joint-venture arrangement and draw up memorandum of

understanding and agreement with relevant institutions and

organizations for promotion and development of small and medium

scale industries

(c) Do such other things as are necessary for the successful performance

of its function under the act.

Functions of the Agency

The agency shall be responsible for:

(a) Initiating and articulating ideas for small and medium scale industries

policy thrusts.

(b) Serving as a vanguard agency and focal point for rural

industrialization, poverty alleviation and eradication, technology

acquisition and adoption, job creation and sustainable livelihood.

(c) Promoting and facilitating development programmes, instruments and

support services to accelerate development, modernization,

networking and linkage of small and medium scale industries.

(d) Mobilizing internal and external resources, including technical

assistance for small and medium scale industries, their support

institutions, trade associations and non-governmental organizations.

(e) Overseeing, co-ordinating and monitoring development in the small

and medium scale industries sub-sector.

84

(f) Designing, packaging and promoting cottage and micro small and

medium scale industries projects.

(g) Providing industries extension services to small and medium scale

industries fabricators of machinery and beneficiaries of micro-credit

loans.

(h) Establishing liaison between research institutions, local fabricators

and small and medium scale industries.

(i) Linking small scale industrialists to sources of finance, technology,

technical skills development and management.

(j) Facilitating, promoting and development of standard designs and

quality assurance for machinery and equipment, as well as

commercializing them to end users.

(k) Promoting and providing access to industries infrastructure, including

estates, layouts and incubators.

(1) Providing necessary assistance to small and medium scale industries

in the marketing of their products.

(m) Promoting familiarization, sub-contracting, clustering and networking

relation.

(n) Providing and promoting strategic linkages within small and medium

scale industries.

(o) Encouraging and promoting strategic linkages within small and

medium scale industries and large scale industries.

(p) Establishing and co-ordinating the institutional development and

activities of industrial development centers in Nigeria.

(q) Collaborating with the agricultural research and mechanization

centers and agro industrial schemes in Nigeria.

85

(r) Liaising with external agencies for support and development of small

and medium scale industries in Nigeria.

(s) Listing products that small and medium scale industries have

substandard internal capacities to manufacture, to meet domestic

market for federal government’s patronage and deletion or

restriction of the schedule importable goods.

(t) Recommending to the federal government from time to time, in

consultation with other relevant agencies and organizations on

applicable tax and tariff regimes, and other financial incentives for

promoting the development of small and medium scale industries.

(u) Monitoring the implementation and compliance with federal

government directives, incentives and facilities for development

policies in or outside Nigeria.

(v) Carrying out such other activities connected with or incidental to the

other functions of the agency in order to promote government policies

in or outside Nigeria.

(w) Provision of and facilitating technical and managerial training to small

and medium scale industries.

Services

i. Source and Provide Business Information:

• Compile, review and update all existing economic policies,

regulations, incentives, legislation affecting MSME operations.

• Source and make available information on international markets,

products standards/specifications and regulations.

• Update and develop databank on MSMEs, raw materials, available

local technology, machineries and prototypes.

86

ii. Design and Establish BSCs and IPs:

• Business Support Centers (BSCs) will be established in each state, to

provide business advisory services, i.e. link MSMEs to sources of

funds; provide internet/website facilities to provide market

information; provide business consultancy services; collate and make

available business plans and prototypes; implement capacity building

programmes, regulatory and standardization frameworks as well as

collate all relevant business information that could be useful to SMEs.

• Develop and establish, in collaboration with state governments and

NGOs in the private sector, Industrial Parks (IPs) to facilitate easy

access to land, good infrastructure, regulatory bodies such as

NAFDAC and SON; banking services, e.t.c.

iii Capacity Building and Promotional Services:

• Develop, test and disseminate new business models illustrating best

business practices, update SMEs operations.

• Conduct seminars, conferences, workshops, and interactive sessions

for promotion of capacity building purposes.

• Encourage and facilitate business clusters, networks and co operatives

for enhancement of productivity and easier access to factors of

production including finance.

• Encourage and facilitate new investments in designated priority areas

in each state.

• Organize trade and investment exhibitions and interactive foray.

• Develop and apply standards and quality control measures for

technologies and promotion of SMEs.

• Improve the financial management skills of MSMEs through training

workshops.

87

• Develop and implement effective strategies for opening up domestic

and international markets for MSMEs products.

Linking MSMEs to Sources of Finance:

• Liaise with financial institutions to harness and pool resources for

utilization by MSMEs.

• Develop and implement a strategy for the effective and timely

disbursement of SMEs fund.

• Hold regular consultations with international donor agencies, trade

groups, relevant ministries, research institutes, states and local

governments with the view to sharing partner in implementing

programmes for the development of MSMEs.

• Attract foreign investments and funds for the development of the

MSMEs sub-sector.

v. Policy Development:

• Develop and seek statutory approval for a national policy on

• MSMEs.

• Conduct impact assessment studies and use same to recommend

improvements in intervention.

viii. The National Poverty Eradication Programme (NAPEP)

Between 1980 and 1992, the average poverty incidence in Nigeria

increased from 0.28 to 0.43 respectively. By 1996, the situation had

worsened to an average of 0.66, (which implied at the time that, out of every

100 Nigerians, 66 were dwelling below the poverty line with great

difficulties). This increasing level of poverty in the country was despite all

the efforts implemented through all the ministries and agencies established

88

by government to fight poverty. Some of the reasons for the low impact or

total failure of these structures include:

• Poor co-ordination of activities and absence of effective continuous

policy formulation;

• Lack of sustainability of programme and projects;

• Absence of achievable target setting;

• Absence of monitoring, evaluation and impact assessment;

• Absence of effective co-ordination, collaboration and

complementation between the agencies and among the three tiers of

government; and

• Duplication of function with a resulting unnecessary rivalry among

institutions.

The above problems set the agenda for the immediate past administration,

thus:

• Streamline and rationalize, the functions of core poverty alleviation

institutions and agencies,

• Reduce overlapping function

• Enhance their effective performance,

• Improve co-ordination; and

• Improve collaboration with State Governments, Local Governments

and International Departments.

A panel chaired by Ahmed’Joda was constituted to address the above. The

panel executed and made recommendations, which included:

89

• That most or all implementation and delivery activities of government

on poverty should be by statutory ministries so that all efforts are

harmonized within the scope of the sector as covered by the

ministries;

• That an institution which should not be an implementing structure

should be established to oversee the provision of the missing link to

enable monitoring of all efforts while allowing for the effective

complementation, collaboration and co-ordination between all

stakeholders.

• This marked the birth of the National Poverty Eradication Programme

(NAPEP).

Overall Objective

Fundamentally, NAPEP’s basic objective is rooted in the working with

relevant agencies of government to co-ordinate and monitors all direct

poverty eradication efforts in Nigeria, and the guiding of the periodic

poverty eradication efforts in Nigeria, and the guiding of the periodic

poverty eradication policy reviews through the use of comprehensive data

and regular poverty incidence assessment to improve effective use of

resource. This will also help achieve the United Nations Millennium

Development Goal (MDG) of having the proportion of people living in

poverty by the year 2015

General Structure

NAPEP serve as the secretariat of the National Poverty Eradication Council

(NAPEC), the apex body for the formulation of policies on poverty in the

country NAPEC is chaired by the president, with the vice president as vice

90

chairman and the secretary to the government of the Federation as secretary.

The ministers of the entire core poverty ministries and the NCP are

members. By the apparent caliber of this term, the final results of

monitoring, co-ordination and implementation of efforts nationwide guides

the NAPEC to set out further policies and achievable tat gets regarding the

eradication of poverty in Nigeria. The directives of the NAPEC is in the

fiscal budgets and programmes if relevant federal ministries regarding

efforts on poverty eradication in the federation

The delivery receipts of the NAPEC include:

• Mr. President is chairman,

• The vice president is vice chairman,

• All relevant ministers are members,

• Frequency of meeting at least once every six months

• Council secretariat located in the office of the secretary to the

Government of the Federation.

• Use all information from the NCC to formulate policies and consider

further approaches for the logical eradication of poverty in Nigeria

Internal Structure

At the headquarters, NAPEP maintains four (4) departments as follows:

• Administration and Supplies,

• Monitoring and Evaluation,

• Research and Programme; and

• Finance and Accounts.

91

Achievements

The pains of poverty are not only threatening the sustenance of our hard

earned democracy, but even the very existence of our country. It was based

on this reality the Mr. President, as chairman of the NAPEC, directed that

the NAPEP Intervention Programmes should, specifically, generate

employment and income particularly for youth and farmers. Thus, since

2001, NAPEP has made the following achievements:

• Co-ordination and monitoring has been the primary mandate of

NAPEP and has been undertaken with all passion and

professionalism.

• Apart from this primary role, NAPEP is also specifically mandated to

intervene in areas where Government needs accelerated results to

complement all the other efforts from other quarters. These areas have

included:

• The Youth Empowerment Scheme (YES): NAPEP has made some

appreciable progress in the sensitization, training, retraining, and

capacity building of unemployed youths between 2001 and 2005,

NAPEP has trained/or resettled over 700,000 youth participants across

the nation.

• Partnership with NGOs and State Governments: NAPEP has also

made a lot of impact especially with The Adolescent Programme

(TAP) of Rivers State, and the training of youths in Niger State, being

brainchildren of the states’ governors’ wives.

• Intervention by Direct Credit Delivery Direct and Indirect loans to

potential entrepreneurs and farmers to engage themselves in

meaningful productive vet to fight poverty;

92

a) Farmers Empowerment: at its pilot stage if involves a total of 7,200

farmers on the basis of four (4) LGAs per state.

b) The Micro-Credit Scheme: twelve states are participating so far. The

micro credit loan was given to the Micro Finance Institutions (MFIs)

who have the means of ensuring disbursement of the loans.

(c) The NAPEP/Glo Mobile Collaboration: to make public commercial

call centers as part of poverty eradication effort among the youths.

(d) The Promise Keeper Programme (PKP): In this case, NAPEP

collaborates with financial organizations to create a large pool of

funds, which the poor can access on an interest basis to undertake

income generating economic ventures.

(e) Multi-Partner Matching Funds Scheme: NAPEP through this scheme

attempts the pool of loan able funds for the poor at optimal interest

rates, among other land able undertakings.

• KEKE NAPEP Project: now is its second phase, the KEKE NAPEP

project is one major project of the NAPEP in terms of public

reception. Over 4,000 units of diesel piaggio three wheel automobiles

(KEKEs) were purchased for commercial transportation in state

capitals and urban centers.

• Resettlement of 106 Trainees of the poultry Training Centre, Otta:

over 100 participants were resettled to establish cottage poultry outfits

nationwide.

• The Youth Information Centres (YIC): this is a scheme through which

information is established nationwide. The package includes furniture

and equipment such as computers, printers, fax machines,

photocopiers, television and video.

93

• The Community Skills Development Centres (CSDCs): this is a

collaborative venture between NAPEP and some othe agencies like

NDDC, etc. the programme is still in its first phase of implementation,

with 47 CSDCs in 13 states and the FCT.

• Establishing Special Training Units in V\TF Centres: Under these

schemes, NAPEP purchased and delivered equipment and tools to the

ten (10) VVF centres nationwide. NAPEP also established micro

credit scheme for all trainees.

• Revolving Micro Finance Scheme: this is one of NAPEP’s critical

intervention programmes. As at 3 1 December, 2005, over

N45,000,000 has been released through 54 groups/Micro Finance

Institutions (MFIs) for disbursement to end users.

Other achievements have included some collaboration activities with

International partners - notably the UNDP and World Bank.

NAPEP Intervention Scheme

As its inception, the intervention projects of NAPEP were broad based and

multi-sectoral. The following were the initial list of scaled interventions

considered:

Youth Empowerment Scheme (Yes)

To address issues of employment generation, skill acquisition and

improvement, wealth generation and youth development, the following were

proposed:

• Assessment and Evaluation of all available skill acquisition/training

centres;

• Establishing a Databank for the unemployed;

94

• Training of 100,000 unemployed youth under CAP;

• Attachment of 50,00 graduates under MAP; and

• Resettlement of 50,000 graduates of CAP, through the Credit Delivery

Programme (CDP).

Rural Infrastructures Development Scheme (RIDS)

To address issues related” to the provision and maintenance of basic but

critical infrastructure, the following were proposed:

• Production of road maps for each state of the federation with

emphasis on feeder/rural roads and connections.

• Assessment, Evaluation and Document of the 46,000 boreholes

established between 1985 to 2000; and

• Survey and Documentation of rural electrification efforts and

establishment of functional NEPA power downting units in each

L.G.A.

Social Welfare Services Scheme (SOWESS)

To address the issues related to the provision of needed core social and

welfare services, the following were proposed:

• Construction and rehabilitation of sports facilities and or the provision

of relevant quality sports equipment to some primary and secondary

schools. Based on the FOS data by 1997 there are 41,342 primary

schools and 6,387 secondary schools.

• Rehabilitation/equipping of selected primary healthcare and ensuring

adequate provision of trained staff. Based on FOS data, by 1991, the

states have 3,355, the LGAs have 7,267 and the communities have

140 primary healthcare establishments.

95

• Rehabilitation of selected recreational centres in the states.

National Resources Development Conservation Scheme (NRDCS)

To address the issues of appropriate tapping of the natural resources while

maintaining adequate care for the environment were proposed:

• Development and production of geological maps for selected minerals

in Nigeria; and

• Environmental protection and control projects in selection parts of the

country.

96

REFERENCES

Emekekwe P.E.(2005) Corporate Financial Management 5 Edition; African

Bureau of Education Sciences, Kinshasa, Congo D.R.

NERFUND (1989) Information Bulletin and Operational Guideline; Federal

Government Printer, Lagos, January 2.

97

CHAPTER FIVE

FINDINGS, CONCLUSIOIN AND RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS

The findings emerging from the study reveal among other things that it is

necessary for government to be promoting/assisting the operations of SMEs

which constitute an integral part of the nation’s economy, and equally acts as

a catalyst for poverty alleviation/eradication.

Also the study projects an indication that there is a tremendous support for

the establishment of SMEs in the country, which prompts most young

people including school leavers to now take to small business establishment

as a means of making ends meet.

Furthering ahead, the study showcased the dominance of SMEs in the

primary sector of the nation’s economy and the high level of economic

development attained by the developed countries of the world, is a result of

their greater emphasis and attention to SMES, while acknowledging the fact

that job creation is the greatest obstacle hindering the growth of SMEs in the

country.

Finally, the study also gave an indication that the present level of

effectiveness and efficiency of the Central Bank of Nigeria and Commercial

Banks in terms of policy guidelines and its implementation, as well as

financial assistance respectively is slightly above average. Whereas, there is

a high level of effectiveness and efficiency on the part of the small and

Medium Enterprises Development Agency of Nigeria (SMEDAN), the

98

National Poverty Eradication programme (NAPEP), and the National

Directorate of Employment (NDE), towards assisting SMEs.

5.2 CONCLUSION

The sky is our limit, if only people would rise up to the task and face the

realities of our time in the present development as Small and Medium Scale

Enterprises Management in Nigeria

The low literacy level and general ignorance, which pervade and cause a lot

of bad attitude and malpractice within the Nigerian business environment,

would be seriously challenged and obliterated with the new trend

Entrepreneurship practice, will eventually assume a new perspective, and

real industrial and economic development achieved

Gradually, institutional financial support is now available through the NDE,

SMEDAN, NAPEP e t c, and a lot of funds are now being raised for small

and medium scale enterprises establishments, as well as self-employment

actualization

There is urgent need for support from various chambers of commerce, NDE,

SMEDAN, NAPEP, the Nigeria Investment Promotion Council (NIPC), etc;

for the economic, political and social transformation of the Nigerian Society

It has worked in the advanced countries of the world such as the United

States of America (USA) Japan, e.t.c; it will also work in Nigeria. This

constitutes part of our critical challenges ahead.

Equally, having been able to observe the importance of small and medium

scale enterprises in the growth and development of any nation’s economy,

99

more especially as it affects economic emancipation and advancement.

Government’s continued promotion/sustenance of SMEs operations should

be advocated

Finally, although there existed some difficulties in the process of carrying

out the research, more especially in the areas of transportation and access to

vital data/information required, the objectives of the study were achieved,

and it was a wonderful experience.

5.3 RECOMMENDATIONS

In view of the immense contributions of the small and medium scale

enterprises in the area of economic emancipation and development of any

nation, as well as the advantages derivable from such enterprises. I

commend the efforts of government past and present towards

promoting/sustaining the operations of this important sub-sector of the

nation’s economy.

However, I recommend that more efforts be made in this particular regard

and more especially as its affects the area of making sure that programmes

designed for this particular objective are properly implemented and

supervised.

Finally, I recommend that studies such as this be given out to students from

time to time in quest of their academic pursuit, for this serves as a way of

enabling them to conduct adequate research and ascertain the true situation

of issues of this nature, as well as other related/relevant ones.

100

BIBLIOGRAPHY

Akpala Agwu (1990) Management: An Introduction and the Nigerian Perspective; Department of Management, Faculty of Business Administration, UNEC, Enugu.

Albert. J. (1980) Straight Talk About Small Business, 2 Edition, Englewood

Cliffs Prentice Hall mc, New Jersey Bosa G R (1987) Financing of Small Scale Industries in Developing

Countries, Praeger Publications, New York Broom H N (1998) Small Business Management, Vintage Press, New York Broom H N and Longnecker J G (1986) Small Business Management 5

Edition, Sc Publishing Company, Ohio Cobn T and Lindberg R A (1978) “Survival and Growth Management

Strategies for the Small Scale Industries”, New American Library, New Jersey.

Dickson F.J. (1974) Successful Management of the Small and Medium

Sized Business, Englewood Cliffs: Prentice Hall Inc. New Jersey.

Ejiofor Pita (1987) Management in Nigeria: Theories and Issues; Africana

— Feb Publishers Limited, Onitsha. Ekpenyong S. (1989) The Cottage Industry in P.N. Ejiofor Ed. Foundations

of Business Administration: Africana Feb Publishers Limited, Onitsha.

Emekekwue P.E. (2005) Corporate Financial Management 5 Edition;

African Bureau of Educational Sciences, Kinshasa Congo D.R. Enudu T 0 (1999) Business Policy An Introductory Analysis, New

Generation Books, Enugu, Nigeria Ezeh J.A. (1999) Fundamentals of Small Business Management; Glanic

Ventures, Emene, Enugu

101

Hasting P G (1968) FUndamentals of Business Ownership, D Van Nostrand

Company mc, London lie N. (2003) Entrepreneurship Development: The Nigerian perspective,

Chiezugo Ventures, Enugu Kotler P (1980) Marketing Management — Analysis, Planning and Control,

Prentice Hall Inc Leon I (1998) Small Scale Concepts, Strategies and Policy Options, Key Bee

Publishers, Owern Lewis G (1975) Small Scale Enterprises in Development Process, Richard D

Irwin Books, London Liehold W and Chutta G (1990) Effective Management of Small Scale

Enterprises; Richard D. Irwin Books, London. Murphy T.O. (1976) A Business Of Your Own: McGrew Hill Inc, New

York. Onuoha Chima B. (1994 Entrepreneurial Development: An Integrated

Perspective; Avan Global Publications, Okigwe. Reid A.S. and Hazel A.C. (1971) The Survival of Small Companies: 1st

Edition; Business Books Limited, London. Shubin John A. (1957) Business Management: An Introduction to Business

and Industry; Barnes and noble Books, NEW York. Stepanek Q (1988) The problem with Small Scale Enterprises in Third

World Countries, Longman Ltd, London Uzor Chidi (1984) The Threats of Small Scale Investors in a Developing

Economy; Fourth Dimension Publishers, Enugu Vroom H (1964) Work and Motivation, John Wiley and Sons mc, New York Williams J. (1982) Starting A Small Venture:4 Edition, Kogan.

102

JOURNALS/OTHERS

Abdulkadir .A. (1984) The Role of NIDB and Future Prospects of Industrial Development, in Nigeria, CBN Bullion Vol. 2, July.

Akintola A. (1984) Manufacturing and Directing Public in South Western

Nigeria, NISER, Ibadan. Ayuba S. (1989) Management Strategies on Small Scale Business: The

Weekly Democrat; Jan 29 Chibundu E.E. (1989) “Problems and Prospects of Small Scale Business in

Nigeria Economy”; A •Paper delivered at a Seminar on Finance for Small Scale Businesses, Victoria Island, Lagos.

Diya Oladipo (1994) “Diya’si Pontification”; Editorial Opinion; Daily

Champion, April 15 Edemereyor M. (1985) Causes of Failure of Small Scale Industries in

Nigeria, Times, September 2. Ejiofor Pita (1984) Making our Organizations Perform: Public Lecture

Service Series No. 2, October. Ezeh C. (1994) “Effective Management Approaches; The Private Sector

Experience”; Management in Nigeria October — December. First Bank Nig Plc (1993) “Financing Small Scale Business in Nigeria”; Bi

Annual Review; Journal of the First Bank of Nig Plc, Vol. 2, No 4, Dec.

Friend 1. (1954) “What Business Can Do To Prevent Recession”; Problems

in Anti-Recession Policy, New York: Committee for Economic Development, Cited in J.F. Welson and E.F.

Brigham, Essentials of Managerial Finance, New York, Hold Rinehard and Winston.

103

Ihyembe R. (2000) “SMEs and the Development of Nigeria Capital Market”, Business Times: Daily Times Nig Plc, Lagos.

IkeE.C. (1988) “Private Limited Liability Companies Act of 1967 and 1984”

in a paper Presented at a Coference Organised by National Association of Small Scale Industries (NASSI) June, 1988.

Isemin I. (1988) Sm Scale Industries in Nigeria, ICON News; July 31. Jegede Charles T. (1990) The Development of the Small and Medium Scale

Industry ih Nigeria, in Management in Nigeria May/June. Marsden K. (1983) Problems of Small Business, Ododuma Business

Journal; No. 17. NERFUND (1989) Information Bulletin and Operational Guideline; Federal

Government Printer, Lagos, January 2. Nwakoby C. (1988) Banks Financing of Small Scale Enterprises; Business

Time, July 25. Nwokoye N.G. (1988) “Marketing Strategies for Business Under SAP”,

Business doncord, May 13. Ogbo N.E. (1985) An Address Presented at the First National Workshop on

the Promotion and Development of Small and’ Medium Scale Enterprises in Nigeria, ASCON Badagry, 4t1 March.

Ojiako O.F. (1987) Problems of Small Scale Enterprises in Nigeria; The Business• Administrator, Vol. 15, UNEC, Enugu. Ojudu Babafemi (1992) Corruption in Nigeria”; African Concord, April 13

Oladele 0. (1985) “Why Commercial Banks Shun Small Business; Business Times, August, Vol 1, No 3

Oresotu F.O. (1985) A Strategy for the Development of Small Scale

Industries in Nigeria, CBN Economic and Financial Review, September, Vol 23, No 3

104

APPENDIX

QUESTIONNAIRE

Department of Management, Faculty of Business Administration, University of Nigeria. Enugu Campus. 15th August, 2011

Dear Respondent,

I am a post-graduate student of the above named institution, carrying out a

research work on (Analysis of government efforts aimed at

promoting/sustaining small and medium scale enterprises operations in

Nigeria).

Please assist me with the relevant data/information on the above topic since I

have chosen your establishment as a case study. All information supplied

will be treated in strict confidence.

The research is purely an academic work in partial fulfillment of the

requirements for the award of Master of Business Administration (MBA) in

the above motioned department of the University.

Thanks for your co-operation.

Yours Faithfully,

ARUA GODWIN M

PG/MBA/09/54506

105

Follow the instructions carefully and tick ( √) for the options of your choice.

1. Sex: (a) Male [ ] (b) Female [ ]

2. Marital Status: (a) Single [ ] (b) Married [ ]

3. Age: (a) 21 - 30 years [ ] (b) 31 - 40 years [ ]

(c) 41 - 50 years [ ] (d) 50 years and above [ ]

4. Section: (a) Engineering [ ] (b) Marketing [ ]

(c) Financial [ ] (d) Purchasing [ ] (e) Production [ ]

(f) Personnel [ ] (g) Others not mentioned specify

5. Designation…………………………………………………………

6. How long have you been in the organization?

(a) 1 - 5 years , [ ] (b) 6 - 10 yrs [ ] (c) 11 - 15 years [ ]

(d) 16 years and above [ ]

7. What is your income grade level?,

(a) 01 - 04 [ ] (b) 05 - 08 E [ ] (c) 09 - 12 [ ]

(d) 13 and above [ ]

8. What is your academic qualification?

(a) WASC/GCE [ ] (b) OND [ ] (c) HND [ ] (d) B.Sc. [ ]

(e) MBA [ ] (f) M.Sc. [ ] (g) Ph.D [ ] (h) Others not mentioned,

specify……………………………………………………………

106

SECTION B

1. What do you understand as Small Business?

(a) Business owned by a single individual [ ]

(b) Business owned by, one or few people [ ]

(c) Business with a minimum capital involvement [ ]

(d) All of the above [ ]

2. Are you in support of the establishment of SMEs in the country?

(a)Yes [ ] (b) No [ ]

3. Is it necessary for government to be promoting/sustaining SMEs

operations in the country?

(a) Yes [ ] (b) No [ }

4. Does SMEs constitute an integral part of the nation’s economy?

(a) Yes [ ] (b) No [ ]

5. Is the growth and development of SMEs a threat to large scale

organizations?

(a) Yes [ ] (b) No [ ]

6. Does SMEs act as a catalyst for poverty alleviation eradication?

(a)Yes [ ] (b)No [ ]

7. Most young people especially school leaver’s graduates inclusive,

now take to small business establishment as a means of making ends

meet.

(a) True [ ] (b) False [ ]

8. The high level of economic development attained by the developed

countries of the world, is as a result of their greater emphasis and

attention to SMEs (a) True [ ] (b) False [ ]

107

9. What approach is most preferable to you in venturing into small

business?

(a) Starting a new firm from the scratch [ ]

(b) Acquiring an existing business [ ]

(c) Operating a franchise [ ]

10. In which of the following economic sectors of the nation does SMEs

Dominate?

(a) Primary sector [ ]

(b) Secondary sector [ ]

(c) Tertiary sector [ ]

11. What do you consider the greater positive contribution of SMEs to

National economic growth and development?

(a) Job creation [ ]

(b) Poverty alleviation/eradication [ ]

(c) Infrastructure attraction and development [ ]

12. What do you consider the greatest obstacle hindering the growth of

SMEs in the country?

(a) Poor financing [ ]

(b) lJnfavourable business environment [ ]

(c) Insufficient incentives and infrastructures [ ]

13. How would you assess government efforts towards

Promoting/sustaining SMEs operations in the country previously?

(a) Highly favourable [ ] (b) Favourable [ ] (c) Slightly favourable

(d) Not favourable [ ]

108

14. How would you assess government efforts towards

promoting/sustaining SMEs operations in the country presently?

(a) Highly favourable [ ] (b) Favourable [ ] (c) Slightly

favourable [ ] (d) Not favourable [ ]

15. How would you assess the level of implementation of CBN’s policy

guideline and directives towards SMEs presently?

(a) High [ (b) Slightly above average [ ]

(c) Average [ ] (d) Low [ ]

16. How would you assess the level of commercial banks assistance in

terms of financing to SMEs

(a) High [ ] (b) Slightly above average [ ]


17. How would you assess the level of effectiveness and efficiency of

SMEDAN towards assisting SMIEs?

(a) High [ ] (b) Slightly above average [ ]


18. How would you assess the level of effectiveness and efficiency of

NAPEP towards assisting SMEs?

(a) High [ ] (b) Slightly above average [ ] (c) Average [ ]

(d) Low [ ]

19. How would you asses the level of effectives and efficiency of NDE

towards assisting SMEs?

(a)High [ ] (b) Slightly above average [ ]

(c) Average [ ] (d)Low [ ]

20. Government has been promoting/sustaining the operations of small

and medium scale enterprises in the past and presently (a) Yes [ ] (b)

No [ ]

FACULTY OF BUSINESS ADMINISTRATION … GODWIN PG.pdf · Department of Management, ... (MBA) in...

Documents

Transcript of FACULTY OF BUSINESS ADMINISTRATION … GODWIN PG.pdf · Department of Management, ... (MBA) in...