The Effect of Information Technology Systems on the Growth of SMEs in Nigeria
Chapter One
OBJECTIVES OF STUDY
The primary aim of this study is to describe the characteristics of SMEs in Nigeria and secondly to explore the impact of ICT on SMEs in Nigeria. Specifically, the objectives of this study are;
- To understand the general characteristics of SMEs and these might contribute to the development of SMEs in Kwara.
- To explore the different areas of SMEs where the use of ICT can improve productivity of SMEs in Kwara.
- To suggest ways and mechanisms on how best to enhance the full potential of ICTs as an enabler of socio-economic development of SMEs in Kwara.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
This chapter reviews the literature on the effect of information technology on the growth of SMEs in Nigeria. It discusses issues arising from the topic of interest as viewed from different perspectives, with a view of giving a theoretical and empirical foundation to the study.
LITERATURE REVIEW
In recent times, many researchers have carried out empirical studies on the role of small and medium enterprises in employment generating in Nigeria.
Lawal, (2002) opines in Safiryu and Njogo (2012) that there is no universal definition of small scale industry. Definition also changes overtime, owing to changes in price level, advances in technology and other considerations. The criteria that may be used in defining small and medium scale enterprises (SMEs) often include turnover, gross output and employment.
Owualah and Obokoh (2007), posited that in all economics but more in developing and transitional economics, there is now a census among state policy makers, development economists as well as international development partners that small and medium enterprises (SMES) are a potent driving force to their industrial growth and indeed, overall economic development. The smallest in this group of enterprises-micro enterprises are also touted as a veritable tool for attaining one of the eight millennium developments of goals of eradicating extreme poverty in the latter. Poverty is caused by inadequate incomes and incomes result from employment which SMES are insidely known to provide.
Adeyemi (2011) state that small and medium enterprises have been considered as the engine of economic growth and for promoting equitable development. The major advantage of the sector is its employment potential at low capital cost. The labour intensity of the SME sector is much higher than that of the large enterprises. The role of small and medium scale enterprises in the economic and social development of the country is well established. The sector is the nursery of entrepreneurship, often driven by individual creativity and innovation (Aremu, 2004).
The relative importance of small and medium enterprise in advanced and developing countries has led and would continue to lead to s Sreconsideration of the role of small and medium scale enterprises in the economy of nations. The development of many countries is often measured by such indices as the level of industrialization, modernization, urbanization, gainful and meaningful employment for all those who are able and willing to work, income per-capital, equitable distribution of income and the welfare and quality of life enjoyed by the citizenry (Arenu, 2011).
Small and medium scale enterprises bring about a great distribution of income and wealth, economic self-independence, entrepreneurial development, employment and host of other positive, economic factor (Aremu, 2004). Moreover, in a country like Nigeria with adverse balance of payment situation, the growing contribution of small scale industries sector in Nigeria’s export portfolio goes a long way in generating foreign exchange and smoothening out the adverse balance of payment situation.
Samuel and Onoriode (2012) posited that small scale enterprises play an important role in the economics of any country in accordance with their relative levels of development. They further emphasized that poverty is a world phenomenon and into incidence in Nigeria had been high and on the increase.
The position is in line with (Adeyemi and Badmus, 2011), they also argued that adequate financing of small and medium scale enterprises will reduce the unemployment level in Nigeria.
There is a general believes that desire employment generation in this country can be achieve through development of small and medium scale enterprises. Gunu (2004) and Aremu (2010) posited that small scale enterprises provide income, saving, and employment generation. They are seen as veritable engines for development of entrepreneurial capabilities and indigenous technology which will generate employment in the country.
Bolton Report (1971) also added the characteristics basis as one of the recommended alternatives in giving SMEs adequate and appropriate definition. These characteristics include small market share, operated independently and managed by its owners or part-owners in a personalized way. These factors are usually used because they are functional and easy to measure.
According Onmonya (2011), the European Union (EU) in 1996, gave the definition of Micro Small and Medium Enterprises (MSMEs) as an enterprise employing less than 250 employees. These were further categorized into Micro, not more than 10 employees; Small scale, more than 10 but less than 50 employees; and Medium scale, more than 50 but not exceeding 250 employees.
CHAPTER THREE
RESEARCH METHODOLOGY
Research design
The researcher used descriptive research survey design in building up this project work the choice of this research design was considered appropriate because of its advantages of identifying attributes of a large population from a group of individuals. The design was suitable for the study as the study sought to a critical analysis of the effect of information technology on the growth of SMEs in Nigeria using Kwara as the case study.
Sources of data collection
Data were collected from two main sources namely:
(i)Primary source and
(ii)Secondary source
Primary source:
These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment; the researcher has adopted the questionnaire method for this study.
Secondary source:
These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.
Population of the study
Population refers to the whole size of individuals which form the subject in a particular study. It is practically impossible to cover the whole population if it is thus a sample is determined. The characteristics of the population of small and medium scale enterprises located in Lagos Nigeria.
Participants working in the SMEs were contacted at a seminar in Lagos and were asked to complete and return the questionnaire. Participants contacted include different departments of the companies that were in attendance. Of the 80 managers participants contacted, sixty two completed and returned the questionnaire. This accounted for 80% response rate.
CHAPTER FOUR
PRESENTATION ANALYSIS INTERPRETATION OF DATA
Introduction
Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey. This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to examine the role of small and medium enterprises in employment generating in Nigeria.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations are made, wh
ich in the opinion of the researcher will be of benefit in addressing the challenges of learners beliefs and conceptions about the small and medium enterprises in employment generating in Nigeria.
Summary
The first question of the study is related to main characteristics of SMEs in Nigeria. The study indicates that the main problems of are SMEs are Poor implementation of polices, lack of continuity, poor capital outlay, poor management expertise, inadequate information base, lack of raw materials, poor accounting systems and unstable policy environment. Our results also indicate that most SMEs in Nigeria are managed by men and are between the age range of 34-40.However, the research results also shows that most stakeholders in the SME sector holds B.sc qualification in their respective fields of specialization.
The research question relives that SMEs do introduce ICT to change its process and product as this relates to the words of ”Chau, 1995 who argues that ICT enhances the production process in organizations as monitoring technologies could be used to reduce the number of supervisors required in the process”. These is followed suit by the next question which relives that SMEs uses ICT to make their services more easily tradable as ”Minton, 2003 affirms that buyers and sellers are able to share information and transfer goods across national borders with the use of ICT, which helps to increase access to global supply chain”.
In the same vein, stakeholders in the SME sector in Nigeria affirms that the use of ICT helps to reduce inventory. Hence, this supports ”Lauder and Westall, 1997 that ”ICT improves suppliers relations consequently a reduction in inventories”. The last research question also relives that SMEs uses ICT to open up new opportunities as affirmed by ”Onugu, 2005 that ICT enables organizations to decrease costs, increase organizational capabilities and also assist to shape inter- organizational coordination. Therefore the use of ICT helps to lower coordination cost and increase outsourcing in organizations”
SMEs have been fully recognized by government and development experts as the main engine of economic growth and a major factor in promoting private sector development and partnership. The development of the SMEs sector with influence of ICT therefore represents an essential element in the growth strategy of most economic and holds particular significance in the case of its productivity level in Nigeria under review. SMEs not only contribute significantly to improve living standards, employment generation and poverty reduction but it also brings about substantial domestic or local capital formation and achieve high level of productivity and capability.
Conclusion and recommendations
From the context of this study, a sound conclusion can be drawn with emphasis that ICT has a great influence on productivity in the SME industry in Nigeria. Hence, based on the research overviewed it is noted that Stakeholders in the SME industry agree that the introduction of ICT in its operation changes its process and productivity which in turn boost profitability. In the same vein, the use of ICT by SMEs open up new opportunities , reduces inventories with the use of ICT as well as makes their services more tradable.
Furthermore, ICT has the potential to improve the core business of SMEs in every step of its business process, through the use of information technology and SMEs can gain from developing capabilities for managing information, intensive resources, enjoy reduced transaction costs, develop capacity for information gathering and dissemination of international scale and gain access to rapid flow of information.
Driven by the findings in this research, SMEs in Nigeria has a long way to go for the sector to be most relevant, focused, productive enough and play the crucial role it is expected to in relation to contributing to the growth and development of the economy of Nigeria. The benefits and need to go for technology development through either technology transfer or technological innovations or inter-firm linkages should be emphasized in the light of dimensions of global competition and its negative fall outs as well as positive opportunities, to small and medium scale industries entrepreneurs through seminars and work shop, at the local level.
Hence, for the government to succeed in reinventing the future of SMEs, it has to extend the current reforms to her educational system to make it more functional , relevant ,need -oriented and driven. Emphasis should be on modern technology, practical technological and entrepreneurial studies aimed at producing entrepreneurs. There is the urgent and dire need for the government to revamp the SME sector of the economy on order to redress the growing unemployment rate in the country, reduce poverty level, enhance standard of living and stimulate economic growth and development.
Furthermore, emphasis should be made on encouraging the female gender to participate more in activities of SMEs in Nigeria and as well include the study of both ICT and SMEs development in her school’s curriculum, establish more vocational schools in both local and urban settlements of the country. The government should help through enlightenment programmes for the youths right from grassroots.
REFERENCES
- Adebisi, T.A., and Oni, C.S. (2012), Assessment of relevance of the national directorate of employment (NDE) training programmes to the needs of the trainees in Southwestern Nigeria. International Journal of Vocational and Technical Education Vol. 4(3), pp. 29-37, March 2012. Available online at http://www.academicjournals.org/IJVTE
- Adebayo, O.S, Balogun, O.J and Kareem T.S (2013): An investigative study of the factors affecting the adoption of ICT in SMEs in Oyo State, Nigeria. International journal of business and management invention. 2(9), 13-18.
- Arendt, L. (2008) Barriers to ICT in SMEs: how to bridge the digital divide? Journal of Systems and Information Technology, 10(2), pp. 93-108.
- Ashrafi, R. and Murtaza, M.(2008).Use and impact of ICT on SMEs in Oman. Electronic Journal of Information Systems Evaluation, 11(3), 125-138.
