Effect of Small-scale Industries on the Nigeria Economy
Chapter One
OBJECTIVE OF THE STUDY
The general objective of the study is to assess the effect of small scale industries on the Nigerian economy. The specific objectives are:
1) To ascertain if there is any significant relationship between small industries and the Gross Domestic Product of Nigeria.
2) To find out the effects of the import restriction on the operations of small scale enterprises in Nigeria.
3) To assess the importance of the identified roles of small scale enterprises in the development of Nigerian Economy.
4) To determine whether or not the Nigerian small scale enterprises make use of all the credit facilities available to them and the reasons for the stand they take in relation with their initial capital.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
MEANING AND CONCEPT OF SMALL BUSINESS ENTERPRISE
In many respects, the meaning and concept of small businesses cannot be completely isolated from the operational environment. Thus the perception and definition is highly dependent on the particular economy that provides the environment of operation. In Nigeria, there seems to be no clear cut definition or scope for determining small business enterprise. However varied definition and scope were made by some agencies as follows:
[a] The national directorate of employment defined it as being able to accommodate project with capital investment as loan as N5,000 and employing as few as three persons.
[b] The Central Bank of Nigeria in its monetary policy guidelines 1980 defined small scale business as an enterprise whose annual turnover rangers between N25,000 and N50,000, also the Federal Ministry of Industries before the Structural Adjustment Programme [SAP] and Foreign Exchange Market, defined small scale business as any manufacturing, processing or service industry with capital investment of not more than N150,000 in plant and machinery.
[c] The Nigeria Bank for Commerce and Industry also defines the small scale enterprise as firms’ or companies with assets [including working capital but excluding land] not exceeding N750,000 and paid employment of up to 50 persons an such an establishment be wholly owned by Nigerians.
Measuring the appropriateness of some of these definition, Nwakobi [1985] criticized most of the definition describing them as merely “institutional” Nwabobi holds the views that the definitions do not pain a health picture of the growth of small scale business enterprise, considering the difficulties involved in capital formation and other discrimination of attitudes of the banks towards the owners of small scale business enterprise. In July, 2001, the national council on industries at the 13th meeting in Markurdi, Benue State, reviewed and adopted the following classification of industrial enterprises and came up with the definition that “A small scale industry is an industry with total capital employed of over N1.5 million but not more than N50 million including working capital but excluding cost of land and of a labour size of 11 -100 workers. However, comparatively, most develop countries seems to have agreed on a maximum unit of 500 employees as a small firm [Feldman 1989]. However, a review of the performance induct of small scale business can be best anchored on the United Nations industrial development organization definition of small scale business as “an economic venture” that is characterized by the following:
- Ownership and management being vested in the same Individual
- Capital being made available by an owner on whom the policy Decisions rest
- Having a coalised operational area
- A situation of a venture controlling a small share of the market Their by constituting a little quota in the large sized market
- The owner participating very actively in all decision makingv Processes on a day to day operation basis with a high degree Of rigid control.
Reflecting the characteristics, small scale business enterprises have emerged, especially in the developing world, with roles of employment generation, encouragement of rural development, assisting substantially in lifting gross domestic product, developing entrepreneurship and proving avenue for self employment.
BASIC CHARACTERISTICS OF SMALL SCALE ENTERPRISE
The overall business scene and activities in Nigeria appear to be dominated by small businesses which are established by individual, groups, companies and cooperatives. Most business start off as small but with proper planning and management, then expand and grow. However, it will be risky to assume that small enterprises are exactly like big ones after all the difference is size. But it is necessary to differentiate the small business from the large ones and to associate those characteristic with problems inherent in small business. In summary, characteristics as identified by several writers among who Broom and Longnecker (1972), MUSSELMAN AND Huglice (1973) and yewande (1991) are presented here. It must not however be taken that these characteristics are all embracing or that all must be present in the same magnitude in a business for such a business to qualify as a “small scale business”.
[1] Management is not independent- generally; the managers are also the owners. This means that the manager/ owner can run the business as he pleases. Discipline as the control factor in this case may sometimes be missing. This lack of proper managerial discipline leads to business failures. [2] The size of the small business firm within industry is usually small. Thus they are not dominant in their individual field or operation.
[3] Capital requirement is small and therefore within reach of the indigenous entrepreneurs.
[4] Majorities of the modern small business units are labour intensive and are able to achieve high productivity. These units are concentrated in areas of low technology.
[5] Capital is supplied and ownership is held by a small group or an individual. The initial capital usually equity holdings is supplied by the owner or co- owners of the business. Often for working capital, they depend on trade credit or credit finance or both.
[6] The area of operation is mainly local employees / workers and owners all like in one home community. Most small scale firms even those identified as modern utilizing plants and machinery are run along family line. However, markets served by them are not always local, modern small firm’s serves market across ethnic cultural and even nations or state boundaries.
[7] On other all embracing characteristic of small scale business in Nigeria is the apparent lack of attention to managerial functions of planning, organizing, directing coordinating and controlling. In Nigeria, the entrepreneur usually sets out to achieve high return on investment. The workers generally are not adequately remunerated or sufficiently motivate.
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 effect of small-scale industries on the Nigeria economy
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 of a study is a group of persons or aggregate items, things the researcher is interested in getting information on the study the effect of small-scale industries on the Nigeria economy. 200 staff of ministry of economic development Delta state was selected randomly by the researcher as the population of the study.
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 on effect of small-scale industries on the Nigeria economy. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of small-scale industries on the Nigeria economy
Summary
This study was on effect of small-scale industries on the Nigeria economy. Four objectives were raised which included: To ascertain if there is any significant relationship between small industries and the Gross Domestic Product of Nigeria, to find out the effects of the import restriction on the operations of small scale enterprises in Nigeria, to assess the importance of the identified roles of small scale enterprises in the development of Nigerian Economy, to determine whether or not the Nigerian small scale enterprises make use of all the credit facilities available to them and the reasons for the stand they take in relation with their initial capital. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of ministry of economic development Delta state. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made economic development managers, policy analysts, senior staffs and junior staffs were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Conclusion
Hardly can any major industry succeed without the services of small business enterprises. The relative strength of their importance varies from one industry to another. The role of small scale businesses in the development of indigenous technology capability in Nigeria cannot be over-estimated. Firstly, the continuing growth in the economy of any nation depends to a large extent on the startups of small businesses, which depends on locally fabricated machinery and local raw material inputs. Secondly, it is a considerable solution to balance of payment problems resulting from less dependence on imported inputs and also serves as a training school for the indigenous entrepreneurs and provides grounds for the acquisition of skill for a large number of workers
Recommendation
The researcher after discussed conclusions recommended that the small scale business contributes in strengthening industrial linkages by producing intermediate products for use in large enterprise in Nigeria. The researcher also showed that government tax policies have not been favourable in the establishment of small scale enterprises in Nigeria for many years now. So government should know how it will be amending some of these tax policies they feel is affecting the establishment of small business in order to encourage more people into venturing into it. Government should also encourage the growth of small business by giving them the necessary assistance as regards to fund raising and equally advice them on how to utilize it effectively. Also, small businesses should form mergers; by this their capital would be placed in a better position when dealing with lending institutions. Their tax burden will not be heavily felt again.
REFERENCES
- Nwakobi, E. (1985): Small Scale Enterprise and the Economy.
- Feldman, C. (1989): The Importance of Small and medium Scale Enterprises.
- Broom and Longnecker (1972): The Impact of Entrepreneurial Development in an Economy.
- Huglice and Musselman (1973): Small Scale Enterprises and the Economy.
- Oshagbenius, J. (1985): The Impact of Small and Medium Scale Enterprises in Nigerian Economy.
- Yewande, M. (1991): The Role of Government in the Development of Small and Medium Scale Enterprise in an Economy
- Harper Boyd, Raph Westfall and Stanlves (1997): Marketing Research Test and cases (Illionois Richard D. Irwin Inc).
- Nwobi, F. N. Statistics 1 (An Introductory Text) Bon Publishers 1998.
- Marrin, Shaw and Jack Wright (1977): Scale for Measurement of Attitudes (New – York: Mc-Graw Hill Book Company).
