Challenges Facing Small and Medium Enterprises in Nigeria
Chapter One
OBJECTIVES OF THE STUDY
The main objective of this study is to find out the challenges of SMEs in Nigeria, specifically the study intends:
- Find out the challenges SMEs in Nigeria
- Analyze the effect of the challenges on the growth of SMEs in Nigeria
- Find out the factors that determine the growth of SMEs in Nigeria
- Proffer solution to the problem of SMEs in Nigeria
CHAPTER TWO
REVIEW OF RELATED LITERATURE
INTRODUCTION
The constraints of setting up and running small and medium scale enterprise have become a nation wide issue. As a result, it has attracted many reaction from prominent people in private and public sector including the government.
Many developing countries have consequently become increasingly aware of and interested in assessing the role that small and medium scale enterprises might play in their industrialization process. Hence, this chapter will examine some vital literature under several topics to shed light on this work. Some other writers made immense contribution on topic related to this course of study in a wider horizon.
In the Nigeria economy, attention have drawn to the fact that small and medium scale enterprise has very little attention, whereas they provide employment for approximately triple the number engage in large scale manufacturing as well as playing their roles of crucial importance to the developing economy. This is why it is important to reconsider the constraints hindering the growth of their sector.
THE CONCEPT OF SMALL AND MEDIUM SCALE ENTERPRISE
The concept and definition of small and medium scale enterprise is dynamic in character and varies with time and also varies among institutions and countries. Notwithstanding, the basic definitional parameters are the same. They includes:
Number of employees, Asset and turnover.
Sule (1986) stated that, it is evidence around the world that small and medium scale enterprise provide an effective means of stimulating indigenous entrepreneurship, enhancing greater employment opportunities per unit of capital invested and aiding the development of local technology. Small scale enterprise: An enterprises with a labour size of 11-100 workers or a total cost of not more than 50 million including working capital but excluding cost of land (Sule, 1986:207) while medium scale enterprises is an industry with a labour size of between 101-300 workers or a total cost of over 50 million, but not more than 200 million including working capital but excluding cost of land (Clifford, 1972: 85).
SMIES and NERFUND (2004) define SMES as an enterprise with an asset base not exceeding N200,000,000.00 excluding land and working capital with staff strength of not less than 10 and not more than 300.
CHAPTER THREE
RESEARCH METHODOLOGY
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitute of individuals or elements that are homogeneous in description.
This study was carried out to examine the challenges facing small and medium enterprises in Nigeria. The operators of fifteen (15 selected SMEs in Lagos State form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
DATA PRESENTATION
Demographic data of respondents
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
This research work was carried out to determine the challenges facing Small and medium enterprises in Nigeria. The study employed both primary and secondary instrument in generating data that were analyzed using simple percentage. Based on the result of the analysis the following findings are made:
Our empirical result reveals that small and medium scale enterprises sources their fund by obtaining loans from banks. It also shows that past saving are made use of and profit ploughed back into the business.
On statistical ground, the empirical result reveals that “there is a positive relationship between Small and medium scale enterprises are veritable tool for economic growth and development and has an impact on the economy.
Most of small and medium scale enterprises encounter problems in getting loans from bank especially when it comes to collateral security requirement.
Also an analysis of the survey report showed that lack of capital has greatly contributed to the decline and poor performance of SMEs.
It was also observed that small and medium scale enterprises played a significant role in the development of nation‟s economy.
There is a significant effect of the challenges of SMEs on the SMEs in Nigeria.
CONCLUSION:
In the light of the above findings and other previously discussed in the study, it could be concluded that constraint has a step down on the performance of Small and medium enterprises but still SMEs has immense contribution in the growth of the economy.
Small and medium enterprise importance to capital formation in Nigeria can not be contested. They provide complementary and competitive roles to other financial institutions and which are of benefit to the people and economy. The future of industrialization process and job creation in developing economies, Nigeria in particular is largely dependent on the fortune of the small and medium scale enterprises. It is the sub sector that holds the promise of meeting the industrial challenges and job creation opportunities in the 21st century. Consequently, all the parties involved in the promotion of the sub sector; government, private sector and the financial system most jointly ensure that the sub sector is given all the support it needs to play its role effectively.
RECOMMENDATION:
Based on our findings, the following recommendations are put forward:
- Commercial bank should be strongly encouraged to assist small and medium scale enterprises by providing cheap sources of finance and making their requirements for loans less stringent and accessible in order to enhance growth of small and medium scale businesses and build a self reliant economy in general.
- Government should give priority attention to the growth of small and medium businesses by making sure that expenditures geared towards its growth and properly channeled.
- A conducive environment should be created for small and medium scale enterprises as well as provide all the necessary support they need to play their role effectively. Government all level are implored to develop industries estate with adequate and reliable infrastructures, including roads, water, energy security and communication.
- Efficient financial system: Efficient and responsive financial system that could serve the economy and the introduction of delivery mechanisms of financial support to SMEs in particular.
- Banks should liberalize their lending policy. Premium should be attached to good feasibility report and skills rather than physical securities. Also the commercial banks should try to meet the Central bank directives for lending to small scale businesses.
- Small scale industrialists should try to develop good relationship with their suppliers, bankers, lawyers, management consultants and indeed all experts and utilize their services.
- Market research should be carried out regularly by business owners. Market research in simple terms, is the objective fact finding and analysis of problems encountered in the transfer or sale of goods and services.
- If a business owner lack the time and “know – how to personally undertake extensive research, an outside research agency or consultant might be employed.
- Establishment of Entrepreneur Development Institute (EDIs) for managerial and technical skills buildings.
REFERENCES
- Adebuiyi, B. S. (1997), Performance Evaluation of Small and medium Enterprises (SMES) in Nigeria Central Bank of Nigeria Bullion, 21 (4), 7-8.
- Ajakaiye, A (2003) Central Bank of Nigeria to develop SMEs information system. Business day, 3 (332).
- Alonge, E. (1992:12) Managing your Enterprise to Maturity, Business Times, May, 25.
- Ani N. B., Nwandu E.C. (1999:42) Entrepreneurial Management: 3rd Publication Nerce Publishers 2007.
- Ayodele, A. (1997). Macro Economic Environmental
- Investment Stimulation and Economic Growth. The Nigeria experience. Ibandan Nigeria Economic Society.
