Evaluation of Small and Medium Scale Industry as a Driver for Economic Development
Chapter One
PURPOSE OF THE STUDY
The broad objective of this research is focused on an evaluation of small and medium-scale industries as a driver for economic development. Other specific objectives include:
To achieve this, the following are the purposes of this study:
- To examine the importance of SMEs in Nigeria’s economy.
- To identify the major challenges militating against the sustainability of SMEs.
- To determine the role of government in assisting the SMEs in Nigeria.
- To suggest an effective approach for solving the challenges of SMEs in Nigeria
CHAPTER TWO
REVIEW OF LITERATURE
INTRODUCTION
Our focus in this chapter is to critically examine relevant literature that would assist in explaining the research problem and furthermore recognize the efforts of scholars who had previously contributed immensely to similar research. The chapter intends to deepen the understanding of the study and close the perceived gaps.
Precisely, the chapter will be considered in three sub-headings:
- Conceptual Framework
- Theoretical Framework
- Empirical framework
CONCEPTUAL FRAMEWORK
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:
- 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.
- 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 making 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”.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
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. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
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 investigate small and medium scale industry as a driver for economic development using Oshogbo Local government area in Osun State as case study. Selected small and medium scale businesses form the population of the study.
CHAPTER FOUR
PRESENTATION OF DATA
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of one hundred and forty-seven (147) questionnaires were administered to respondents of which only one hundred and forty-one (141) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 141 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
In this study, our focus was onsmall and medium scale industry as a driver for economic development using selected small and medium scale businesses Oshogbo Local government area in Osun State. The study specifically was aimed at highlighting the importance of SMEs in Nigeria economy, identify the major challenges militating against the sustainability of SMEs, determine the role of government in assisting the SMEs in Nigeria and suggest effective approach for solving the challenges of SMEs in Nigeria. A total of 141 responses were validated from the enrolled participants where all respondent are drawn from selected small and medium scale businesses Oshogbo.
CONCLUSION
Based on the finding of this study, the following conclusions were made:
- The importance of SMEs in Nigeria economy includes:
- They create employment and raise living standards,
- They facilitates self empowerment
- They ensure a boost in the economy
- Help big enterprises such as supplying raw materials and parts and distributing products.
- The major challenges militating against the sustainability of SMEs includes:
- Insufficient capital,
- Infrastructural inadequacies,
- Inadequate market research and
- Lack of proper book keeping.
- The role of government in assisting the SMEs in Nigeria includes:
- Provision of constant manpower,
- Provision of Direct financial assistance to small business organization,
- Provision of tax incentives and
- training and development.
- The other effective approaches will ameliorate the constraints faced by SMEs includes:
- unlimited access to international markets,
- the existence of efficient laws, regulations and rules,
- Strong institutional capacity and
- poor management skills
RECOMMENDATION
Based on the responses obtained, the researcher proffers the following recommendations:
- Government should 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.
- Government should as matter of urgency assist prospective entrepreneurs to have access to finance and necessary information relating to business opportunities, modern technology, raw materials, market, plant and machinery which would enable them to reduce their operating cost and be more efficient to meet the market competitions.
REFERENCES
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