Survey on Market Risk in Nigeria
CHAPTER ONE
Objectives of the study
The following aims and objectives of the study
- To survey the Nigerian market risk.
- To analyze the risk factor involved in venturing into the Nigerian market.
- To know the stability level of Nigerian markets.
- To know if the Nigerian market is safe for investors.
- To know if the Nigerian market encourages SME development.
CHAPTER TWO
LITERATURE REVIEW
Conceptual framework
The source of each risk helps to manage the risk at its source instead of its outcome. If the source of a risk is not identifying, the risk may not be managed as effectively and efficiently as desire by management. External risk (those arising outside the small and micro enterprises) may not fully manageable by the small and micro enterprise. Internal risks that are not managed at the source may result in ineffective deployment of valuable resources. For example, if a micro‟s products are not selling as expected to a perception that the price is too high, there may be an increased focus on managing price risk within the sales and marketing areas.
Theoretical Literature Review
The literature review of this study covers the key concepts concerning the small and micro enterprises, risk management in small and micro enterprises, specific objective of the study, theoretical and empirical study related to risk management following by the conceptual framework of the study.
Concept of Small and Medium Scale Enterprises
There are various definitions to what constitutes a small or medium sized firm. For example, Abor et al, ( 2007) defines small or medium sized firms as the non – subsidiary and independent firms which employ less than a given number of employees. Abor et al, (2007) argues that enterprises qualify as micro ,small or medium-sized enterprise if they fulfils maximum ceilings for staff headcount and either a turnover ceils or a balance sheet ceiling . Marsch et al, (2007) assert that small and Medium Enterprises are more opaque in terms of information, that is, the information asymmetry, which is a situation where business owners or managers know more about their business prospects and risk than lenders. Information asymmetric between Small and Medium Enterprises and banks arise from Small and Medium Enterprises lack of accounting records, inadequate financial statements or business plans which makes it difficult for creditors and investors to assess the credit-worthiness of potential Small and Medium Enterprises proposals. Central Bank of Nigeria (CBN, 2011) argues that SMEs are critical to the development of any economy, potentials for employment generation, improvement of local technology, output diversification development of indigenous entrepreneurship and forward integration with large-scale industries.
In Nigeria the SME sector has been recognized as a significant sector in employment creation, income generation, and poverty alleviation and as a base for industrial development. The sector is estimated to generate about a third of GDP, employs about 20% of the Nigerian labour force and has greatest potential for further employment generation Nkya (2002). However, Nigeria has never had a specific policy focusing at the development of SME sector. The different policies have various uncoordinated programmes and interventions aimed at supporting the sector with limited impact. This has resulted in a number of gaps leading to inability to address the core constraints inhibiting the growth of the sector. This has made it difficult to exploit the existing potentials for acceleration of SME development and limits its ability to exploit the exciting potential of SMEs to accelerate growth and improving availability of funds and covering their business against risk (Ministry of Trade and Industry, (2002).
CHAPTER THREE
RESEARCH METHODOLOGY
Research Design
This study used a descriptive research design, because the researcher was attempting to describe and explained conditions of risk management at SMEs by using questionnaires to fully describe a phenomenon. To achieve the objective of the study, 65 key players and small and micro enterprises was selected. The selection of small and micro enterprise comprised the following; line of businesses, namely the owners of shops, printing, barber shop, rice millers, patent medicine stores, hotels, and computer services. The business lines most of enterprises at SMEs are in the form of small and micro businesses.
Populat&ion of the Study
Mugenda and Mugenda (2003) Defined a population frame as an objective list of the population from which the researcher made his/ her selection. The study population was both small and micro enterprises at SMEs which were estimated to be 1350 in population and 15 key players (purposive samples).
Sampling Technique
This study used probability and non-probability sampling technique. In probability sampling, the systematic sample was used to pick the respondents and every 27th small and micro enterprise were selected for included in the sample and in non-probability sampling the study was purposive sampling because the researcher was selected the best 15 respondents to answer research interview questions to meet research objectives.
CHAPTER FOUR
DATA PRESENTATION, ANALYSIS AND DISCUSSION
Introduction
This chapter presents data analysis which was collected in the field. This chapter intended to answer the sources of risks, effect of risk, measures that can be used to reduce risks of SMEs and advantage of taking risk management in business operations , and finally analyzing on the way in which effective of risk management in small and micro enterprises in Zanzibar. The specific research objectives have been used as a guide who consists of: to identify the sources of risk in small and micro enterprises at SMEs, examine the negative effects caused by risks faced small and micro enterprises, investigate how small and micro enterprises can mitigate risk in their daily activities and identify the advantages of taking risk management in small and micro enterprises.
CHAPTER FIVE
SUMMARY, CONCLUSION AND POLICY IMPLEMENTATION
Introduction
This chapter gives the summary of the study. It started with the summary of the findings focus on the investigation of risk management in small and micro enterprises in Zanzibar. It next shows the identification of the sources of risk in small and micro enterprises. Also it examined the effects of risk in small and micro enterprises furthermore, investigated how small and micro enterprises can mitigate risk in their daily activities. Finaly identified the advantages of taking risk management in small and micro enterprises.
The qualitative and quantitative method were employed to gather information from different respondents including : small and micro enterprises (owners of shops, printing, barber shop, rice millers, patent medicine stores, hotels, and computer services) at SMEs and key players of small and micro business at SMEs like leaders of the market who are responsible for SMEs. The findings based objective one show that sources were fire outbreaks, record keeping, electrical cut and bad environment, poor government support and security in the market, theft and low knowledge in business operation. Therefore, it is concluded that fire outbreak and electrical cut off are the main source of risk.
Also, based on objective two findings indicated that failure to return loan in time, bankrupt, low money circulation, and reduction of revenue and loss of asset, it is concluded that negative effects are within their control. Another specific objective was to investigate how small enterprises can mitigate risk in their daily activities the responses were enough resources, good business environment, security in the market, proper government policies, avoid cooking in the market and entrepreneur knowledge. Also the study used descriptive research questions, in which the researcher described and explained conditions of risk management by using questionnaires to fully describe risk faced small and micro enterprises at mwanakwerekwe market.
The qualitative and quantitative methods were employed to gather information from different respondents including owners of small and micro enterprises and key player of market from SMEs.
Summary of the study
Risk is a necessary part of any business, and risks can arise from a number of sources. While risk is essentially unavoidable, it is certainly possible to manage the risks that business face. Understanding the types of risk of business faces is important because it can help the owners of enterprises to determine and how to protect their business investment. Therefore, managing the risk to minimize the loss exposures today becomes the essential issues for every micro enterprise. But due to the shortage of time and money the researcher was conducted the study on dealing with one type of enterprise which is micro enterprises which was help the researcher to accomplish the study in timely .This study was conducted in Zanzibar city especially at SMEs.
Source of risks in SMEs
The main source of risk that cause the damage in the market are fire outbreak due to occurrences of fire outbreak which were caused by electrical cut, combustion and cooking activities that contributed damages of properties. For example many business operators took loan from bank and from Saccoss, but after occurrences of fire in the market, many business operators failed to return their loan. In order to avoid the sources of risks, key players in the market should restrict all cooking activities and also stop all activities the cause fire in market like combustion of dust near to market. Another main source was poor government support on infrastructure because during the damage there is delaying of the government extinguisher within the market to reach the place of events which lead the owners of enterprise or peoples to extinguish fire by using local tools for prevent their assets. Poor knowledge of business is also led the risk in business activities for the owners of enterprises at the market, this is because many business operators were not using nor had no knowledge in book keeping result of loss assets, reduced the revenue or bankrupt.
Recommendations for customers
The customers to avoid bias during the purchasing goods and service for making selection of sellers accordingly to the races, color and religion or politics matter lead to backup some sellers but customer have right to make selection for goods and service accordingly to needs such as qualities, quantities and prices, clean for the goods and services.
Area for the Further Research
More research could be carried out for identifying why insurance became the least applied strategy among SMES. Also, the study will propose to conduct further to study why majority of big enterprisers was affecting with HIV/AIDS which lead to backup to their families, countries as well as National.
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