The Causes of Small Scale Business Failure in Nigeria
Chapter One
OBJECTIVE OF THE STUDY
The overall aim of this study is to critically assess the causes of small scale business failure in Nigeria. Hence, the study will be channeled to the following specific objectives;
- Ascertain whether the sex of workers contribute to business failure.
- Determine whether there is a bearing between educational level of the workers and business failure.
- Find out whether finance is a causative factor to business failure.
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 Scale Business
Copious literature exists on Small Scale and Medium Enterprises {SMEs} written by various authors and in different languages and for various purposes like Aluko 1972, Olashore 1987, Obitayo 1991, Ekpenyong 1992, Olorunshola 2001, Anyawu 2003, etc. This fact underscores the essence, importance and relevance of this sub-sector in the development of any given economy. The experiences of developed economies in the relation to the roles played by SMEs buttresses the fact that the relevance of SMEs cannot be overemphasized especially among the Less Developed Countries {LDCs} or rather Developing Countries. In order to highlight the significance of SMEs in relation to the growth and development of a given economy, SMEs have been variously referred to as the “engine of growth”. This stems from the fact that almost all countries that have focused on the SMEs sector and ensures its vibrancy have ended up succeeding in the significant reduction and its attendant enhancement in the quality and standard of living, reduction in crime rate, increase in per capita income as well as rapid growth in GDP among other salutary effects (Basil, 2005).
One major drawback in Nigeria’s quest for industrial development over the past years has been the absence of a strong, vibrant and virile SME sub-sector. Given a population of well over 120million people, vast productive and arable land, rich variety of mineral deposits, as well as enormous human and other natural resources, Nigeria should have been a haven for Small and Medium Enterprises with maximum returns as it also has the location advantage as a marketing hub for the West and even East African Countries.
It might seem difficult to obtain a precise definition of small and Medium Enterprise. Several writers have propounded various definitions and explanations as to what Small and Medium Enterprises are. Some have defined SMEs based on the characteristics of the business, such as size, level of operations, type of industry, assets employed, and number of employees, turnover, market, management or control of the business or several others (Austin, 2009).
As it has been observed from the afore mentioned, there is no consensus on the real definition of Small and Medium scale enterprises (SMEs) as can be seen that, both terms, Small and Medium are relative and they differ from industry to industry and country to country. The difference amongst industries could be seen to be the difference in capital requirements of each business, which those among countries could arise as a result of difference in industrial organization by countries at different stages of economic development. What might therefore be defined as SME in a developed country can be regarded as a large scale enterprise in a developing country using partners as fixed investment and employment of the labor force. It is important also to recognize that definitions change over time and hence, even in a developing country, what was previously classified as SME could be regarded as a large scale industry when the quantities of relevant parachutes change during the production process.
The Nigerian Bank for Commerce and Industrial (NBCI) adopted a definition of small – scale business as one with total Capital not exceeding N750,000 (excluding cost of land but including working capital). The Federal Ministry of Industry’s guidelines to NBCI defined a small – scale enterprise as one with a total cost of not exceeding N500,000 (excluding cost of land but including working capital). The Nigerian Industrial Development Bank (NIDB) defined Small – Scale enterprise as an enterprise that has investment and working capital not exceeding N750,000, while it defined Medium Scale enterprises as those operating within the range of N750,000 to N3million in 1979, the new Industrial Policy for Nigeria Small Scale Industries are defined as those with total investment of between N100,000 and N2 million.
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 constitutes individuals or elements that are homogeneous in description.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
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 fifty (50) questionnaires were administered to respondents of which fifty (50) were returned and validated. For this study a total of 50 was validated for the analysis.
CHAPTER FIVE
SUMMARY, CONCLUSIONS AND RECOMMENDATIONS:
Introduction
This chapter summarizes the findings into the causes of small scale business failure in Nigeria using selected business centers and restaurant in Enugu State as a case study. The chapter consists of summary of the study, conclusions, and recommendations.
Summary of the Study
In this study, our focus was to examine the causes of small scale business failure in Nigeria using selected business centers and restaurant in Enugu State as a case study. The study specifically was aimed to ascertain whether the sex of workers contribute to business failure, determine whether there is a bearing between educational level of the workers and business failure, and find out whether finance is a causative factor to business failure.
The study adopted the survey research design and randomly enrolled participants in the study. A total of 50 responses were validated from the enrolled participants where all respondent are selected business centers and restaurant owners in Enugu State.
Conclusions
Based on the findings of the study, the researcher recommended that;
- The sex of workers does not contribute to business failure?
- There is a bearing between educational level of the workers and business failure.
- Finance is a causative factor to business failure.
Recommendations
Based on the findings of the study, the following recommendations are proffered:
- Government should fashion out modalities in implementing their designed policies and follow it up to a logical conclusion instead of adopting and abandoning one programme for another. It is obvious that government has in the past made some support measures in developing small business enterprises in Nigeria, but the problem remains that there has never been appropriate implementation of these laudable programmes. Therefore, there is need for adequate and urgent attention by government in creating regulatory bodies to checkmate the inappropriate behaviours of those piloting the affairs of the agencies. The need for a good policy which will be creating a more favourable environment for small business investment over inflation control will be a great deal.
- There should be adequate regulations of banks and other financial institutions to effectively provide loans to small business enterprises. There is a need for strengthening the specialised financial institutions such as Nigerian Bank for Commerce and Industry (NBCI), the Nigerian Development Bank (NDB), etc, to effectively provide a special funding or loans and credit guarantee schemes.
- Good infrastructures generally promotes business activities whether small, medium or large, there should be necessary attention in the development and improvement of road networking, communication, water supply, machineries and equipments etc, and most importantly alternative energy source. The infrastructural problem in Nigeria must be addresses as soon as possible hence it has continued to bring negative effects or poor results on all the facet of business and life of people.
- Additionally, the researchers also recommends the strengthening of the legal and institutional framework for the successful operation of these designed banks and other financial institutions including tax incentives for the development of small business enterprises, review and implement polices on a codified tax and incentives structure reform that support large businesses to promote the growth of small business enterprises in their business activities.
- Furthermore, government should offer programmes in partnership with universities and other vocational institutions in training business owners on how to manage business especially in the arrears of finance, marketing strategies and book keepings etc. The owner/managers of business enterprises should also avail themselves in proper management techniques hence it will further enhance the improvement of their businesses.
- Finally, there should be more strong regional support by the government to enable the growth of small business enterprises in Nigeria.
REFERENCES
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