of the Study
focus on economic development has shifted in recent years from public-sector
led economic development to private sector driven economic development. In
achieving this, the Small and Medium Enterprise (SME) sector is usually relied
upon because of extant scholarly knowledge of its capacity to contribute to
2002, the Honourary Presidential Council on Investment (HPACI) SME sector
profile reveals that the SMEs contribute as much as 40% of GDP in developed
economies and some developing nations. The report further shows that SMEs
constitute over 90% of firms in Nigeria with a meagre 1% contribution to GDP.
This disproportionate contribution is as a result of factors within the
have adduced several reasons including access to finance, infrastructural
limitations, entrepreneurial competence of owner-managers and the impact of
multiple tax, to explain differences in SMEs contributions to GDP (Kessides,
1993; Sule, 1980 and Anyanwu, 1994; HPACI, 2002, and Aruwa, 2004). Foremost of
these barriers are inadequate finance and lack of infrastructures. Kessides
(1993) recognises the significance of infrastructure in the process of economic
the Honourary Presidential Council on Investment (HAPCI, 2002), after an
in-depth study of the SME sector, gave the reasons limiting the role of SMEs as
the hub of entrepreneurship in Nigeria. Some of the reasons given were
infrastructural limitations, access to finance, access to enterprise support services,
unfavourable business environment and poor access to information about sources
of raw materials and market network. There is a recurrence on the greater
impact of limited access to finance, entrepreneurial incompetence and
inadequate infrastructure in the SME literature.
need to improve SME development in Abuja is particularly timely given the
crises and attendant less propitious economic situation that has bedevilled the
capital since the 1980s. This manifested by way of the deplorable nature of
socio-economic infrastructure. This has the effect of imposing heavy cost and
of shifting of resources away from productive private investment since domestic
and foreign entrepreneurs would only invest where infrastructure exists and
satisfactory rate of return is assured.
(2001) observes that indices of micro-economic infrastructural facilities are
inadequate and the operation of the functional ones has not been efficient.
This indeed has dire consequences in promoting business activities in Nigeria.
The SME sector in Nigeria operates in an environment with very poor
infrastructure, which deter prospecting firms from entry and hinders effective
performance and international competitiveness (Aruwa, 2004).
1.2 Statement of the Problem
power supply and bad roads are major social and economic infrastructures
hindering effective operations of small and medium scale enterprises in
Nigeria. Constant power outages for example, do not encourage business
activities as most skilled and un-skilled jobs are greatly dependent on
provision of infrastructure services to meet the demands of businesses-both
small and medium scale, is one of the major challenges of economic development
in Nigeria. The provision of economic and social infrastructure can expand the
productive capacity of the Nigerian economy by creating enabling environments
for small and medium scale businesses in an economy, thereby encouraging
This is not always the case as small
businesses in Nigeria suffer from bad roads to constant power outages. A study
conducted by Ogbonnaya (2010) demonstrated empirically that no matter how novel
the policies or incentives to drive the industrial sector are, if the
infrastructural problems are not fixed, the policy objective of accelerating
the growth of the industrial sector may not be realized.
significance of infrastructure in the process of economic growth has long been
established. Infrastructure has been seen as the basic requirement for business
establishment and survival. The costs of acquiring infrastructures are
significantly enormous for SMEs to bear and therefore, government intervention
is inevitable. However, the depth of impact, the degree of impact or
relationship coefficient has not been established particularly in respect of
Kaduna state. This makes this paper distinguishable.
1.3 Objectives of the Study
main aim of the study is to evaluate the role of economic and social
infrastructure in promoting business activities in Nigeria. Other specific
identify infrastructure challenges that affect business activities in FCT
evaluate the specific roles played by both economic and social infrastructures
in promoting business activities in FCT Abuja.
suggest entrepreneurial policies that will enhance the operations of small and
medium scale businesses in FCT Abuja.
1.4 Research Questions
infrastructural challenges affect the smooth operation of businesses in Abuja?
role have economic and social infrastructure played in promoting small business
activities in Abuja?
policies if introduced by the government will help promote small and medium
scale business activities in Abuja?
1.5 Statement of Hypotheses
The study developed two operational
hypotheses as stated below:
Infrastructural facilities in FCT Abuja is inadequate.
facilities in FCT is adequate.
Infrastructural facilities does not have
significant impact on
performance of businesses in FCT.
Infrastructural facilities have significant impact on the performance of
businesses in FCT.
Small and Medium scale Enterprises (SMEs)
in Africa rely largely on own savings, not only to grow but also to innovate,
firms often need real services support and formal finance assistance, failing
which under-investment in long term capabilities (training and R&D) may
result, (Oyelaran-Oyeyinka, 2003).
Besides finance, there are critical
elements (including: knowledge, skills and experience of staff; capacity and
quality of internal facilities; information and knowledge of market;
intellectual and managerial leadership; external infrastructure and the
incentive system at the micro and macro levels) that lacking within technology
support institutions themselves. These undermine the effectiveness of their
support to Small and Medium scale Enterprises (SMEs). This study is significant
because it would help to evaluate the operations of a vital segment of the
industrial sector – Small and Medium Scale Enterprises (SMEs) , which have been
identified as having very high potential in promoting economic growth and
development (Oni and Daniya, 2012). The evaluation shall be done with special
focus on their financing thereby adding to the existing literature on the
This study will be of great benefit to the
This study highlights and critically
examines the various infrastructural challenges faced by small and medium scale
enterprises in Nigeria. The study will enable government bodies and other
stakeholders to make policies that will help fast-track the provision of
adequate and quality infrastructures to create enabling environment for small
and medium scale enterprises in Nigeria.
The study will also be a great importance
to students both at basic and tertiary levels. Findings and recommendations
will guide students in research and further studies.
Since most manufacturing companies depend
on small and medium scale enterprises for their survival, the study will go a
long way in assessing the role manufacturing companies can play in
strengthening the operations of small and medium scale enterprise in Nigeria.
The study will provide foundation for
future studies. Based on research questions and recommendations given in the
study, further research studies can be developed from the project work.
of the Study
This research work focuses on the role
infrastructures such as economic and social infrastructures have played in the promotion of Small and Medium Scale
Enterprises (SMEs) in Nigeria paying special attention to the impact the
government of Nigeria has on the development of Small and Medium Scale
Enterprises for a period of three (3) years 2009. The research intends to study
the essential problems encountered by Small and Medium Scale Enterprises and
suggest ways by which they can be adequately and efficiently promoted.
Most of the information and data needed
for the study would be gathered from existing literature and from some selected
business owners in FCT Abuja.
of the Study
Limitations faced in the course of the
research were accessibility to information, difficulty in accessing the target
sample during working hours due to the busy nature of their operations,
inability to use a large sample size due to time and resource constraints,
unwillingness of small business owners to reveal confidential information in
fear of competitions.
Business: The Oxford Learner’s Dictionary defines
business as a commercial activity, a means of live hood, a trade, profession,
Capital: capital can be defined s man-made
productive asset that are set aside for the production of other assets. In
other restricted cases, it is defined as money set aside to start business.
Economic Development: it can define as the process whereby a
country’s real per capital gross national product of income increases over a
sustained period of time through continuing increases i.e. per capital
Economic Growth: Economic growth is the increase in the
amount of the goods and services produced by an economy over time. It is conventionally measured
as the percent rate of increase in real gross domestic
or real GDP. Growth is usually calculated in real terms, i.e. inflation-adjusted terms, in order to obviate the distorting
effect of inflation on the price of the goods produced. In economics, "economic growth" or
"economic growth theory" typically refers to growth of potential output, i.e., production at "full employment".
Economy: the word is used to mean a particular
system of organization for the production, distribution, and consumption of all
things people use to achieve a certain standard of living.
Entrepreneurship: The willing and ability of an individual
to seek out investment opportunities in an environment, and an environment, and
be able to establish and run an enterprise successfully based on the identified
Infrastructure: Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary
for an economy to function. It can be generally defined
as the set of interconnected structural elements that provide framework
supporting an entire structure of development. It is an important term for
judging a country or region's development.
Role: according to Merriam-Webster’ dictionary
is defined a function or part performed especially in a particular operation or
process or major.
SMEs: Small and medium enterprises or small and
medium-sized enterprises (SMEs, small and medium-sized businesses, SMBs, and
variations of these terms) are companies whose personnel numbers fall below
certain limits. The abbreviation "SME" is used in the European Union and by international organizations such
as the World Bank, the United Nations and the World Trade
(WTO). Small enterprises outnumber large companies by a wide margin and also
employ many more people. SMEs are also said to be responsible for driving
innovation and competition in many economic sectors.