THE IMPACT OF GOVERNMENT POLICY ON THE GROWTH OF SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA
1.1 BACKGROUND TO THE STUDY
is defined in the Merriam-Webster Online Dictionary as a definite course or
method of action selected from among alternatives to guide and determine
present and future decisions. Policy can also be defined as making decisions
that reflect values and allocating resources based on those values. Thus,
policy represents a particular political, ethical, or programmatic viewpoint.
Governmental policy reflects theoretical or experiential assumptions about what
is required to resolve a particular issue or problem (Obi, 2001). At the
federal and state levels, governmental policy is reflected in multiple venues:
federal and state constitutions set the general framework, as interpreted in specific instances
through court decisions.
executive’s agenda is
presented through speeches, press releases, “State of the State” and budget
messages to the legislature, executive orders, and instructions to department
Legislative policy is expressed in speeches and press releases by
the leadership and formulated in policy and appropriation bills.
It is not generally recognized that budgets, expressed in appropriation acts and taxes, are critical statements of social policy. Budgets distribute
resources and determine what government can and cannot do. They may or may not
provide stable resources for governmental services (Bacdon, 2004).
can also be found in the determinations and decisions of state department heads
and middle management. Their decisions or actions determine how legislative
policy and broad governmental mandates are actually translated into services.
Policy is reflected in strategic plans and policy memoranda (EKSG, 2014).
It is translated and carried out through rules
and regulations, manuals, requests for proposals, contractual agreements,
enforcement actions, and so forth. However, many researchers has proved in the
past that government policies do influences small and medium scale enterprises.
Small and medium enterprises are
believed to be the engine room for the development of any economy, because they
form the bulk of business activities in a growing economy like that of Nigeria
(Basil, 2005). This is manifested in the following ways, Employment generation,
rural development, Economic growth and Industrialization, Better Utilization of
Governments create the rules and
frameworks in which Small
and medium scale enterprises are able to compete against each
other. From time to time the government will change these rules and frameworks
forcing small and medium scale enterprises
to change the way they operate (Essien & Udofia, 2006). Small and medium scale enterprises
are thus keenly affected by government policy. Key area of government policy
that affects business is taxation policy. Taxation policy
affects business costs. For example, a rise in corporation tax (on business
profits) has the same effect as an increase in costs. Small and medium scale enterprises
can pass some of this tax on to consumers in higher prices, but it will also
affect the bottom line. Other business taxes are environmental taxes (e.g.
landfill tax), and VAT (value added tax). VAT is actually passed down the line
to the final consumer but the administration of the VAT system is a cost for
business (Ikherehon, 2002). Moreover, the government of the day regularly
changes laws in line with its political policies. As a result small and medium scale enterprises
continually have to respond to changes in the legal framework (Izedomi, 2011).
However, the researcher will in this chapter provide an introduction on the
impact of various government policies on Small and medium scale enterprises
1.2 STATEMENT OF THE PROBLEM
The term government policy can be used to
describe any course of action which intends to change a certain situation.
Think of policies as a starting point for government to take a course of action
that makes a real life change (Ekezie, 1995). Government uses policy to tackle
a wide range of issues. In fact, it can make policies that could change how
much tax you pay, parking fines, import and export duties, immigration laws and
pensions (Ireghan, 2009). However in Nigeria, government has come up with
various policies aimed at investing in and boosting the Small and medium scale enterprises to
generate employment and reduction of poverty but there has been issues of poor
implementation. Policies can also be changed by
government when is not effective, also when they create a policy it can be made
to affect specific groups of people or everyone in society. Other government
policies concerning issues such as subsidies, interest rates, exchange rates and public-private
partnerships also influence the growth of small and medium scale enterprises
(Iromaka, 2006). However, the researcher is seeking to examine the impact of
government policies on the growth of small and medium scale enterprises in
1.3 OBJECTIVES OF THE STUDY
general objective of this study is to examine the impact of government policy
on the growth of small and medium scale enterprise while the following are the
ascertain the impact of government policy on the growth of small and medium
determine the nature of government policy that can influence the growth of
small and medium scale enterprise.
identify factors limiting the growth of small and medium scale enterprise.
1.4 RESEARCH QUESTIONS
is the impact of government policy on the growth of small and medium scale
kind of government policy can influence the growth of small and medium scale
are the factors limiting the growth of small and medium scale enterprise?
Government policy does not affect the growth of small and medium scale
Government policy does affect the growth of small and medium scale enterprise
1.6 SIGNIFICANCE OF THE STUDY
This study on the impact of government
policy on the growth of small and medium scale enterprises will enlighten the
entrepreneurs and the general public on how government policy can positively or
negatively affect the growth of small and medium, scale enterprises. It will as
well be a useful guide for the government in formulating policies that will
contribute to the nation’s GDP through the growth of small and medium scale
enterprises. This research will also serve as a resource base to other scholars
and researchers interested in carrying out further research in this field
subsequently, if applied will go to an extent to provide new explanation to the
1.7 SCOPE/LIMITATIONS OF THE STUDY
research will cover the overview of the different government policies and how
they can influence the growth of small and medium scale enterprises. It will
also covers investigations into different kinds of government policies and how
they affect the growth of small and medium scale business. Factors that
generally affect the growth of small and medium scale enterprises will also be
considered in this research.
1.8 DEFINITION OF TERMS
policy: A plan or course of action, as of a government,
political party, or business, intended to influence and determine decisions,
actions, and other matters
an enterprise that has asset base (excluding land) of between N5million –N500
million and labour force of between 11 and 300.
a compulsory contribution to state revenue, levied by the government on
workers' income and business profits, or added to the cost of some goods,
services, and transactions
a sum of money granted by the state or a public body to help an industry or
business keep the price of a commodity or service low.
the state of a country or region in terms of the production and consumption of
goods and services and the supply of money.
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