THE ROLES OF SMALL SCALE ENTERPRISES IN EMPLOYMENT GENERATION AND FINANCIAL GROWTH IN NIGERIA (A Case Study of Selected Small Businesses in Lagos Sub-Urban)
In both developed and developing countries, the government is turning
to small and medium scale industries and entrepreneurs, as a means of
economic development and a veritable means of solving problems. It is a
seedbed of innovations, inventions and employment. Entrepreneurship is
as old as Nigeria and had contributed to the growth of the economy.
Presently in Nigeria, SMEs assist in promoting the growth of the
country’s economy, hence all the levels of government at different times
have policies which promote the growth and sustenance of SMEs.
This paper identifies the orientation of SME’s and entrepreneurial
trends in Nigeria, tackles the operational definition and scopes, and
describes the role of the Nigerian government as a participant,
regulator and facilitator, both legally and politically in the growth of
SMEs and entrepreneurship. It identifies the marketing problems of SMEs
and entrepreneurships in Nigeria, the provision and enactment of
beneficial and supportive laws, the provision of infrastructural
facilities, constant man-power and development, direct financial
assistance to SMEs and the establishment of finance institutions to
support SMEs. It identifies the roles of SMEs in Nigeria’s development
and growth. It discusses the entrepreneurial thoughts, problems and
advance practical marketing solution.
It concludes by clearly specifying the role of marketing to the
survival of SMEs and entrepreneurship in Nigeria, and relevant
recommendations. For SMEs to survive marketing practice and principles
must be given prominence.
TABLE OF CONTENTS
CHAPTER ONE : INTRODUCTION
1.1 Background of the Study
1.2 Objectives of the Study
1.3 Statement of the Problems
1.4 Research Question
1.5 Statement of Hypothesis
1.6 Methodology of the Study
1.7 Significant of Study
1.8 Scopes and Limitation
1.9 Organization of Work
1.10 Definition of Terms
CHAPTER TWO: LITERATURE REVIEW
2.2 Entrepreneurship Thoughts and Philosophyin the Developing World
2.3 Traditional/Pre-colonial thoughts of Entrepreneurship in Nigeria
2.4 Marketing Problems of Small Business Enterprises
2.5 Entrepreneurship Support Strategies in Nigeria
2.5.1 Participation Strategy an Opportunity for Marketing in Nigeria
2.5.2 Credit Support Strategy
2.5.3 Extension Service Strategy
2.5.4 Industrial Estates Strategy
2.5.5 Private-Led Market Strategies
2.5.6 Privatization Strategy
2.5.7 Delegation Strategy (Empowerment)
2.5.8 Partnership Strategy
2.5.9 International Strategy
2.6 Small Scale Industry – Its Role in the EconomicDevelopment in Nigeria
2.7 Obstacles to Entrepreneurship Development
2.7.1 Economic Obstacles
2.7.2 Technological Backwardness
2.7.3 Political Legal Obstacles
2.7.4 Managerial Obstacles
2.7.5 Behavioural Obstacles
2.7.6 Production Operation Problems
2.7.7 Finance and Accounting Problems
2.8 Solution Strategies to SMES Problems
2.8.1 Government Related Solution
2.8.2 SMES – Oriented Solutions
2.8.3 Society Oriented Solution
2.8.4 Bank Oriented Solution
CHAPTER THREE: RESEARCH METHODOLOGY
3.2 Restatement of the Research Hypothesis
3.3 The Population of the Study
3.4 Sample Size and Sampling Procedure
3.5 Source of Data/Method of Data Collection
3.6 Method of Data Analysis
CHAPTER FOUR: DATA PRESENTATION AND ANALYSIS
4.1 Presentation and Analysis
4.2 Testing of Hypothesis
CHAPTER FIVE: SUMMARY, CONCLUSION AND RECOMMENDATION
1.1 BACKGROUND OF THE STUDY
Small scale enterprises are catalyst in the socio-economic
development of any country. They are a veritable vehicle for the
achievement of national macroeconomic objective in terms of employment
generation at low investment cost, the catalytic roles of SSEs have been
amply indigenous technology. The catalytic roles of SSEs have been
amply displayed in many countries such as Malaysia, Japan, South Korea,
India etc. SSEs contribution substantially to the Gross Domestic
products (DGP), export earnings and employment opportunities of these
Using the definition of central Bank of Nigeria (1993), SSEs can) be
defined as an enterprise, whose total cost, excluding cost of land but
including working capital, is above N10 million.
Financial growth on the other hand may be defined as a gradual and
steady change in the long-run which comes about a gradual increase in
the rate of savings and population (Schumpeter 1934).
Simply put, Economic Growth is an increase in per capital income over a long period of time or over a business cycle.
A person is said tobe unemployed if a job is not available when he is willing and able to work at the prevailing wage rate.
The Federal Government of Nigeria has long recognized the need to
promote the development of SSEs in order to stimulate employment,
mobilize local resources, reduce migration from rural to urban area and
disperse industrial enterprise more evenly across the country. This is
why the government has established institutions to provide both
financial and nonfinancial services to SSEs. The roles of SSEs will be
examined in this work in relation to employment generation and financial
growth in comparison to that of large scale.
1.2 OBJECTIVES OF THE STUDY
The objectives of the study are:
1. To evaluate the performance of small scale industries.
2. To assess the roles of small scale enterprises in employment generation.
3. To determine the extent at which small scale enterprises contribute to financial growth.
4. To identify the major constraints hindering the operations of small scale enterprise
5. To make suggestions on how the performance of small scale enterprises could be improved.
1.3 STATEMENT OF THE PROBLEMS
Nigeria is a country with increasing labour force. She lacks capital
as well as foreign investment into the country as a result of political
instability and other reasons. Therefore, a proper and efficient way of
utilizing her scarce other resources must be found in order to reduce
unemployment and increase economic growth. it
must be noted that unemployment is not only an economic problem but
also a social problem. This means, it does not only under growth, it
also gives room for social problems such as robbery, arson, suicide etc.
The key problem facing most small-scale enterprises is lack of
finance whether for the establishment of new industries or to carry out
expansion plans. The inability to attract financial credit or resources
has hindered or stifled the growth of small scale enterprises. The
reasons for the lack of fund include the following:
· High rate of inflation that led to the vast depreciation of
the naira exchange rate, thus making it difficult for most small and
medium enterprises to obtain the required input for expansion
· Low level of savings in the economy, which leads to low capital formation
· High rate of interest charged on loan, which scares off potential small and medium scale entrepreneurs
The unwillingness of retail banks to grant credit to small and medium
scale enterprise because of the low creditworthiness of these
enterprises has also hampered their growth over the years.
1.4 RESEARCH QUESTIONS
i. Do small scale enterprises play any role in employment generation?
ii. Do small scale enterprises contribute to financial growth?
ii. what are the major constraints hindering theactivities of small scale enterprises in Nigeria.?
1.5 STATEMENT OF HYPOTHESES
In order to achieve the above stated objects, the following hypotheses shall be tested:
Ho: Small-scale enterprises do not play significant roles in employment generation.
H1: Small-scale enterprises play significant roles in employment generation.
Ho: Small-scale enterprises do not play significant roles in financial growth.
H1: Small-scale enterprises play significant roles in financial growth.
1.6 METHODOLOGY OF THE STUDY
The study will base its data collection on both the primary and
secondary sources. The secondary source shall include, textbooks,
journal, speeches delivered in various seminars, information from
Federal Offices of Statistics, CBN Annual Report etc. The primary source
is through the use of questionnaire, which will be used to obtain
information from the respondents that from the sample of the study. Data
obtained through the questionnaires shall be presented through the use
of simple frequency distribution table. The data shall be analyzed
through the use of chi-square distribution, which is the statistical
method use to test for the difference of two independent statistics.
1.7 SIGNIFICANCE OF STUDY
The study is significant in that it will show how SSEs may be used to
generate more employment, improve financial growth and help the country
from her present recession if not depression as it has done in many
other countries mentioned in the introduction.
1.8 SCOPES AND LIMITATION
The study will be limited to SSEs as defined. Also the study shall
limit five (5) SSEs in Lagos state, the selection of these Small Scale
Enterprises will be done by the use of strategic sampling method that
would represent the entire population of Small Scale Enterprises in
1.9 ORGANIZATION OF WORK
The study will be divided into five main chapters. Chapter one will
cover the general introduction into the study under which introduction,
statement of problems, objectives of the study, statement of the study
are discussed. Chapter two will focus on literature review, which has to
do with a general presentation of views by former researchers as well
as scholars on the main variables of the study. Chapter three will
contain the structural composition of the study under which the sources
of the finance of small scale enterprises are discussed. Chapter four
will be devoted to data presentation and analysis and chapter 5 will be
used for summary, conclusion and recommendations.
1.10 DEFINITION OF TERMS
ENTERPRISE: An enterprise is an entity engaged in an economic activity.
AUTONOMOUS ENTERPRISE: is an enterprise which is not classified as a partner.
SMALL SCALE ENTERPRISE (SME): is regarded as small
or medium sized if it has not more than 250 employees and not more than
50 Million Euro turnover respectively a balance sheet total of less than
43 Million Euro and if not more than 25% of the shares of such an
enterprise are in the ownership of another enterprise.
SMEs: Small and Medium Enterprises are those firms, which satisfy the definitions given above
SMEDAN: Small and Medium Enterprises Development Agency of Nigeria
BOI: Bank of Industry, which provides medium or long-term loans to enterprises
CBN: Central Bank of Nigeria, the apex bank in Nigeria, which supervises other banks
Total Quality Management (TQM): This is a concept in
management which says that every individual and division in an
organization should emphasize the satisfaction of customers and client
Budget: A type of plan that specifies anticipated
result in numerical terms and serves as control device for feedback
evaluation and follow-up.
Forecasting: A method of predicting future business conditions for the purpose of establishing goals and budget.
Policy: A general guide to thinking and action or decision of people to do something through certain ways or procedures.
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