TABLE OF CONTENTS
Cover
…………………………………………………..…………….……page…i…
Declaration………………………………………………………………………………..
Approval………………………………………………………………………………....i
Dedication………………………………………..………………………………………iv
Acknowledgement……………………….……………………………………………….
Table of contents……………………………………………………………………… List of
tables………………………………………………………………….………..ix
Acronyms
………………………………………………………………………………...x Abstract………………………………………………………………………..…………xi
CHAPTER
ONE………………………………………………………………………...1
INTRODUCTION............................................................................................................ 1
1.0
Background of the study............................................................................................... 1
1.1 Statement of the
problem……………………………………………………………...2
1.2
Research objectives....................................................................................................... 3
1.3
Research questions........................................................................................................ 3
1.4
Purpose of the study...................................................................................................... 3
1.5
Scope of the study......................................................................................................... 3
1.6
Significance of the study............................................................................................... 4
CHAPTER
TWO.............................................................................................................. 5
LITERATURE
REVIEW................................................................................................ 5
2.0
Introduction................................................................................................................... 5
2.1
Meaning of SMEs.......................................................................................................... 5
vi
2.2
Factors affecting the growth
of SMEs……………………...……………
2.2.1 Performance
indicators of SMEs …………………………………………..….......13
2.3
Meaning of
insurance…………………………………………...15
2.4
Contribution of
insurance companies16 to t
|
2.5
|
Factors
inhibiting the purchase
of insurance19 by
SME
|
|
2.6
|
Relationship between
insurance companies and growth
of SMEs…………
|
|
2.7
|
Conclusion…………………………………………………………………………...23
|
CHAPTER
THREE........................................................................................................ 25
RESEARCH
METHODOLOGY.................................................................................. 25
3.0
Introduction…………………………………………………………………………..25
3.1
Research design........................................................................................................... 25
3.2 Survey
Population……………………..………………………………………….….25
3.2.1
Sample size............................................................................................................... 25
3.2.2
Sample design........................................................................................................... 26
3.3
Data Sources................................................................................................................ 26
3.4
Data collection............................................................................................................. 26
3.5
Measurement of Variables........................................................................................... 27
3.6 Validity and
Reliability of instruments………………………………………………27
3.7
Data analysis................................................................................................................ 28
3.8 limitation of the
study………………………………………………………………..28
CHAPTER
FOUR……………………………………………………………………...29
DATA
ANALYSIS, PRESENTATION AND INTERPRETATION…...………….29
4.0
Introduction…………………………………………………………………………29
vii
4.1
Response rate……………………………...…………29…
4.2
Personal data………………………………………………………………………....29
4.3
Findings
on factors affecting SMEs growth……………………………………….
|
4.4
|
Findings on
contributions of insurance companies
to the growth
of SME
|
|
4.5
|
Findings on factors
inhibiting the purchase of insurance
cover……………
|
|
4.6
|
Findings on
relationship between insurance companies
and the growth
of
|
CHAPTER
FIVE……………………………………………………………………….38
DISCUSSION &
SUMMARY, CONCLUSION AND RECOMMENDATIONS....38
5.0
Introduction…………………………………………………………………………38
5.1
Discussion of
the
findings……………..…………………………………38
5.2
Conclusion………………………………………………………………..………….41
5.3
Recommendation………………………………………………………………….....42
5.4
Areas for
further……….….………………………research……..………………42
REFERENCES............................................................................................................... 43
APPENDIX I.
.…….………………………………………………………………..48
APPENDIX II…………………………………………………………………………..52
viii
LIST
OF TABLES
Table 1 Targeted Sample
Size…………………………………………………………………26
Table 4.2.1 Showing
findings on gender of the respondents………………………………….29
Table 4.2.2 Showing
findings on age range of the respondents……………………………….30
Table 4.2.3 Showing
findings on educational level of the respondents……………………….30
Table 4.2.4 Showing
findings………………………….ontheresponden31
Table 4.3.1 Showing
findings on innovation…………………………………………………..31
Table 4.3.2 Showing
findings on competition…………………………………………………32
Table
4.3.3 Showing findings on management skills and actions…………………………….32 Table
4.3.4 Showing findings on lack of credit by SMEs……………………………………..33
Table 4.3.5 Showing
findings on technological change……………………………………….34
Table 4.4.1 Showing
contribution of insurance companies to the growth of SMEs…………..35
Table 4.5.1 Showing
factors inhibiting purchase of insurance cover by SMEs………………..36
Table 4.6.1 Showing
relationship between insurance companies and the growth of SMEs…..37
ix
ABSTRACT
The purpose of this
study was to establish the relationship between the contributions of insurance companies
and the growth of SMEs in NIC basing on the following objectives; to examine
major factors that affects the growth of SMEs; to assess the contribution of
insurance companies to the growth of SMEs; to investigate the factors
inhibiting the purchase of insurance cover by SME operators and to determine
the strength of the relationship between insurance companies and growth of
SMEs.
The research was
descriptive in nature involving quantitative methods which was administered
through questionnaires. The total sample comprised of 65 respondents of all the
managers and employees of NIGER INSURANCE CORPORATION. Simple random sampling
was used whereby the researcher went to NIC and administered questionnaire to
the sampled or selected employees. Primary data was obtained from the library
materials, textbooks, NIC brochures, internet and journals. Data analysis was
carried out using SPSS and frequency distribution tables.
Findings revealed that
innovation is a strong empirical evidence for fast growing SMEs, competition
has a great effect on SMEs industry and credit remains a great challenge to the
growth of SMEs. Besides that insurance companies mitigate risks and enhance
loan acceptability by SMEs sector with banks. However low income earned by
SMEs, high premium cost and paperwork and experience and beliefs inhibit the
purchase of insurance cover by SMEs. Nevertheless, there is a strong positive
relationship between insurance companies and the growth of SMEs at Spearman
Correlation Coefficient.
It was concluded that
improvement in business skills increases the performance of SMEs. However
insurance companies do not lowers insurance rates and offer protection to SMEs
income statements. In addition SMEs being small in size and their inability to
fully understand the document limits them to get insurance cover. It was
recommended that management of NIC need to build a great relationship with SMEs
as their customers in orders to develop and grow them in trust and also lower
the premium rates to SMEs in order to improve on their performance. Also NIC
need to have a fresh look at the scope and spectrum of services provided to
SMEs and has a better understanding on the scale of enterprise sector.
xi
CHAPTER
ONE
INTRODUCTION
1.0 Background
The substantial growth
of small and medium enterprises (SMEs) activity clearly marks SME as one of the
most remarkable economic phenomena. SME is a business that is privately owned
and operated with a small number of employees and relatively moderate volume of
sales. The definition of SMEs varies from country to country depending on the
level of development and the strength of the economy. The lower limit for small
scale enterprises is set at between five and ten workers and the upper limit is
set at between fifty and one hundred workers. The upper limit for medium scale
enterprises is set between one hundred and two hundred and fifty workers
(Hallberg, 2000).
In Nigeria there are
approximately 1,069,848 SMEs currently in operation and they comprise over 90%
of the private sector. They contribute to employment, provision of basic goods
and services, and generation of export and tax revenues for national
socio-economic development. Their Gross Domestic Product (GDP) contribution to
the economy is 75% and they employ about 2,500,000 nationals. The location of
these SMEs is mostly in urban areas with 80% located therein. They operate
business like restaurants, accountants, hairdressers, conveniences stores and
guesthouses (Hatega, 2007).
On the other hand
insurance is a contract by which one party undertakes in consideration of a
payment called premium to secure the other against pecuniary loss by payment of
a sum of money in the event of destruction or damage to property, fire,
accidents or death of a person. Economy, investment and finance reports (2010)
defines insurance as a policy from a large financial institution that offers a
person, company, or other entity reimbursement or financial protection against
possible future losses or damages. An insurance contract is an agreement by
which the insurer promises, from a premium or assessment, to make a payment to
a policy holder or a third person if an event that is the object of a risk
occurs. SMEs often face a variety of problems related to their size. Frequent
causes are bankruptcy, theft, fire, death, automobile accidents and workers
injuries.
1
1.1
Statement of the problem
Despite the contribution of insurance corporations to the growth
of SMEs in economic development, failure and slow growth still exists and the
public doubts its management (Ocici, 2007). Research suggest that 80% of the
businesses affected by major incident close down within 18 month, and 90% of
those who lose data close down within 2 years. This is due to the failure of
small businesses to have adequate insurance cover and proper business
continuity plans (cover sure, 2007). However literature has shown that
insurance companies are not willing to insure SMEs and it was the aim of this
research to establish whether a relationship between these two variables
exists.