A STUDY OF MICRO CREDIT STRATEGIES EMPLOYED IN THE DEVELOPMENT OF INDUSTRIAL CLUSTERS IN SOUTH EAST NIGERIA



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A STUDY OF MICRO CREDIT STRATEGIES EMPLOYED IN THE DEVELOPMENT OF INDUSTRIAL CLUSTERS IN SOUTH EAST NIGERIA



ABSTRACT

 

 

Isolation and barriers have never worked to develop prosperity, and these have been the key obstacle preventing Small and Medium Enterprises (SMEs) boost their competitiveness. Firms that have come together as a group and which are located in close proximity have prove to be capable of rapid economic growth, sustainable leadership in export markets, significant employment generation and preservation of high-value added jobs. Equally, studies from both developed and developing countries show that SMEs cluster development provides for reconciling the economic development, poverty reduction and social equity. It should be brought to mind that for these enterprises to provide the dynamic boost to the economy that Nigeria so badly needs government policies must support the right business environment for them to thrive via identifying and implementing effective initiatives for improvement within their operating space. No doubt there is grinding poverty in the midst of abundant resources in the country and no responsible government can be comfortable with this. Nigeria has the highest rate of collapse of Small and Medium Enterprises (SMEs) within the first five years of operation, due largely to low financial capacity of the entrepreneurs who are thus unable to manage well the gestation period of growing enterprise. There are, today, about 700 micro finance banks listed in Nigeria, with only about 70 of them or 10 percent, functioning. Poverty in Nigeria, no doubt, has become an embarrassment to a country with such huge natural and human resources. Despite all the interventions by government to reduce poverty, the impact of the different interventions has been insignificant. This study determines the various Micro-Credit strategies employed in the development of industrial clusters in the South-East Nigeria. This research survey made use of both primary and secondary data, with a determined sample size of 200. Findings from this survey has it that: The strategies employed in the development of the Industrial Clusters in South-East Nigeria which include: Service Level Agreement (SLA); Cluster dominance; Membership of Market Association/Cooperative Society and Pricing (i.e Profit Sharing) have made significant impact; there is willingness by the stakeholders to provide Micro-Credit supports for the sustenance of MSMEs in the South-East; there is significant relationship between the Micro-Credit supports and performance of the Industrial Clusters. As the world is currently looking at Micro-Business Enterprises, particularly those within Clusters as the engine of growth for industries, if these business enterprises are not adequately supported and encouraged in terms of Micro-Credit supports, education, effective monitoring and evaluation, the dream, goals and objectives of their establishment will be defeated. Considering the efficacy of Micro-Credit supports and the significant impact such supports make in the development of Industrial Clusters which can be attributed to the effective/efficient strategies (Service Level Agreement; Cluster dominance; Membership of Market Association/Cooperative Society; Pricing, i.e Profit Sharing) employed by the Micro-Finance Institutions operating within the Industrial Clusters, the Micro-Finance Institutions operating outside the Industrial Clusters are thereby advised and encouraged to appreciates and adopt the above strategies so as to help them actualized their organizational goals and objectives which will in turn contribute to national development and the realization of the Millennium Development Goals (MDGs).


CHAPTER ONE

 

INTRODUCTION

 

 

1.1         BACKGROUND OF THE STUDY

 

Man, they say, cannot live in isolation because no man is an island. This implies that we as men leave interdependently for the realization of our goals and objectives. The same applies to industries, they will need to relate with each other for the actualization of their desired industrial goals and objectives, hence, the popular industrial and labour maxim-―Industrial Relations for Industrial Growth and Development‖. Isolation and barriers have never worked to develop prosperity, and according to Amobi (2006), have been the key obstacle preventing Small and Medium Enterprises (SMEs) boost their competitiveness. According to UNIDO (2006), ―firms that have come together as a group and which are located in close proximity have prove to be capable of rapid economic growth, sustainable leadership in export markets, significant employment generation and preservation of high-value added jobs‖. Equally, studies from both developed and developing countries show that SMEs cluster development provides for reconciling the economic development, poverty reduction and social equity.

 

It is in the light of the fore-going that the Federal Government of Nigeria has decided to underline it objectives to embark on poverty reduction via sustainable growth with employment under the second phase of the National Economic Empowerment and Development Strategy, code-named: NEEDS II for the 2007-2011 period. It should be brought to mind that for these enterprises to provide the dynamic boost to the economy that Nigeria so badly needs government policies must support the right business environment for them to thrive via identifying and implementing effective initiatives for improvement within their operating space.

 

Over the years the government had embarked on series of policy and institutional reforms, aimed at enhancing the flow of finance from the banking system to Small and Medium Industries (SMIs) as well as those involved in the petty-business (micro) activities at the informal level.

 

 

 

 

 

14


 

The much talk of the need for government, financial institutions, corporate organizations and government agencies to support in the building and developing of the small enterprises sub sector is not without its merit and desirability. Although, it is not an indication that small business operators should fold their arms and wait for the almighty handout from these agencies, either in the form of loans, and or grants, yet, getting such support could go a long way in transforming the small business landscape in a number of ways and also helping to strengthen the economy of the nation.

 

According to Alabi (2007), ―the challenges of the sector is similar in both Nigeria and in the United Kingdom, but what makes the difference for those in the latter region is the way the government intervenes‖. He further asserted that the first difference is that the government provides enabling environment, in the form of basic infrastructure, right regulatory framework, as well as credit tracking system. This way, SMEs operators do not have to battle fundamental challenges, but are however, left to concentrate attention in taking right investment decisions that help them to stabilize.

Citation - Reference

All Project Materials Inc. (2020). A STUDY OF MICRO CREDIT STRATEGIES EMPLOYED IN THE DEVELOPMENT OF INDUSTRIAL CLUSTERS IN SOUTH EAST NIGERIA. Available at: https://researchcub.info/department/paper-6883.html. [Accessed: ].

A STUDY OF MICRO CREDIT STRATEGIES EMPLOYED IN THE DEVELOPMENT OF INDUSTRIAL CLUSTERS IN SOUTH EAST NIGERIA


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Isolation and barriers have never worked to develop prosperity, and these have been the key obstacle preventing Small and Medium Enterprises (SMEs) boost their competitiveness. Firms that have come together as a group and which are located in close proximity have prove to be capable of rapid economic growth, sustainable leadership in export markets, significant employment generation and preservation of high-value added jobs. Equally, studies from both developed and developing countries show that SMEs cluster development provides for reconciling the economic development, poverty reduction and social equity. It should be brought to mind that for these enterprises to provide the dynamic boost to the economy that Nigeria so badly needs government policies must support the right business environment for them to thrive via identifying and implementing effective initiatives for improvement within their operating space. No doubt there is grinding poverty in the midst of abundant resources in the country and no responsible government can be comfortable with this. Nigeria has the highest rate of collapse of Small and Medium Enterprises (SMEs) within the first five years of operation, due largely to low financial capacity of the entrepreneurs who are thus unable to manage well the gestation period of growing enterprise. There are, today, about 700 micro finance banks listed in Nigeria, with only about 70 of them or 10 percent, functioning. Poverty in Nigeria, no doubt, has become an emb.. Click here for more

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