CONTRIBUTIONS OF SMALL SCALE BUSINESS ENTERPRISES TO ECONOMIC DEVELOPMENT

CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Nigeria economy far back before the advent of oil exploration in the early 70’s was an agrarian economy. Nigeria was not considered a rich country at the time, but the nation was able to fed itself adequately and the economy was very buoyant. At this time, 85% of the country’s export earning was from agricultural product. During this period also, Nigeria has been making concerted effort toward the economic development of the sovereign nation.  Most enterprises propelling the activities of the nation were mainly on large scale being set up by the federal government which were capital intensive, these enterprises were being operated mostly by foreigners some other industrial plants in the economy then, were owned by Europeans and also master minded by their experts.

The oil boom era shifted the nation’s emphasis from agriculture to mainly cruse oil.  Nigeria had a lot of money, but that was the starting point of the problem of the economy.  The economy could not move forward due to mismanagement by the country’s leadership that led to conspicuous extravagant spending the nation started suffering from economic depression such as inflation mass unemployment, high foreign debts, money devolution’s and so many others.

In response to these weaknesses of large scale enterprises, coupled with the total economic depression government then sought to promote small scale enterprises as a strategy for achieving self reliance and the only way to match on into an industrialized economy.  Government has championed the campaign for individuals, most especially the unemployed one’s to be creative and be self employed.

Coupled with this quite a lot of funds programmes and employment scheme have been launched both at state and federal level.  Some of these programmes are the national economic empowerment development strategy (NEEDS), small scale industry credit scheme (SSICS), National directorate of employment (NDE),Federal office of statistics, Niger Delta development commission (NDC), which have been providing loan facilities for small scale industrial owners.

To further show the importance of this sector and the potentials it has in promoting an industrialized and self- reliance economy, government national development plan of (2000-2010) explicitly stated the main objectivities of the programme geared toward the development of small scale industries as the creation of employment opportunities mobilization of local resource.  These are to be achieved through complementary assistance to small scale entrepreneur in financial management, technical conceptual and human relations skills.  The main vehicle designated for administering development centers (ADC) and the states small scale industrial scheme (SSIS)

Small scale businesses are generally more flexible and more willing to exploit new opportunities.  Therefore a small scale enterprise encourages indigenous entrepreneurship which helps to develop our rural areas and reduce rural urban migration.  Therefore it is undoptably accepted that small scale business enterprise forms the bed rock of any nation’s industrial take off.

STATEMENT OF PROBLEM

For Nigeria to excel industrially there is the need to promote and develop this sector because it serves as the bedrock of the countries industrial development.  Unfortunately ,t he sector could not grow fast due to some problems facing the sector both internally and externally.  This project work wills therefore investigation on the following:

a)         Managerial problem that hinders the promotion of entrepreneurial development.

b)         Lack of credit and infrastructure deficiencies.

c)         Various administrations in Nigeria that lack the will and power to evolve appropriate institutional strategies to ensure a co-ordinate system of assistance to small business enterprises

Based on the knowledge gathered from this study, small business entrepreneur have limited experience and this should utilize simple and uncomplicated approach to planning their activities.  The basic planning process for small entrepreneur development is as follows:

i)    RESOURCE ANALYSIS:   Analysis of yourself, know your business strengths and weakness, source of fund etc.

ii)   ENVIRONMENTAL:          Examine outside factors such as technological changes, government regulations, social trends etc.

iii)    COMPETITVE ABILITY: Analysis of company’s strength and weaknesses in relation to its major competitors.

iv)   Setting objectives of the firm such as sales volume, growth of earnings return on investments, market share.

v)   Firm opportunities & risks strengths & weaknesses market operating problems

vi)   Determination of appropriate strategies and tactics to achieve desired objectives economically. 

OBJECTIVES OF THE STUDY

Specifically, the main objectives of this study is to carryout research into what economic benefits Nigeria could derive from effective promotion of small scale business enterprise and also highlight the ways means and strategies that could be adopted to promote and facilitate the development of small scale business enterprise to promote economic self reliance in the society.

The importance of small scale enterprise in the promotion of economic self reliance has always been at the fore front of development strategies in Nigeria. However many developing countries have failed to adopt this strategy owing to their belief that it is a relatively slow process of industrialization.

Consequence, the objectives of this study are:

i)                    To examine the existing scheme for the promotion and development of small-scale business enterprises in Nigeria.

ii)                  To identify the problem militating against the effectiveness of these scheme.

iii)                To suggest possible solution to the identified problem

iv)                To know the various administration in Nigeria that lack the will and power to evolve appropriate strategies to business enterprises

v)                  To know the lack of credit and infrastructural deficiencies in small business enterprises.

vi)                To know how to do with the establishment and operation of small business enterprises.

In addition, the study seek seeks to determine the potentials possessed by the country for the establishment development and growth of small scale industries. The analyses of all these factors are aimed at assessing the role of small-scale business entrepreneur in the growth of industries in the country.  

RESEARCH QUESTIONS

It is the aim of this study to know the following:

i)                    What are the managerial problem that hinders the promotion of entrepreneurial development?

ii)                  Why is it that some various administration in Nigeria lack the will and power to evolve appropriate strategies to small business enterprises?

iii)                Why is it that there is lack of credit and infrastructural deficiencies in small business enterprises?

iv)                What are the means of finding out the existing scheme for the promotion and development of small scale business enterprises?

 HYPOTHESIS FORMULATION

H0:      Small-scale business enterprises do not lack source of credit and

encouragements from government  that facilitates growth

H1:      Small-scale business enterprises lack source of credit and

encouragements from government  that facilitates growth

H0:      Small scale business enterprises do not lack initial managerial and

technical training to organize productive activities.

H1:      Small scale business enterprises lack initial managerial and

technical training to organize productive activities.

H0:      General deficiency in infrastructural development do not hinders

entrepreneurial development.

H1:      General deficiency in infrastructural development hinders

entrepreneurial development.

SIGNIFICANCE OF THE STUDY

Nigeria has suffered a great deal from mono-cultural dependence on one export commodity, she has also neglected agricultural which was her main-stay that use to account for the occupation of more than half of the total population of 80million people as at 1960.

The importance and role small- scale business enterprises played in a developing economy is so vast and enormous that this vital sector cannot ordinarily be relegated to background.  One needs not to go into the sterility and idle state of many of our white elephant industrial projects. Infact, this sector will be more beneficial for restructuring our growing industrial economy in the short run than large industries.

A research project work on the contribution of small scale business enterprise to Nigerian economic self reliance will be beneficial to the following:

i)                    Small scale entrepreneur.

ii)                  Small scale industries supporting agencies

iii)                State governments.

iv)                The entire business community in Nigeria

v)                  Prospective industries

vi)                The federal government for industrial planning and development

It is significant to not that most countries particularly the developing economic argued that the large scale industries have not played and cannot alone be expected to play a dynamic  in the rapid economic growth and development of self reliance in the third world countries it has become evident in some countries that small scale industries which have been neglected could play the role faster than the large scale establishment in this direction, therefore this study becomes significant.  This study also to a greater extent adds to the existing volume of knowledge about small scale industries contribution to self reliance thereby making references possible for future researcher in this areas of study.

SCOPE OF THE STUDY

The scope of this study is contributions of small scale business enterprises to economic development.

DEFINITION OF TERMS

In other to be explicit in this study, clarification is made of some terms and terminology used which may convey different meaning in every day use.  Therefore, the following words are defined as they are conceptualized in this study.

a)         NATIONAL ECONOMIC EMPOWERMENT DEVELOPMENT STRATEGY

This is a government policy aimed at strengthening country’s economy.  it is a home grown policy of the present administration which seeks to empower the small scale industrialist and the people to be self reliant and be self employed.

b)         SMALL SCALE INDUSTRIES CREDIT SCHEME (SSICS)

A government sponsored institutionalized credit scheme whereby small-scale business man are directly given loans to start or expand their business.

c)         NATINAL DIRECTORATE OF EMPLOYMENT (NDE)

It was set up by the federal government in November 1986 to work out strategies for dealing with the menace of mass unemployment in the country especially school leavers and college graduates, it’s initial core programmes were formally launched on 30th January 1987.

d)     FEDERAL OFFICE OF STATISTICS

This is office that publishes official statistics for the country through its quarterly digest of statistics, annual abstract of statistics and monthly economic indicators. These contain statistical information on the economic and social aspects of Nigeria population density, age distribution, external trade etc.

e)         NIGER DELTA DEVELOPMENT COMMISSION (NDDC)

This is a commission set up be the government to look into the developmental needs of the oil producing states with a view to accelerating development and the area through execution of developmental projects and empowering the people of the area.