THE IMPACT OF GOVERNMENT POLICY ON THE GROWTH OF SMALL AND MEDIUM SCALE BUSINESS IN NIGERIA(A STUDY OF SELECTED SMEs IN PORT-HARCOURT RIVERS STATE)

ABSTRACT

The study examines the impact of government policy on the growth of small and medium scale business in Nigeria. the main objective of the study is to examine the impact of government policy on the growth of small and medium scale enterprises in Nigeria. the specific objectives are to ascertain the impact of government policy on the       growth of small and medium scale enterprise, to determine the nature of government policy that can influence the growth of small and medium scale   enterprise, to identify factors Limiting the growth of small and   medium scale enterprise. The simple random sampling technique was used to select a hundred (100) small scale industries in the Rivers State. The questionnaire were administered to 100 small-scale enterprise selected out of the industries in Port-Harcourt Rivers State. The population size of 100 respondents as the same as the sample size. Findings revealed that limiting the growth of small scale enterprise. Based on the findings of the study, summary, conclusion and recommendations were made that government should channel financial resources through the Micro Finance Banks to SMEs due to the nature of their loans and their proximity to the SMEs rather than deposit money banks, regular training for entrepreneurs is highly recommended especially in the area of record keeping.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

Policy is defined in the Merriam-Webster online diction as a definite course or. Method of action selected from among alternative to guide and determine present and future decision. Policy can also be defined as making decision that reflect values and allocating resources based on those values. Thus, policy represents a particular political, ethical or programmatic any viewpoint. Government 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!

     The federal and state constitutions set the general frame work, was interpreted in specified instances through court decisions.

     The chief executive’s agendas presented through speeches, press release “state of the state” and budget messages to the legislative, executive orders, and instruction to department heads.

     Legislative policy is expressed in speeches and press release by the leadership and formulated in policy and appropriation bills.

It is not generally recognized that budget, expressed in appropriation acts and taxes are critical statement of social policy. Budgets distribute resources and determine what government services (Bacdon, 2004).

Policy can also be found in the determination and decisions of state department heads and middle management 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, request for proposals, contractual agreement, enforcement actions and so forth. However many researchers has proved in the past that government policies do influences small and medium scale enterprise.

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 indigenous Resources. Governments create the rules and frameworks in which small and medium scale enterprises are able to compete against each other from time the government will change these rules and framework forcing small and medium scale enterprises to change the way the operate (essien & udofia 2006). Small an medium scale enterprise are thus keenly affected by government policy key area of government policy that affects business is taxation policy.

Taxation policy affects business cost. For example, a rise in corporation tax (on business profits) has the same affects as an increase in cost. Small and medium scale enterprise 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 (Ikherhon, 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). Considering the above contributions by authors in the topic we therefore add to knowledge by examining the impact of government policies on selected SMEs in Port-Harcourt.

1.2 STATEMENT OF THE PROBLEM

The term government policy can be used to describe any coarse 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 issues. In fact, it can be make policies that could change how much taxes 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 subside; interest rates, exchange rates and public- private partnership also influence the growth of small and medium scale enterprise (Ironaka, 2006).

However, the researcher is seeking to examine the government policies can influence the growth of small and medium scale enterprise in Port Harcourt.

1.3 AIM/OBJECTIVES OF THE STUDY

     To ascertain the impact of government policy on the   growth of small and medium scale enterprise.

     To determine the nature of government policy that can       influence the growth of small and medium scale enterprise.

     To identify factors Limiting the growth of small and   medium scale enterprise.

1.4 RESEARCH QUESTIONS

     Are there any impacts of government policy on the growth of small and medium scale enterprise?

     What kind of government policy can influence the growth of small and medium scale enterprise?

     What are the factors limiting the growth of small scale enterprise?

1.5 SIGNIFICANCE OF THE STUDY

This study on the impact of government policy on the growth of small and medium scale enterprise 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 nations 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 extent to provide new explanation to the  topic.

1.6 SCOPE OF THE STUDY

This research work in terms of content was primarily made to cover the impact of government policies on small and medium scale enterprises interns of how these policies affect their growth and development contribution of government by small and medium scale enterprise.

Geographically, the scope of the study was limited to small and medium scale enterprise that are involved in production wholesales, distribution and professional services in Port-Harcourt areas of Rivers State.

1.7 DEFINITION OF TERMS

Government policy: A plan of course of action, as of a government political party, or business intended to influence and determine decisions, actions and other base (Excluding Land) of between N5 million – N500 million of labour force of between 11 and 300.

Tax: A compulsory contribution to state revenue believed by the government on worker’s income and business profits or added to the cost of some goods, services and transactions.

Subsidies: 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.

Economy: the state of a country or region in term of the production and consumption of goods and services and the supply of money.