EMPOWERING SMALL AND MEDIUM SCALE ENTERPRISES FOR NATIONAL DEVELOPMENT

CHAPTER ONE

 INTRODUCTION

BACKGROUND TO THE STUDY

            Small and Medium Scale Enterprises are sub-sectors of the industrial sector which play crucial roles in socio-political and industrial development (Ahmed, 2006).  Following the adoption of Economic reform programme in Nigeria in 1981, there have been several decisions to switch from capital intensive and large scale industrial projects which was based on the philosophy of import development to Small and Medium Scale Enterprises which have better prospects for developing domestic economy, thereby generating the required goods and services that will propel the economy of Nigeria towards development.  It is based on this premise that Ojo (2009) argued that one of the responses to the challenges of development in developing countries particularly, in Nigeria, is the encouragement of entrepreneurial development scheme.  Despite the abundant natural resources, the country still finds it very difficult to discover her developmental bearing since independence.  Quality and adequate infrastructural provision has remained a nightmare, the real sector among others have witnessed downward performance while unemployment rate is on the increase.  Most of the poor and unemployed Nigerians in order to better their lots have resorted to the establishment of their own businesses.  Consequently, Entrepreneurship is fast becoming a household name in Nigeria.  This is as a result of the fact that the so called white collar jobs that people clamour for are no longer there.  Even, the touted sectors (Banks and companies) known to be the largest employer of labour are on the down-turn following the consolidation crisis and fraudulent practices of the high and mighty in the banking sector.  The companies of course are folding up as a result of erratic power supply, insecurity and persistent increase in interest rate which has led to high cost of production and undermines profit making potentials of companies operating in Nigeria.  As a result of banking sector practices and continuous folding up of companies, a lot of Nigerians are thrown into unemployment which inevitably detriment the economic situation of the country.

            Since the office jobs that people desire are no longer there for the teeming population of the country in general and Edo State in particular, and the few ones that succeeded in getting the jobs are thrown out as a result of the factors identified above, the need for the governments of Edo State and Nigeria and the people to have a rethink on the way-out of this mess became imperative.  Hence, the need for Small and Medium Scale Enterprises (SMEs) became a reality as a means of ensuring self independent, employment creation, import substitution, effective and efficient utilization of local raw materials and contribution to the economic development of our dear nation (Nigeria).  This is against the backdrop of high incidence of poverty in the nation in general and Edo State in particular, which is occasioned by the lack of access to capital, hence the need to reiterate the imperatives of SMEs in economic development of the country.  All the aforestated benefits of Small and Medium Scale Enterprises cannot be achieved without the direct intervention of the government and financial institutions.  Over the years a number of policies have been formulated by the government with a view to developing Small and Medium Scale Enterprises.

STATEMENT OF PROBLEM

            The performance and effectiveness of small and medium scale enterprises as an instrument of economic growth and development in Nigeria has long been under scrutiny.  This intense scrutiny has been against the backdrop of the low performance and inefficiency that characterized small and medium scale enterprises particularly in assessing its role on economic growth and development.  Despite government institutional and polices support to enhancing the capacity of small and medium scale enterprises, small and medium scale enterprises has fallen short of expectations.  This has generated serious concern and skeptism on whether SME can bring about economic growth and national developments in Nigeria.  The concern is even more disturbing when comparing SME in Nigeria with other countries particularly where SME has become harbinger of economic reconstruction and transformation (Ihua, 2009).  In the case of Nigeria, small and medium scale enterprises have performed at very abysmal level.  This low performance has further exacerbated poverty, hunger, unemployment and low standard of living of people in a country whose economics is ailing.

            The current problems of hunger, poverty and unemployment have undermined the capacity of the economy and small and medium scale enterprises are seen as mechanism for intervention to addressing these long term problem of the economy.

            Unfortunately, SME have not been able to propel economic growth and development which are quintessence of mitigating the effect of poverty, hunger, unemployment and low standard of living on the economy.  The challenge of addressing the problem of hunger, poverty and unemployment is even more worrisome when considering the actualization of the millennium development goals by the country in 2015.  If Nigeria is to achieve the millennium development goals by 2015, one of the sure ways is to enhance the capacity of its SMEs.  The core issues identified by the millennium development goal such as hunger, poverty, literacy, maternal and mortality rate would not be achieved unless the problems of SMEs are clearly tackled.

            The challenges and the problem of small and medium scale enterprises are tied to some economic variables and the challenges that generally characterized the nation’s economy.  Some of the challenges and problems include high level of unemployment, high poverty incidence, and low industrialization capacity, lack of finance, inconsistent government policies and inadequate infrastructure and insecurity of the business climate among others.  Nevertheless, the internal characteristics of small and medium scale enterprises too have also interact with some economic variables to undermine the capacity of the economy.  Issues of low level of entrepreneurial skills, poor management practice, inadequate equity capital and lack of information among other problems.

            This study, thus, seeks to look into ways the SMEs in some selected communities in Edo State will be empowered to engender national development.

OBJECTIVES OF THE STUDY

            The overall objective of this study is to determine how small and medium scale enterprises can be used as a catalyst for national socio-political and economic growth and development.  Specific objectives include the following:

1. To examine the constraints affecting small and medium scale development in Nigeria.
2. To evaluate the financial services and incentives available to SMEs.

STATEMENT OF HYPOTHESES

            In order to enable the researcher confirm the greatest drawback for SMEs in Nigeria and fully appreciate their respective relevant significance vis-à-vis national development, she has to postulate the following hypotheses:

1. Ho:      Access to finance/capital does not represent the greatest problem confronting  SMEs in Nigeria.
2. Access to finance/capital represents the greatest problem confronting SMEs in Nigeria.
3. Ho:  Management does not represent the greatest problem facing SMEs in Nigeria.
4. Management represents the greatest problem facing SMEs in Nigeria.
5. Ho:  Infrastructure does not represent the greatest problem facing SMEs in Nigeria.
6.    Infrastructure represents the greatest problem facing SMEs in Nigeria.