THE ROLE OF THE FEDERAL GOVERNMENT OF NIGERIA IN THE PROMOTION OF SMALL AND MEDIUM SCALE BUSINESSES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

Small scale businesses constitute an important component of the Nigerian industrial sector. The importance of this sector cannot be over emphasized, especially in a typical developing country like ours where the level of youth unemployment is rising beyond control. Hence small scale industries generate employment opportunities per unit of capital investment because they are generally more labour intensive which are more capital in nature. A large scale industry that cost N20million for instance, may employ a mere 70 (seventy) workers or less. Where as a small scale industry that cost just N150,000 (one hundred and fifty thousand naira) may employ about 20-30 workers.

Small scale business specialized in the production and marketing of various products and services ranging from food, beverages, drinks/sachet water, cosmetics, spare parts and many others.

 Kilby (1969) acknowledge the diversity of terms of the degree of specialization and division of labour and the quantity of raw materials and output and the character of markets being served by small scale businesses. As a result the bulk of Nigerian business falls within the small scale business which account for over 80% of the number of enterprises in the country. (Ekunna 1992 Pg.160)

 Several number of small scale business are successful while other fail or are staggering for survival due to poor background management, lack of qualified manpower, poor capital base, lack of marketing research and appropriate technology and credit rating among banks and other lenders. These problems continue to militate against the establishment, survival and growth of small scale business in Nigeria. Although successful government in Nigeria have been emphasizing on the importance of small scale business and have established institutional support agencies to facilitate industrialization.

However, small scale business still operate in uncertainty and are faced with serious obstacles, this raises the questions of whether  the federal government is actually up to the responsibility in the promotion of small scale business in Nigeria.   

1.2. OBJECTIVE OF THE ESSAY

1. The main objectives of this study is to evaluate the impact of federal government in the promotion of small scale business in Nigeria. This study will specially seek to achieve the following:

2. To evaluate the marketing challenges facing small scale businesses.

3. To identify the sources of funds to the activities of the industry.

4. To find out the extent of government involvement in promoting the activities of the business.

5. To bring to light the contribution of the industry to the development of national diploma in marketing.

Finally, it is my hope that the students of marketing and others in related discipline will find this study very informative and useful tool in their respective studies.

1.3. SIGNIFICANCE OF THE ESSAY

The significance of this study lies basically on its contribution to knowledge and its benefits to individual and organization. The current economic crises in Nigeria has deciminated the growth of infant industries and encourages the establishment of similar business venture in both small and large scale proportions.

Although successful governments have vowed to support individuals and group initiatives in the establishment of small scale businesses.

 The current state of most small scale business in Nigeria is a far cry particularly when structural adjustment programme (SAP) was introduced, which brought about the problem of devaluation of the naira and the scarcity of foreign exchange of raw materials from abroad which has adversely affected production unit especially under a depressed economy.

 This study is an attempt to evaluate the role of government in the promotion of small scale business in Nigeria as a country.

1.4. RESEARCH QUESTIONS

1. Does government have a role to play in the promotion of SMEs in Nigeria?

2. How committed has government been in the promotion of SMEs in Nigeria?

3. What are the sources of funds available to SMEs?

4. What are the marketing challenges faced by small scale businesses in Nigeria?

1.5. RESEARCH HYPOTHESIS

H0: there is no significant impact of government intervention on the promotion of SMEs in Nigeria

H1: there is a significant impact of government intervention on the promotion of SMEs in Nigeria

1.6. SCOPE OF THE STUDY

As the title of this essay indicates, the study focuses its attention to federal government support to small scale business enterprises in Nigeria, it causes various policy, guidelines, direct and indirect financial assistance and other programs and initiatives designed to promote this vital sector of the country.

1.7. DEFINITION OF TERMS

The following terms and abbreviations used in the extended essay are defined below:

(SSICS) Small Scale Industries Credit Scheme

(SME) Small and Medium Enterprises

 (NIDB) Nigerian Industrial Development Bank

 (NERFUND) National Economic Reconstruction Fund

 (NDE) National Directorate of Employment

Small scale enterprise: Apart from size, it is a type of business that is self initiated, largely self financial, closely self managed and is of relatively small in size when considered as part of the industry.

Management: Is the part of loaning organizing, directing and motivating others so as to enhance productivity with maximum utilization of available resources and achieving the organizational goals or objectives.

Resources: These are the primary inputs that needs to be put together into function before the proper management activities really take place. These activities include; men, materials , money and machines.

Enterprises: This is one of the fundamental principles of management that is concerned with the division of labour and assigning of responsibilities with authority for the