SOLVING UNEMPLOYMENT PROBLEM THROUGH THE ESTABLISHMENT OF SMALL SCALE INDUSTRIES (SSIS)

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The small scale industries (SSIs) form the bedrock of the economic growth in every nation. No country achieves a viable economic growth and development without the establishment of small scale business firms. They have always been in the forefront of development strategies. Nigeria’s quest for development must be hinged on industrialization. This is because of the great role industries play in terms of production activities, employment generation and the overall improvement in the quality of life.

Small scale industries are seen as veritable instruments for the industrial development of a nation. Industrial development involves the development of a technical arrangement that moves an economy from traditional method of production to a more complex system of mass manufacture of variety of goods and services involving technology and management techniques (Anyanwu, C. M. 2001).

Industrialization propels growth and quickens the achievement of structural transformation and diversification of economies. It enables a country to utilize fully its factor endowments and depend less on the external sector for its, growth and sustenance.

Beyene (2002), avers that SSIs have been important economic catalysts in the industrialized countries. The industry provides employment and earning opportunities, which contribute to economic growth and increase in the standard of living of the populace. Davis et al (1996) views small scale industries as the engine of development strategies in the promotion of economic growth and development. The Nigerian industrial promotion council, NIPC, confirms this by stating that “the Advent of small and medium scale enterprises in Nigeria was necessitated by the need to stimulate the establishment and growth of industries in order to launch the country’s industrial development. Small scale industries perform vital roles in economic development of any nation. They are the bedrock upon which industrial development could be achieved. This is because SSIs promote stable industrial base and ensure a balanced distribution of industrial development of any nation.

Anyanwu (2001) sees the failure of part industrial policies, which were anchored on the establishment of large industries, the flexibility, adaptability and regenerative tendencies as SSIs to propel economic development and the fact that growing and dynamic small businesses elsewhere have grown into large ones and have contributed substantially to national development objectives as the reasons for adopting small scale industries as a strategy for industrial development. Great Britain and Japan, owe their early industrial and economic expansion to their broad based small business establishment (Ojo A T, 2006).

The establishment of large industries involves heavy outlays and is essentially capital intensive, which does very little in solving unemployment problems. It also requires that manufacturing industries be designed and set up by foreign producers who also supply most of the raw materials and machinery spare parts needed for an uninterrupted production of industrial output. Consequently, foreign exchange requirements by local producers become critical and the inability to produce such foreign exchange can lead to severe disruption in the production activities. Thus, it behooves developing countries to devote vigorous energy to the development of local manufacturing industries. To obtain economic self reliance and sufficiency, Nigeria needs to pursue small scale industries as a strategy for growth and development. Given the paramount role of SSIs to the growth and development of the country, it becomes imperative to assess their contribution to the development of Imo State, the “Eastern heart land”.

1.2 STATEMENT OF THE PROBLEM

The problem of unemployment in Nigeria has become a dilapidating and problematic issue in Nigeria. The problem does not only affect the life of the people but facilitate the downfall of the economy. The problem of this study also involves the shortcoming and inability of the government to create employment through the generation and supporting of small-scale industries. These problems have justified the fact that the small scale industries sub sector is now characterized by low productivity and high rate of business failure. The sector bears most of the brunt of the existing gap in the Nigeria management system. Despite the vital role of small scale industries play in economic development, their impact is not adequately assessed. An adequate assessment of their contribution to the economy would be a yardstick to ease their procurement of finance.

This project seeks to determine the contribution of small scale industries to employment creation in Imo State specifically and, by extension, to Nigeria. It also determines how small scale industries have enhanced the revenue base of the state through the income generated from taxes paid by them and assesses the extent to which SSIs) have contributed to the development of the state.