EXAMINATION OF THE CHALLENGE FACING SMALL AND MEDIUM SCALE ENTERPRISES IN BENUE STATE
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EXAMINATION OF THE CHALLENGE FACING SMALL AND MEDIUM SCALE ENTERPRISES IN BENUE STATE
Chapter one
INTRODUCTION
1.1. Background for the Study
Small and medium-sized businesses are undoubtedly the driving force behind economic growth, poverty alleviation, job creation, and crime reduction. They make up a huge percentage of enterprises worldwide and play an important part in any economy.
The Nigerian government, through its economic regulatory bodies, recognises the importance of small and medium-sized firms in providing employment to its population.
Small and medium-sized businesses face a number of issues that jeopardise their long-term viability, including excessive manufacturing costs, an inability to establish competitive advantage, and a lack of entrepreneurial innovation.
Researchers have found that the failure rate of small and medium-sized businesses in developing countries is greater than in the developed world (Marlow, 2009). In Nigeria, SMEs confront numerous hurdles that have slowed their growth in recent years.
These obstacles include irregular electricity supply, indiscriminate tax assessments, limited access to financial institution loans, and the inability to preserve accurate financial records.
According to Oluboba (2010), the main problems facing SMEs that are however unsurmountable are low levels of entrepreneurial skills, poor management practices, low access to money and capital markets, low equity participation from promoters because of insufficient personal savings due to their poverty level,
low return on investment, inadequate equity capital, poor infrastructural facilities, high rate of enterprise mortality, shortage of skilled manpower, multiplicit
A company’s capacity to meet its key performance indicators in a sustainable manner is critical to achieving its goals (Simerly and Mingfanf, 2000; Wan and Yiu, 2009). The Nigerian government has previously launched a variety of programmes and policies aimed at small and medium-sized businesses in order to improve the flow of financial resources to these organisations (Oni and Daniya, 2012).
The Small and Medium Enterprise Development Agency of Nigeria (SMEDAN) and the National Credit Guarantee Scheme were both created in 2003. The Microfinance Policy Regulatory and Supervisory Framework (MPRSF) was established to address the issue of small business operators’ lack of access to credit, along with the Small Scale Industrial Credit Schemes (SSICS)
the Nigeria Industrial Development Bank (NIDB), the World Bank-Assisted SME II loan project, international financial assistance, the National Economic Reconstruction Fund (NERFUND), and the Bank of Industry (BOI), among others.
Despite the implementation of various programmes and policies in Nigeria, poverty, unemployment, and stunted economic growth remain pervasive (Lawson 2007; Owenubiugie and Igbinedion, 2015; Obadeyi, 2015).
Despite the fact that small and medium-sized businesses play a critical role in the national economy, they continue to face several challenges. They face major obstacles that jeopardise their ability to function and contribute effectively to the economy.
Small and medium-sized businesses continue to face a number of challenges, including difficulty accessing credit, short loan repayment periods, banks’ inability to finance small and medium-sized businesses, and high interest rates, among others.
In Nigeria, small and medium-sized businesses account for approximately 90% of the industrial sector, 70% of national industrial employment, and 10% of manufacturing production (Ajayi, 2002).
According to Anwatu (2006), small and medium-sized firms account for 75% of the private sector in Nigeria. Developing the private sector is a driver of growth, wealth generation, and employment in Nigeria.
Small business enterprises in Nigeria perform below expectations (Basil, 2005; Abiodun, 2011). Thus, this study investigates the issues that small and medium-sized businesses face in Benue state.
1.2. Statement of the Research Problem
The survival of small and medium-sized businesses is regarded as critical in any economy for addressing issues of poverty, unemployment, and crime while also assuring economic progress.
There is deficiency in the performance of small and medium-sized commercial enterprises in terms of economic growth, job creation, and poverty alleviation, making it difficult for small firms to achieve their desired outcomes.
The government is responsible for providing jobs and security for citizens, among other things. However, because the government cannot provide full employment for the people, it creates an enabling climate for non-state actors to fill the gap.
Small and medium-sized firms are among the non-state players. The federal government, through the CBN, implemented Microfinance Policy in 2005, which resulted in the establishment of Microfinance banks. Microfinance banks now provide partial financing to alleviate the lack of access to finance that SMEs in Nigeria face.
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