MITIGATING THE DIFFICULTIES EXPERIENCED BY SMALL AND MEDIUM-SIZED COMPANIES IN MAKURDI
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ABSTRACT
This study’s primary objective is to investigate methods for mitigating the difficulties faced by small and medium-sized businesses in Makurdi. A sample size of 270 was taken from the population of 828 registered companies in Benue State, and a total of 270 copies of the questionnaire were distributed, of which 240 copies (representing 89%) were properly completed and returned, while 30 copies (representing 11%) were not returned. Both primary and secondary sources were utilized to collect information for this study. The primary data collection instrument was the questionnaire. In the data analysis, the frequency distribution of the data was presented in tables as a percentage frequency distribution. The hypothesis was examined using the chi-square test at a 5% level of significance. After analyzing the data, the major findings were as follows: Nigeria’s small and medium scale enterprise policies are improperly implemented; small and medium scale enterprises are an effective means of fostering indigenous entrepreneurship; and poor management practices, financial problems, a lack of capital, and a lack of infrastructural facilities, among others, hinder the performance of small and medium scale enterprises in Nigeria. The study concludes that the government’s role in promoting and developing small and medium-sized businesses in Nigeria is highly effective, in the sense that the government supported small and medium-sized businesses through favorable investment policies, institutional and fiscal policy, protective business law, and financial incentives; and that small and medium-sized businesses had contributed significantly to the economic growth and development of Nigeria. As a result, the report suggests that the government should ensure there is no improper implementation of its policies towards small and medium enterprises and should not neglect business activities to facilitate small and medium enterprises in Nigeria in the areas of incentive and infrastructure development. The government should also provide adequate financial support to small and medium-sized businesses to prevent a lack of capital. Moreover, small and medium-sized businesses should ensure that they resolve internal issues that impede their performance. In order to improve their performance, they need ensure that there are effective management techniques or expertise, effective accounting standards, appropriate workforce, and avoid financial irresponsibility and corruption.
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CHAPTER ONE
INTRODUCTION
- Background to the study
The economic development agencies in Nigeria acknowledged the significance of micro, small, and medium-sized businesses, especially as the largest component of the economy. The central bank of Nigeria (CBN) and the small and medium enterprises development agency of Nigeria (SMEDAN) are agencies that regulate and encourage the economic development of the country and believe that SME’s give employment opportunities for residents. According to the survey, over 80% of Nigeria’s workforce is employed by small and medium-sized businesses (SMEDAN, 2013). Another survey found that 97% of Nigeria’s economy is comprised of small and medium-sized businesses, and that SMEs supply 70% of the country’s employment prospects (Shehu, A. M., Aminu, I. M., NikMat, N. K., Nasiru, A., Johnson, P. O., Tsagem, M. M., & Kura, K. M., 2013). Numerous presidents have tried unsuccessfully to alleviate poverty in the nation through the supply of work. Recent research indicates that the jobless rate is at an all-time high. Small businesses play a practical role in Nigeria’s economy since they employ citizens, provide citizens with a means of subsistence, eliminate poverty in the economy, and contribute to its growth. Over 80 percent of small firms fail during the first five years, according to a research. Despite the significant contribution of small enterprises to Nigeria’s economy, there is a high rate of failure attributable to significant obstacles to their survival.
The growth and development of small and medium-sized companies (SMES) in Nigeria has been sluggish and, in some cases, stunted due to a number of problems and challenges affecting this vital subsector of the economy. Some of the problems cited in the literature as being responsible for the slow growth and development of small and medium-sized enterprises include: inadequate managerial and entrepreneurial skills; deplorable infrastructural facilities; funding and financing challenges; corruption and lack of transparency resulting from government regulation and regulators; etc.
It has been stated that money is the most troubling of these obstacles, however it is acknowledged that most new small businesses are not attractive to banks since they wish to decrease their risk profile. Small and medium scale enterprises (SMEs) in Africa have been found to rely heavily on their own savings, not only to grow, but also to innovate, whereas firms often require real services support and formal finance assistance, failing which under investment in long term capabilities (Training and R & D) may result. On the other hand, SMEs in Nigeria have been blamed for poor performance on management practices, poor access to funds, and low levels of innovation.
Numerous studies were conducted, which led to the identification of the numerous obstacles facing small firms. As provided by a number of researchers, the article outlined the numerous important obstacles that impeded the survival and expansion of small companies in the Nigerian economy. Using the multi-case qualitative study, successful small business managers described in an interview the tools, policies, and tactics they employed to address the identified obstacles. The study addressed the primary question: what tools, policies, and tactics do successful small business managers employ to offset the issues facing their companies?
Nonetheless, this research evaluates the advantages and disadvantages of historical patterns and initiatives to grow small and medium-sized firms (SMEs) in Nigeria. It finds and analyzes the potential for promoting small and medium-sized businesses (SMEs) in Nigeria. This research entitled “Addressing the Challenges Facing Small and Medium-Sized Businesses in Makurdi” could not have arrived at a better time.
1.2 Statement of the Problem
The Nigerian national economy is characterized by a mirage of issues, which has rendered development-oriented governance sleepy. Government’s unfavorable fiscal policy inconsistencies and lack of physical amenities have hampered and stalled the development of small and medium-sized businesses in Nigeria. The growth and development of small and medium-sized businesses in Nigeria has been sluggish and, in some cases, inhibited due to a number of problems and challenges affecting this vital subsector of the economy. These problems include, among others, financial issues, insufficient management competence, an inadequate accounting system, and a lack of materials, for which the researcher seeks solutions. In addition, the majority of small and medium-sized businesses in Nigeria are failing or are uncompetitive because they lack the necessary financial resources to pursue their manufacturing operations. Thus, the purpose of this study is to investigate the likelihood of mitigating the issues faced by small and medium-sized businesses in Makurdi.
1.3 Objectives of the Study
The primary objective of this study is to identify and then analyze the most effective and efficient means by which small and medium-sized enterprises (SMEs) could be financed and promoted, taking into account the various economic, political, social, psychological, etc. conditions under which SMEs are encouraged to operate. In doing so, the researcher seeks to provide in-depth information and analysis on the many ways for fostering the growth of small and medium-sized businesses.
Given the preceding, the researcher intends to:
I Evaluate the government’s role in mitigating the issues faced by small and medium-sized businesses in Makurdi. Nigeria.
(ii) Determine the economic potential of Nigeria’s small and medium-sized businesses.
(iii) Identifying the obstacles to the development of small and medium-sized businesses in Nigeria.
(iv) Examine the financial support provided to small and medium-sized businesses by the government and other organizations.
1.4 Significance of the Study
This study, when finished, will be of great use to a variety of stakeholders in their implementation efforts, including governments at all levels, SME promoters, etc.
It supports policymakers in the creation of laws and regulations that foster an enabling environment for small and medium-sized businesses.
This study will enable them to identify the challenges facing the growth of small and medium-sized businesses.
Investors/Entrepreneurs: It will allow them to understand what they want from the government in terms of promoting small and medium-sized businesses. It will also assist students to understand the costs associated with developing small and medium-sized businesses.
Companies will also profit from this study, as they are interested in assessing the firm’s overall success, operational and financial efficiency.
This study will also aid students and researchers who are interested in studying or learning more about the issue and conducting research.
The objective of this paper is to offer owners and managers of small firms with pertinent information about the issues they face and to outline potential tools, policies, and strategies for addressing them. Reducing the obstacles small businesses face in Nigeria will increase the number of successful small enterprises in Nigeria. An increase in the number of successful small enterprises would lead to a rise in employment and a decrease in poverty in the Nigerian economy.
1.5 Research Questions
The answers to these well-structured questions provide solutions to the problem(s) being investigated. In the back of the investigator’s mind is the question, “Would the answers to these questions bring solutions to the perceived problem being studied?” As a result of our topic, the researcher may pose the following research questions:
How should we evaluate the government’s efforts to mitigate the issues faced by small and medium-sized businesses in Makurdi?
What effects do small and medium firms have on the economic growth of Nigeria?
What are the barriers to the development of small and medium-sized businesses in Nigeria?
What is the current state of financial support for small and medium-sized businesses in Nigeria?
1.6 Research Hypotheses
Similar to research questions, hypotheses provide direction and enable the collecting of data, as well as its subsequent analysis and deduction of conclusions. Unlike research questions, hypotheses have a distinct structure. There are no questions posed. They are instead presented as potential solutions to the observed problem.
Here, throughout the study effort, the researcher formulates the following hypotheses:
Highly effective is the government’s participation in alleviating the obstacles faced by small and medium-sized businesses in Makurdi.
Small and medium-sized businesses have significantly contributed to Nigeria’s economic growth.
1.7 Scope of the Study
Because the researcher was unable to cover all Nigerian small and medium-sized businesses, just a subset was examined (SMEs). The sample size was determined based on the number of registered small and medium-sized businesses in the metropolitan area of Makurdi. This study examined the issues and future possibilities of a selection of Nigerian small and medium-sized firms (SMEs).
1.8 Limitations of the Study
Several constraints were identified during the course of this investigation, the most significant being:
Inaccessibility of Data
Access to the collection of hard data was one of the main obstacles encountered by the researcher in this study because to high data gaps and pancity. This caused the researcher to restrict the analysis to small and medium scale firms (SMEs) in Nigeria, ignoring cottage and micro enterprises whose difficulties, while analogous, may be fundamentally distinct from those of SMEs (SMEs).
Time and Funds
Another disadvantage of this study relates to time, financial, and logistical constraints, which reduced the study’s intensity and scope.
Opposition of Respondents
Additionally, the researcher was hindered by the unwillingness of certain respondents to complete the questionnaires.
1.9 Definition of Terms
Medium Enterprise: Firm whose total cost, including working capital but excluding the cost of land, exceeds three hundred million naira (300,000,000), has between seventy-one (71) and two hundred (200) full-time employees, and generates more than twenty million naira in yearly revenue (20,000,000).
Small Enterprise: An enterprise whose total cost, including working capital but excluding the cost of land, is between ten and one hundred million naira (ten to one hundred million naira), has between eleven and seventy full-time employees, and an annual revenue of less than ten million naira (ten million naira).
Large Firm: Any enterprise whose total cost, including working capital but excluding the cost of land, exceeds three hundred million naira (300,000,000), has a labour force of more than two hundred (200) employees, and generates more than twenty million naira in yearly revenue (20,000,000).
Micro Enterprise: A company whose total cost, including working capital but excluding the cost of land, is less than ten million naira (10,000,000) and/or has fewer than thirty (30) full-time employees and/or generates less than two million naira in annual revenue (2,000,000).
Economic Growth refers to the increase in profit generated by a nation or individual’s planned economic resources.
This term refers to a person who organizes and runs a commercial enterprise.
Investor: A person who invests money in a business with the expectation of a financial return.
Management is the process of getting things done through other people through planning, controlling, and making decisions.
This could refer to the group of people who control a state.
This term refers to a business organization in which an individual or group of individuals organize and operate in order to generate a profit.
This could be any country’s financial system’s institutional and other arrangements for the transfer of savings from people who generate them to those who use them for investment or consumption.
MITIGATING THE DIFFICULTIES EXPERIENCED BY SMALL AND MEDIUM-SIZED COMPANIES IN MAKURDI
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