PROBLEMS AND PROSPECTS OF SMALL-SCALE INDUSTRIES IN NIGERIA
Need help with a related project topic or New topic? Send Us Your Topic
DOWNLOAD THE COMPLETE PROJECT MATERIAL
PROBLEMS AND PROSPECTS OF SMALL-SCALE INDUSTRIES IN NIGERIA
Chapter one
INTRODUCTION
1.1 Background of Study
Small-scale industries are critical sources of job creation, the development of indigenous technology, and even the dispersal of industrial setups if it increases manufacturing export production and the local content of industrial output by fostering forward and backward industrial linkages to boost overall economic activity.
Since the second National Development Plan (1970-1974) and the third National Development Plan (1975-1980), emphasis has been focused on the development and proliferation of small and medium-sized firms (SMEs) with the goal of leveraging them as true engines of economic growth and development.
As a result, numerous definitions of what constitutes a small or medium-sized industry have emerged since the 1970s. The Central Bank of Nigeria (CBN) defines small scale enterprises in its credit guidelines for banks as enterprises with an annual turnover of no more than N500.000 in the case of commercial banks and enterprises with a capital investment of no more than N2 million excluding the cost of land, or with a maximum turnover of no more than N5 million in the case of merchant banks.
Similarly, the federal ministry of industry’s instructions to the Nigerian Bank for Commerce and Industry (NBCI) define small-scale businesses as enterprises that incur land costs but do not include working capital.
In practice, the Nigerian Bank for Commerce and Industry accepts small-scale industries defined as enterprises with capital of no more than N750,000, minus land costs but containing working capital.
The Nigerian Industrial Development Bank (NIDB) defines small scale firms as those with project costs (investment and working capital) of less than N750,OOO, and medium scale enterprises as those with project costs ranging from N750,000 to N3 million.
The Centre of Industrial Research and Development (CIRD) at Obafemi Awolowo University, Ile-Ife defines small scale firms as those with total capital assets of less than N250,000 and fewer than 50 full-time employees.
The varied definitions show that emphasis has often been placed on certain financial ceilings in capital investment.
Small-scale enterprise formation (and death) is typically explained by the owner-manager’s desire to own his personal business. Thus, small-scale firms, like the prolonged shadow of their owners, reflect both their strengths and faults.
Thus, the small-scale firm entrepreneur begins to develop its distinct animation, abilities, work experience, advantages, and attitudes. In summary, the performance of the small scale is governed by the owners’ personality qualities
which include responsibility, energy, initiative, persistence, and health thinking capacity, human relation ability, communication ability, and technical knowledge.
Governments in both industrialised and developing countries offer a wide range of programmes to aid small and medium-sized businesses. Despite the success of SME strategies in a few countries (e.g., Taiwan, Northern Italy, and Ireland), the bulk of developing countries have found that their SME development programmes have had a less positive influence on company performance. The search for best practices is based on several fundamental questions.
i. What is the basis for public intervention in the first place?
ii. Why should SMEs be prioritised for assistance?
iii. If there is a case for government action, what form should it take?
1.2 Problems of Study
The challenges that small and medium-sized businesses in Nigeria face are not insurmountable, as the country is well-positioned to give solutions. In general, the issues range from insufficient funding, a lack of accountability, and a lack of infrastructure.
Most small businesses are run by a single person, and the owner quickly loses control of the business due to the need to attend to various managerial functions.
This is why it is beneficial for effective management to distribute duties within the company or to seek the advice of a management consultant. Small- and medium-sized businesses typically require a high level of technological inputs, as well as technical skills, at a high expense.
Inadequate finance is frequently caused by a lack of proprietorship equity participation. A robust capital base and financial outlook are essential for a successful firm. It is consequently prudent financial management to seek out more business partners who can bring in more capital to finance the firms’ activities. Small businesses, on the other hand, are typically hesitant to draw on partners, even if it means undercapitalization.
Small-scale firms have been underfunded, prompting the government to develop steps to aid this sector. Loan packages from the World Bank, the National Directorate for Employment, and other monies to finance the activities of the firms.
Small businesses, on the other hand, are typically hesitant to engage in partners, even if it means undercapitalization. Small-scale firms have been underfunded, prompting the government to develop steps to aid this sector.
Such aid schemes include loan packages from the World Bank, the National Directorate of Employment, and NERFUND. Small businesses that rely solely on one owner can suffer financially and lack responsibility, which is essential for success. Accountability ensures proper management over acceptable financial plans.
Small-scale organisations are not immune to the lack of infrastructure that plagues all Nigerian businesses. Small and medium-sized businesses, on the other hand, are burdened with a heavy producing plant, as well as hefty phone and electricity costs. Needless to say, no firm can function without its facilities.
1.3 PURPOSE OF THE STUDY
The primary goals of this study are:
1. To examine how small-scale entrepreneurs might achieve efficient management by delegating responsibilities within the organisation and eliminating the need to seek external support from a management consultant.
2. Assess the danger of undercapitalization and relate it to the proprietors’ unwillingness to bring in partners or suitable funding.
3. Suggest measures for the government to improve the economy’s infrastructure, lowering the cost of developing small-scale firms.
4. Describe the situation in which the government could make foreign exchange inexpensive to small and medium-sized businesses while allowing the naira to float to determine its true worth.
5. Evaluate the strategies that SMEs will use to take a daring approach to creating new ideas.
6. Examine the owner-manager’s incapacity to recognise his own weakness and tap into the skills of staff.
1.4 RESEARCH QUESTION.
The project funds answer the following tentative research questions:
1. To what extent has insufficient financing hampered the growth and development of small-scale businesses in Nigeria?
2. To what extent has the one-man ownership syndrome of small-scale firms affected the success of the business?
3. To what extent have small-scale businesses been hampered by a lack of infrastructure, limiting their ability to develop and expand?
4. To what extent has the complexity and annoyance associated with sourcing foreign exchange to meet import needs resulted in a high rate of business?
5. Failure of small-scale businesses?
6. To what extent can low production, bad management, poor accounting records, and financial indiscipline limit the potential of small-scale enterprises?
1.5 Statement of Hypotheses
This research aims to test the following hypotheses:
HO: Financing small-scale businesses in Nigeria has numerous challenges and is unprofitable.
HA: There are attractive opportunities for financing small-scale businesses in Nigeria.
HO: There is no rationale for government involvement in the creation of SMEs.
HA: There is justification for government involvement in the growth of SMEs.
1.6 Methods for Data Collection
There are two forms of research data: primary and secondary data derived from primary secondary sources.
Primary data are data obtained specifically for research purposes. The study’s data sources include the administration of a questionnaire given to a person about a research topic, interviews with people in related professions, personal observation of the same activities, and records kept by some small and medium-sized firms. This source of data is useful since it provides information as well as explanations for the answers to questions.
Secondary data are those gathered from relevant reviewed literature, which for the purposes of this search includes textbooks and periodicals on the management and finance of small and medium-sized firms, as well as other relevant publications.
Need help with a related project topic or New topic? Send Us Your Topic