EFFECTS OF SMALL AND MEDIUM SCALE BUSINESS ON ECONOMIC DEVELOPMENT
The purpose of this research work is to critically assess the extent of which small and medium scale business is used as an instrument for economic development of small and medium scale business were thoroughly in the study of dissertation. The research applied the use of survey methods in carrying out the research design and simple percentage was used to analyze data collect. The preceding analysis has revealed that small scale business has a vital role in the development of Nigeria economic and through their wide dispersal. They should provide an effective means of mitigating rural urban migration and resources utilization. And this also will contribute in strengthening industrial linkages by producing intermediate products for use in large enterprise in Nigeria.
1.1 Background of the Study
Entrepreneurship is one of the economic variables that attract the attention of governments and researchers both in the developed and developing countries in the last two decades. Several efforts and initiatives are being made by governments and Non-Governmental Organizations (NGOs) to promote entrepreneurship through Small and Medium Scale Business (SMSB) which contribute greatly to the overall economic growth and development of Nigeria.
For the past decades, Small and Medium Scale Business enterprises in Nigeria were characterized as essentially backward and component in the wheel of the overall development of the Nigeria economy. As a result of this, there has been a prevalent feeling that such businesses could be assisted only for social reasons, not as a promising opportunity for national development. Obviously, too little attention has been paid to the benefits to be derived from helping Small and Medium Scale Business to modernize and grow. This attitude arose partly amongst both the citizens and government and mainly from the very nature of the small business which made it difficult for its impact to be felt in the economy.
Baig (2007) opine that the private sector through small and medium scale business can contribute to economic growth, job creation, and national income and hence to national prosperity and competitiveness. According to her, the private sector contributes substantially to the Gross Domestic Product (GDP), and thus unleashing domestic resources (financial and entrepreneurial) is likely to create a more stable and sustainable pattern of growth. However, the major component of private sector, Small and Medium Enterprises (SMEs) is generally considered as the engines of economic growth, cornerstones for creativity and innovation, and seedbeds of entrepreneurship (Baig, 2007; Charles, 2011).
SMEs according to the World Bank refer to those businesses with maximum of 300 employees and annual revenue of $15 (Dalberg, 2009). Central Bank of Nigeria (CBN) sees SMEs as those businesses with less than 50 employees (medium scale businesses less than 100). Essentially, SMEs are business entities that are independently owned and operated, and meets employment or sales standard, whose investment in machinery and equipment does not exceed six hundred thousand naira.
Accordingly, due to the recognition of the roles of small business, the Nigerian government has since 1970 initiated programmes for the assistance of small businesses, especially, in the areas of finance, extension and advisory services including, training and provision of infrastructures. All these are designed to enhance the development of small businesses. Successive governments in Nigeria have for the past three decades shown great interest in the financing of small businesses by establishing specialized banks and other credit agencies/schemes to provide customized funding.
In spite of all the contributions and the attention given to it by the government, the small business enterprise is still confronted with problems peculiar to what many may refer to as the ‘Nigerian factor’. One of such problems is the lack of funds, “It takes money to do business”.
1.2 Statement of the Problem
Nigeria is currently witnessing an alarming rate of unemployment which is growing in geometric progression. The economy is also increasingly finding it difficult to cope as Nigerian economy is declining. A lot of experts have called for the creation of an enabling environment for small and medium scale business to thrive. They cited Asian “Tigers” such as Malaysia, China, Sought Korea, Indonesia, Singapore and Thailand where both the government and individuals knowing the importance of small scale industrial development join forces together in fostering effective and sustainable small scale enterprises in their countries. Evidence also abound that in the above mentioned places, a lot is being done to empower the growth of this sub sector of the economy. The role of small scale industries in the development of indigenous technology cannot therefore be over emphasized, hence this research is set out to analyse the effect of small and medium scale business on economic development of Abuja and Nigeria at large.
1.3 Objective of the Study
This study seeks to identify the effect of the small and medium scale business on the economic development of Abuja with a particular interest in Mr. Biggs Restaurant. To achieve the above mentioned aim the following specific objectives shall be pursued:
- To examine the roles of small and medium scale business in the economic development of FCT Abuja.
- To identify the problems / challenges faced by small and medium scale business in Abuja and Nigeria at large.
- To proffer solution / recommendation to the identified problems
1.4 Significance of the Study
The study is thus important because of its potentiality in the development of the small and medium business which has been characterized as the “main carrier of development and the engine of social and economic growth” in Nigeria. The study will also help in identifying why people don’t go into small and medium scale enterprise despite its numerous advantages. It will also find problems encountered while running the business.
The study will help government identify areas requiring attention, thus stimulating government into proper directing of loans and incentives to improve upon existing ventures. It will also provide useful guide for prospective entrepreneur that wish to choose self-employment as a career. And finally, it will serve as secondary data for subsequent studies by a prospective researcher.
1.5 Research Questions
- What are the roles of small and medium scale business in the economic development of Abuja the Federal Capital Territory?
- What are the sources of fund available for small and medium scale business?
- Does government policy affect the establishment and management of small and medium scale business in Abuja?
- What are the challenges faced by Small and medium scale business in Abuja?
1.6 Research Hypothesis
The following hypotheses are formulated to test the effect of small and medium scale business on economic development of FCT Abuja.
H0: Small and medium scale business has no effect on the economic development of FCT Abuja.
Hi: Small and medium scale business has positive effects on the economic development of FCT Abuja.
1.7 Scope of the Study
The scope of this research is limited to the effects of small and medium scale business on economic development of FCT Abuja with particular interest in Mr. Biggs Restaurants. The collection of data and its analysis shall be based on information gotten from Mr. Biggs Abuja alone as this topic has wide scope of to be covered.
1.8 Limitation of the Study
Certain Limitations were encountered in the course of this study. Key among these includes:
- Unavailability of Data: One of the greatest challenges the researcher encountered in this study relates to access to and collection of data due to extreme data gaps and scarcity. This compelled the researcher to limit the study to Small and Medium Scale Business thus excluding Cottage and Micro Enterprises whose challenges though comparable, could be fundamentally different from those of SMEs.
- Time and Funds: Another limitation of this study relates to time, funds and logistics constraints, which limited the intensity of the spread or area of coverage of the study. Even though SMEs are spread throughout the length and breadth of Nigeria with negligible concentrations in some States and less urban areas, this study focused largely on small and medium scale business in Abuja the Federal Capital Territory.
- Resistance of Respondents: The researcher was also limited by the reluctance of some respondents to complete the questionnaires promptly and those who even failed to complete them at all. This thus limited the number of respondents involved in the study despite the researcher’s efforts and approaches to them explaining the potential benefits of the study to them.
1.9 Definition of Relevant Terms
- Small Scale business: – Small scale business is any processing, serving or manufacturing industry with an investment in machinery and equipment below N500,000 (Waboi, 2012).
- Management: – According to Akpala (2000) Management is the process of combing and utilizing an organization input (men, materials and money) by planning, organizing, directing and controlling for the purpose of producing output (goods and services).
- Entrepreneur: – According to Hagen, an entrepreneur is an individual who conceives the idea of business, design the organization of the firm, accumulates capital, recruits labour, establishes relations with supplies, customers and the government and converts the conception into a functioning organization business.
- Opportunity: An opportunity is a potential gainful situation that must be recognized and exploited; an opportunity has the qualities of being attractive, durable and timely. It is anchored in product or services which creates or adds value for its buyers or end users.
- Development: This entails growth of the business, increases in goods and services and the improvement of lives of the citizen.
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