SMALL SCALE ENTERPRISES AND SOCIO-ECONOMIC DEVELOPMENT IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Small scale enterprises constitute the fabric of national economy (Onuaha, 1998: 1). The Nigerian economy has been in a process of almost transition both economically as regards the economy. Obi (1998:4) start from primitive to modern and form a mixed economy to a market driven one. In all these stages, he noted Small Scale businesses and entrepreneurs are known to have taken active part while government plays the actual regulatory and facilitating rules.

Many studies have indicated that the expansion of the small scale sector has significant contribution to employment generation rural industrialization optimal, are of human and material resources and has considerable multiplier effect on the economy through backward and forward linkages (Attah and Chuta 1984).

The issue of promoting entrepreneurship and small scale business in our national development has been ongoing.

The idea in all ramifications has occupied our government, planners and administrator in different spheres, past and present government since 1999 have embarked on policies that would ensure a stable Nigeria and her national economy. in the same vein, Okonkwo (1986), a former minister of budget and planning opined that he would like to see thousand of small scale industries and business throughout the country employing five, ten, twenty, workmen. Some measures taken by the government included, Apex Loan Scheme (ALS), structural Adjustment Programme (SAP), National Directorate for employment (NDE) etc. In a forward to the national policy on micro, small and medium enterprises, the Directorate General Mrs. Modupe Adelege had this to stay:

The importance of micro, small and medium enterprises (MSMES) in employment generation, Economic empowerment, poverty alleviation and even distribution of development had long been recognized. The major challenge has been how to make this happen in the framework of robust policy platform. (Ekpenyong, 1988).

This goes on to show the importance that past and present government have shown in developing the factor. All over the world, Small scale enterprises and their operators play crucial roles in the development process and constitute the fabric of national economics. They are keys to the creation of indigenous products, machine, technology and entrepreneurial capacity at every stage of economic advancement, from feudal system to the market led economy, small scale enterprises are known to have taken a centre stage in employment creation and development with government playing the role of a facilitator and regulator in terms of number and geographical spread, small scale businesses units have proved to be effective and vital engine for providing vertical and horizontal linkages in productive activities and in propelling forces of economic growth and development.

According to Osaze (2005) small scale business in Nigeria formed and important sector for employment. It is known to employ over 45% of the labour force in Nigeria.

Small firm offers productive outlets for enterprising and interdependent minded people. This according to him, will continue to increase with advancement in technology and the desire of many young people venture into their own edeavours.

Obanla (1987), the Federal Government of Nigeria in realization of the tremendous contribution of small scale business has encouraged the establishment and operation of such businesses by direct financial assistance through the National Directorate of Employment (NDE) government regulation on industry, its fiscal policy and funding of Development Banks (NIDB) and the Nigerian Bank for Commerce and Industry (NBCI) and others.

The evolution of SMEs and entrepreneurship dated back to many centuries ago, starting with the early period to middle ages, 17th, 18th, 19th and 20th centuries, a long the time, business was perceived negatively starting with the disparaging remarks about business which Napoleon castigated England as a nation of shopkeepers .

Even in the past century business was often regarded as elite inglorious occupation (Koontz et al 1980:30-32).

1.2 STATEMENT OF THE PROBLEM

Political economists have preoccupied themselves with political economy and the non-managerial aspect of business thus, early political theorists have been slow in turning their attention to the problem of administration despite the fact that no organisation (including business organisation) can function effectively or efficiently without good administration.

Early theorists did not see the need to compartmentalize the business discipline within the broad field of social sciences for many years, there was a wide spread belief among managers and administrators in the private and public sectors and other organizations, that management or the study of business is not susceptible to theory that management is totally an art and not to any extent a science.

Small scale businesses have serious problems and prospects faced worldwide, similar problems and prospect are faced by people (businessmen) in Uyo metropolis and these problems are still enormous.

However, lack of management skill in area of finance is a serious intractable setback to small scale business, proprietors of most small-scale in Uyo at large are simply unaware of what is happening to their resources, usually as a result of poor bookkeeping or sketch accounting system.

As Olasore, (1987) put it “accounting is the set of rules and methods by financial and economic data are collected, processed and summarized into report that can be used in making decisions. Weak accounting system is identified as one of the basic problems of small scale business. This problem usually result in inability for a firm to produce accurate figures to project the true position of the business.

Production problem frustrate the effectiveness of small scale business which effective planning by managers should enable the firm to build a five year reputation for excellence which can enable a firm to create a demand for its products. Small business fail because of inadequacy in marketing strategies, owners lack these strategies because they cannot select the appropriate blend of marketing and cannot also identify the target market and specific groups of customers. New technological developments affect the efficiency with which products can be manufactured and sold. Some of the socio-cultural factors like, attitude, values and customs affect small scale business in Uyo metropolis.

However, in most third world nations, including Nigeria, SMEs failure rate remains very high. This research projects is an attempt to focus on small scale enterprises and socio-economic development in Nigeria.

1.3 OBJECTIVES OF THE STUDY

Lack of management skill in the areas of finance affects the effectiveness of small scale enterprise.
Lack of planning affects the efficiency of small scale enterprise.
Lack of marketing strategies affects small scale enterprises.
Socio-cultural inadequacies affects the success of small scale enterprises.

1.4 RESEARCH QUESTIONS

(i) Does lack of management skills in the area of finance affect the effectiveness of small scale enterprises?

(ii) To what extent does lack of planning affect the efficiency of small scale enterprises?

What are the marketing strategies which could be employed to aid small scale business?
What are the inadequacies of socio-cultural elements that thwart the success of small scale enterprise?

1.5 RESEARCH PROPOSITIONS

Lack of management skills in the area of finance affects the effectiveness of Small Scale enterprises.
Lack of planning affects the efficiency of Small Scale enterprises.
Lack of marketing strategy affect small scale enterprises.
Socio-cultural inadequacies on the success of small scale enterprises.

1.6 SIGNIFICANCE OF THE STUDY

Inspite of the obvious importance of effective and good management in all business activities, many small businesses still suffer from poor management methods and techniques.

This research is an attempt to unveil the entrepreneurial failure and tackle it squarely so as to recommend to the leaders and operators of the economy what they should do to sustained the dream of 2020 economic tiger.

The study will also reveal the economic set back of SMEs in Uyo metropolis and the desirability and methods of installing an efficient management system and approaches.

In an economy situation like ours where unemployment too is rife, this study will make valuable contributions, suggestions and findings that will be of encouragement to intending investors, small business managers owners and indigenous industrialist, exposing them to the economic and socio-cultural realities of the society.

Further, it will be of great relevance to the government economic planners during allocation and distribution of resources, students and enterprises who want to conduct further research in the area of small business enterprises.

1.7 SCOPE AND LIMITATIONS OF THE STUDY

The study was conducted strictly to evaluate small scale enterprises and socio-economic development in Nigeria. The scope is Uyo Local Government Area. The researcher encountered some difficulties in the course of this study. This manifested in the form of dearth of literature on the subject matter of the research as well as lack of time and finance.

1.8 DEFINITION OF TERMS

(i) Small Business is defined as a business which is independently owned and operated.

(ii) Small scale enterprises: These are normally privately owned corporations, partnership or sold proprietorship. What small scale enterprises are usually not dominant in their field of operation.

(iii) Development: Is a process by which a high degree of self reliant economic growth in a society sustained over a long time, is associated with substantial reduction in poverty, unemployment, inequality and external dependence.

(iv) Entrepreneurship: This is the development of a business from the ground up, coming up with an idea and turning it into a profitable business.