PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM ENTERPRISES IN NIGERIA.
A CASE STUDY OF ENUGU EAST SENATORIAL ZONE.
TABLE OF CONTENTS
Approval Page i
Dedication ii
Acknowledgement iii
Abstract
Table of Contents
CHAPTER ONE
1.1 Background of Study 1
1.2 Statement of the problem 4
1.3 Objective of the Study 6
1.4 Hypothesis 6
CHAPTER TWO
2.0 Literature Review 7
2.1 Conceptual Framework 7
2.2 Theoretical Literature 11
2.2.1 Types of Small and Medium Enterprise 15
2.2.2 Roles of Small and Medium Enterprise in Enugu State
Metropolis in Job Creation and Poverty Eradication 16
2.2.3 Importance of Small and Medium Enterprise in Nigeria 18
2.2.4 Problems of Small and Medium Enterprise Enugu East 22
2.2.5 Prospect of Small and Medium Enterprise Enugu East
Senatorial Zone 23
2.2.6 Challenges in Facing Small and Medium Enterprise in
Enugu East Senatorial Zone 25
2.2.7 Small and Medium Enterprise Credit Scheme: Case Study
Of Enugu East Senatorial Zone 26
2.3 Empirical Framework 30
2.3.1 Ways of Encouraging Small and Medium Enterprise to
Enhance National Development in Enugu East Senatorial
Zone 35
2.3.2 Government Refund on Small and Medium Scale and
Means of Administration 37
2.3.3 Limitation of the Study 38
CHAPTER THREE
Research Methodology 40
3.1 Research Design 40
3.2 Area of Study 40
3.3 Source of Data 40
3.4 Sample Size Determination and Sampling Techniques 41
3.5 Instrument 41
3.6 Data Collection Procedure 42
3.7 Method of Data Analysis 42
CHAPTER FOUR
Data Presentation of Analysis 44
4.1 Analysis and Interpretation of Data 44
4.2 Test Hypothesis 59
CHAPTER FIVE
Summary, Recommendation and Conclusion 63
5.1 Summary of Findings 63
5.2 Conclusion 64
5.3 Recommendation 64
Bibliography 66
Questionnaire 67
LIST OF TABLES
Table 4.1 Administration of Questionnaire 44
Table 4.2 Distribution of Respondents 45
Table 4.3 Age Distribution of Respondents 45
Table 4.4 Marital Distribution of Respondents 46
Table 4.5 Educational Qualification of Respondents 46
Table 4.6 Number of Years in the Business 47
Table 4.7 What Extent Does Enugu East Senatorial Zone
Affect the Operation of Small and Medium Enterprise 48
Table 4.8 Factor Responsible or phenomenal growth of
Small and Medium Enterprise 49
Table 4.9 Responses of Consumers Feelings 50
Table 4.10 Nature of Competition 51
Table 4.11 Problems of Setting up Small and Medium Enterprise 52
Table 4.12 Problems of Managing Small and Medium Enterprise 54
Table 4.13 Future prospects of Small and Medium Enterprise 56
Table 4.14 Distribution of Daily Turnover 57
CHAPTER ONE
1.1 BACKGROUND
In recent years, particularly since the adoption of the economic reform programme in Nigeria in 1986, there has been a decisive switch of emphasis from the grandiose, capital intensive, large scale industrial project based on the philosphy of import substitution to small scale industries with immense potentials for developing domestic linkages for rapid, sustainable industrial development. Apart from their potential for ensuring a self reliant industrialization, in terms of ability to rely largely on local raw materials, small scale enterprises are also in a better position to boost employ raw materials, small and medium enterprise, are also in a better position to boost employment, guarantee a more even distribution of industrial development in the country, including the rural areas, and facilitate the growth of non-oil exports.
In Nigeria, the definition of small and medium enterprises also varies from time to time and according to institutions, for instance, the Central Bank of Nigeria’s (CBN) monetary policy circular No:27 of 1988 define small scale enterprises (excluding general commerce) as enterprises in which total investment (including land and working capital) did not exceed #500,000 and or the annual turn-over did not exceed #5.0 million.
Medium enterprise (excluding general commerce) as enterprises in which total investment and not exceed #1,000,0000 (1 million) and the annual turnover did not exceed #1.2 million. Small scale enterprises is one of the modern strategies underdevelop countries are employing to break into the “league” of developed countries. Fasua (2006:85) categorized business that fall under small scale as follows firewood supply, plantain production, restaurant services, small scale poultry raising, operating a nursery for children, home laundry services and host of others. Business grouped under medium scale according to fasusa are ; soap production, hair/body cream production, chemical production, commercial poultry, profession appractes (law, accountancy, education) food and beverage production among others.
Consequently, both the federal and state governments and recently, local governments, have stepped up efforts to promote the development of small scale enterprises through increased incentive scheme, including enhanced budgetary allocations for technical, assistance programmes. New lending schemes and credits institutions for technical assistance programme New lending schemes and credit institutions such as the National Economic Reconstruction found (NERFOUND), World Bank-assisted small-scale enterprises loan scheme (SMES), Nigeria Export and Import Bank (NEXIM), the people’s Bank of Nigeria (PBN) and the Community Bank have also emerged at both the national and local levels to boost the flow of development finance of small scale enterprises which have so far depended largely on personal funds and credit. From informal sources for both their investments and working capital.
Unfortunately, all these formal credit scheme have not been able to adequately redress the fundamental problems which have constrained small scale enterprises access to credit. The low credit rating of this class of enterprises, is attributable largely to their weak capital, base, high mortality rate, low productivity and shortage of managerial skills. Indeed, the problem of weak capital base, high mortality rate, low productivity and shortage of managerial skills. Indeed, the problems, of weak capital base, and poor access to finance appear to have developed into some vicious circle, leading to slow growth, stagnation and even rapid demise of the small scale enterprises. The impact of all existing credit scheme interms of providing funds for meaningful and sustained development among the small scale enterprise, had medium enterprise to serve the expected role of catalyst for rapid industrial development, there is need for a more innovative strategy for improved access to development finance for the small and medium enterprise that would address their inability to provide collateral securities for loans formal credit institutions.
1.2 Statement of the problem
Small and medium enterprise are mostly in managed by owners and relations. The financing in most cases in normally provided by the owners. The owners fail to realize the importance of external source of capital in order affect expansion in the business. In most cases, the by the owner, members of the family and friends in most cases.
In another development, small and medium enterprise experiences difficulties in raising equity capital from the finance houses or individuals. Even when the finance house agrees to provide equity capital, the conditions are always dreadful. All the result to inadequate capital available to the sector and thus lead to poor financing. This is the bane of most cottage industries in Nigeria. About 80% of small and medium enterprises are stifled because of this problem of poor financing and other problems associated with it (Chukwuemeka, 2006). The problems that emanated from poor financing include:
a) Lack of competent management which is the consequence of inability of owners to employ the services of experts.
b) Use of obsolete equipment and methods of production because of owner’s inability to access new technology.
c) Excessive competition which resulted from sales which is a consequence of poor finance to cope with increased competition in the industry.
Inspite of the different measures since 1960 to increase industrialization, small medium enterprises are still facing hard conditions. This is as a result of some constraining factors.
1) The high cost of available raw materials affects the prices of good food. This only has adverse affect on the turnover of the enterprise but also on the profitability.
2) To what extent has the finance house strict conditions affected the development of small scale.
3) Does poor financing actually affect small and medium business operation.
1.3 Objectives of the study
The specific objectives of the study are:-
1) To determine factors influencing small and medium enterprise in Nigeria
2) To determine the extent finance house strict conditions have affected the development of small and medium enterprise in Nigeria
3) To assess the extent poor financing has affected small and medium business operation in Nigeria.
1.4 Hypothesis
The following hypothesis are formulated to provide the lead for this study:
H1: The phenomenal growth in the number of small and medium enterprise is not due to guest for self employment.
H2: The profitability of the business has not encouraged people
involved in the business.
Do you need help? Talk to us right now: (+234) 08060082010, 08107932631 (Call/WhatsApp). Email: [email protected].IF YOU CAN'T FIND YOUR TOPIC, CLICK HERE TO HIRE A WRITER»
