Small and Medium Scale Business/Enterprises (SMEs)

The term SME has a wide range of definitions varying from country to country and between the various reporting small and medium enterprises statistics. Some common criteria used to define SMEs are net assets, number of employee and level of sale and investment (WTO, 2013),

According to Gibson and Vaart (2008) different multinational organisation define SMEs as follows; World Bank defined SMEs as a firm with 300 employees or maximum revenue of 15 million dollars, Multilateral Investment Fund and Inter- America Development Bank (MIF-IADB) defines as a firm with 100 workers or maximum revenue of 3 million dollars. The UNDP defined SMEs as a firm with a maximum of 200 employees while Africa Development Bank uses a threshold of 50 employees and Norway the threshold for SMEs is 100 employees.

 

SMIEIS (2006) claimed that small and medium scale enterprises are those enterprises that have a total capital employed not below one million five hundred thousand but not exceeding two hundred million including working capital but excluding cost of land, with an employee strength of not below ten and not above three hundred. SMEDAN (2005) defines small and medium scale enterprises based on the following criteria: small scale enterprises are businesses with ten to forty-nine people with an annual turnover of five to forty-nine million Naira while a medium scale enterprises that have fifty to one hundred and ninety-nine employees with a year turnover of fifty to four hundred and ninety-nine million Naira.

 

In Nigeria, small and medium scale enterprises cover economic activities within all sectors. It is clear from the various definitions, showing that there is no single concept that constitutes small and medium scale enterprises; the definitions vary across industries and the globe. Small and medium scale enterprises are heterogeneous group, and small and medium scale enterprises owners may or may not be poor. Some are dynamic, growth-oriented, and innovative while others are not; there preferred to remain small and also to continue as usual.

In some countries, small and medium scale enterprises owner and workers are (or are perceived to be) dominated by a member of particular ethnic groups (Hallberg, 2000).Generally, a small business is one that is independently owned and operated and not dominant in its field of operation. Criteria such as sales volume and the number of employees in the firm are also used in assessing the size of businesses.