IMPORTANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE NIGERIAN ECONOMY

IMPORTANCE OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE NIGERIAN ECONOMY

(A Case Study of Agatha Trading Company Nigeria)

ABSTRACT

The purpose of this research work is to expose the general public on how small and medium scale enterprises can provide employment and Transform the country’s economy. The sectors have the capability of providing employment to 70% of the country’s population. The work will show the practical aspect of employment creation through Agatha Trading Company (operations). The researcher work will also cover some organizations that promote SMEs in Nigeria. The researchers equally try to look at the importance of small and medium scale enterprise in the country’s economy.  One of the bases of this research work is for public to understand the importance of SMEs as a vehicle of effective growth and development in the country as it reduces unemployment. In order to check the validity of the subject matter; data were gathered using both primary and secondary data collection method. A well-constructed questionnaire as dispatch out to respondents (i.e. staff of Agatha Trading Company Nigeria) which were collected within four days of dispatch. The data collected was tested using chi-square test statistics and at the end it was discovered that Small and Medium Scale enterprise will provide adequate goods/services to ultimate users at the right time, right place, and in the right quantity. It will also encourage people to be independent on government and will increase employment which in turn increase the Gross domestic percentage (G.DSP) per capital income of the country and good standard of living.

 

CHAPTER ONE

1.1   BACKGROUND OF THE STUDY

One of the policy instruments which the Federal Government OF Nigeria adopted to speed up industrialization in the country is the promotion of small and medium scale enterprises (SMES). Their activities were encouraged, and the incentive given to them to boost the operation. Incentives, such as tax relief, import duty, restates on essential raw materials, loans and credit facilities through organizations like the small scale industrial credit scheme development, development of industrial centers to assist young entrepreneurs to perfect their skills and so on.      

These efforts were complemented by numerous financial institution set up solely to provide funds towards the industrial sector of the economy such as the Nigeria Industrial Development Bank (NIDB), Nigeria Bank of Commerce and Industry (NBC), Nigerian National Economic Reconstruction Funds(NNERFUN) and the like, all providing funds for operations or importations of vital raw materials. Father measures were taken by the Government towards the development of indigenous enterprises through the Nigeria Enterprises Promotion Decree of 1976 and 1977 with subsequent adjustment, which reserved certain enterprises mainly for indigenous entrepreneurs, while allowing foreign participation in others. This was further expanded through revitalization and commercialization were slated to be privatized in their operations, commercialized so that they could complete effectively with other private sector organizations offering similar services or products.

Recently, the federal government has established the Bank of Industries (BOI), to support small and medium scale enterprises despite all the initiative from the Federal Government that are operated, through banks and other financial houses, the small and medium scale enterprises, sub sector is still faced with a lot of problems that prevent them from the available funds and the delivery of such funds.
in view of the above, this research is therefore carried out to lay down the importance of small and medium scale enterprises to the Nigerian economy and the measure to be put in place to enhance their performance  so as to make way for effective performance of present and the future small and medium enterprises in the economy.

1.2   STATEMENT OF THE PROBLEMS

Commercial banks are generally week in granting loans to small and medium scale enterprises.

There is also poor administration of government in assisting programmes for small and medium enterprise development. Instead they are looking down upon and regarded as “No future ambitioned people” poor communication networking and lack of information made available either from experience or from other people also constitute the problem of development some government policies are also not to be overlooked as a potential small an medium scale problem. These policies tends to discourage any initiative put forward by a small and medium scale enterprise in their operation for instance a business man who is starting fashion designing business would be challenged with the government policy of loan on the importation of textile materials.

1. OBJECTIVE OF THIS STUDY

Objective of this study is to search for better ways to solve the above mentioned problems and proffer solutions to this. The discussion on small and medium scale enterprises (SMEs) is very wide and could be endless. Nevertheless for the purpose of this research the scope of discussion shall cover the following areas:

1. To find out the importance of the small and medium scale enterprises to the Nigeria economy.
2. To find out the role of the small and medium scale enterprises on economical Nigeria development.
3. To determine the problems encountered by the small and medium scale enterprises.
4. To identify those strategies that will enhance the success establishment and operation of small and medium scale enterprises.

1.4   SIGNIFICANCE OF THE STUDY

This project work is significance due to some numbers of reasons:   

1. The study will provide a yard stick with which to develop appropriate measures against the problem or factors that prevent the full utilization of enterprises. (small and medium scale enterprises).
2. It is the researcher’s belief that study will be of immense assistance to investors and entrepreneurs alike.
3. It will also enlighten the general public and prospective investors on the potentials of small and medium scale enterprises (SMES).
4. This will therefore, guide them on the type of viable enterprises to venture into.

1.5   RESEARCH QUESTION

To make this research work more explicit or clear, the following questions would be considered by the researcher:

1. Are individual advised to engage in small and medium scale enterprise?
2. How has small and medium scale enterprises impacted on the current economic development of Nigeria.
3. Does the government of Nigeria encourage small and medium scale business?
4. What do you think are the major financial sources of small and medium enterprises (SMEs)?
5. What is the motivational tool or force for small and medium scale enterprises?
   1. RESEARCH HYPOTHESIS

Hypothesis is a tentative statement of plausible assumption, the validity of which is yet to be known. Here statement of reasonable assumption is made and later subjected to test.

The study shall test the following hypothesis:

H_o:   Effective distribution system does not significantly increase organization sales volume.

H_i:    Effective distribution system significantly increases organization sales volume.

1. SCOPE OF THE STUDY

The research work shall cover the vital issues of small and medium scale enterprises through SMEs among others by limiting the scope of the study, to its relevance in the country economy, the benefit and what is stand to achieve as well as taking AGATHA as a major contributing stakeholders.

1.8   LIMITATION OF THE STUDY

The study is constrained by human factors which on the possible failure of individuals nor likely to tell the exact truth of what are available. Similarly, time has the tendency to hinder on intensive research work. But not withstanding the above effort has been made to overcome incidents obsolete as much as necessary, finally insufficient fund was constant because of vital information have to be sourced from the internet.

1.9   DEFINITION OF RELEVANT TERMS

a.     Management: Management is the continuous systematic process of planning, organizing or directing staffing and controlling resources of the organization (man, money and materials) so that, the individuals, the organization and the society can achieve certain objectives.

b.     Mental ability: This consists of creative thinking ability, analytical ability and general intelligence.

c.      Strategy: Is the determination of the long terms goal and objective of an enterprise and the adoption of courses necessary to carry out the goals.

d.     Self confidence: Base on a very adequate self confidence that an enhance problem solving or the ability to handle difficult situation.

e.     Technical knowledge: To know how related to the business that is ability to use tools, procedures and techniques necessary to ensure judicious utilization of resources.