Download the complete project material on Problems And Prospect Of Small And Medium Scale Enterprises In Nigeria Economy
CHAPTER ONE
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INTRODUCTION
1.1 Background of the Study
Small and medium scale enterprises (SMEs) are generally regarded as the engine of economic growth and equitable development in developing economies. They are labour intensive, capital saving and capable of helping create most of the one billion new jobs the world will need by the end of the century. They are also perceived as the key to Nigeria’s economic growth, poverty alleviation and employment generation.
But their unimpressive performance in employment generation in recent years has generated a lot of research interests on their challenges and prospects. After Nigeria’s independence in 1960, much emphasis has been laid on the growth of small and medium scale industries as a means of reducing the incidence of poverty and unemployment in the country.
Since the adoption of the economic reform programme in 1986, there has been a decisive shift from grandiose, capital intensive and large scale industrial projects based on import substitution to small scale industries with immense potentials for developing domestic linkages for sustainable industrial development. Apart from SMEs potential for self-reliant industrialization using local raw materials, they are in a better position to boost employment, guarantee even distribution of industrial development and facilitate the growth of non-oil exports.
Fissaeha, states that SMEs employ 22% of the adult population in developing countries while Fabayo, observed that small firms are major source of employment opportunities for a wide cross-section of the workforce: the young, old part-time workers and the cyclically unemployed. Kombo, etal, submitted that “SMEs have contributed greatly to the growth of Kenyan economy, accounting for 12-14% of GDP, through creating employment opportunities, training entrepreneurs, generating income and providing a source of livelihood for the majority of low income households in the country.
Hence, promotion of such enterprises in developing economies like Nigeria will bring about great distribution of income and wealth, economic self-dependence, entrepreneurial development and a host of other positive economic uplifting factors. SMEs are veritable engines for attainment of national objective in terms of employment generation at low investment cost, development of entrepreneurial capabilities and indigenous technology. They reduce the flow of people from rural to urban areas and can easily be established with minimal skill.
They also contribute substantially to the country’s gross domestic product, export earnings and development of employment opportunities. Most SMEs in Kaduna city operate as family/sole proprietorship business and are generally classified into commercial, industrial and agricultural categories depending on their activities though commercial SMEs constitute more than 90% of the entire number.
There are 1,200 registered SMEs in Kaduna city offering various products/services to the general public. Because, SMEs can be established with minimal capital/registration/managerial skill, there are in the most vantage position for employment generation and promotion of entrepreneurial capacity at the local level.
Despite the presence of many SMEs in Kaduna city, the high rate of unemployment (28%) in a population of 157, 791,115 persons suggests that these SMEs are experiencing some major challenges that are hindering their performance. It is against this background that it becomes pertinent to discuss the issues, challenges and prospects of small and medium scale enterprises (SMEs) in Kaduna.
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1.2. Statement of the Problem
Small and medium scale enterprise (SME’s) have played and will continue to play a remarkable role in the growth, development and industrialization of many economies in the world. In the case of Nigeria, SME’s has performed below expectations due to a combination of factors which ranges from the attitude and habits of SME’s themselves through economic related factors, inconsistency in the policy of government, and somersaults (Adetola, 2016).
It is also important to note that SMEs in Kaduna are not immune from the afore mentioned challenges in their day to day operations hence it becomes necessary to embark on a study that investigates the issues, challenges and prospects of small and medium scale enterprises in Kaduna.
1.3. Research Objectives
The research objectives are as follows:
1. To determine whether poor financing constitute a major challenge in the performance of SMEs in Kaduna.
2. To ascertain whether inadequate social infrastructures constitute a major challenge in the performance of SMEs in Kaduna.
3. To determine whether lack of managerial skills constitute a major challenge in the performance of SMEs in Kaduna.
4. To ascertain whether multiple taxation constitute a major challenge in the performance of SMEs in Kaduna.
1.4. Research Questions
From the above research objectives, the following research questions were formulated:
1. Does poor financing constitute a major challenge in the performance of SMEs in Kaduna?
2. Do inadequate social infrastructures constitute a major challenge in the performance of SMEs in Kaduna?
3. Does lack of managerial skills constitute a major challenge in the performance of SMEs in Kaduna?
4. Does multiple taxation constitute a major challenge in the performance of SMEs in Kaduna?
1.5. Research Hypotheses
In view of the above research questions, the following null hypotheses were formulated:
1. HO1: Poor financing does not constitute a major challenge in the performance of SMEs in Kaduna.
2. HO2: Inadequate social infrastructures do not constitute a major challenge in the performance of SMEs in Kaduna.
3. HO1: Lack of managerial skills does not constitute a major challenge in the performance of SMEs in Kaduna.
4. HO2: Multiple taxation does not constitute a major challenge in the performance of SMEs in Kaduna.
1.6 Significance of the Study
This study when completed will be a valuable help to various stakeholders for implementations with the concerned efforts of all and sundry including: government sat all levels, SME promoters etc.
Policymakers: It guides them in making policies and regulations that will create enabling environment for small and medium scale enterprises.
SMEs:This study will enable them to identify the problems confronting the development of small and medium scale enterprises.
Investors/Entrepreneurs: It will enable them to know what they expected of government in the promotion of small and medium scale enterprises. It will also enable them to know the cost involvement in establishing the small and medium scale enterprises.
Companies: They will also benefit from this study, since they are interested in the overall success, operational and financial efficiency evaluation of the firm.
Student/Researchers: This study will also be a benefit to them, since they are curious in studying or knowing more about the topic and in their research work.
1.7 Scope of the Study
Because the researcher could not be able to cover the whole of Nigerian small and medium scale enterprises (SMEs). The researcher narrowed it down to the number of registered small and medium scale enterprises in Kaduna metropolis where the sample size was determined. This study covered the problems and prospects of some selected small and medium scale enterprises (SMEs) in Nigeria.
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