Challenges In Funding Small-Scale Trading Businesses (A Case Study Of Leather And Tarpaulin Enterprise)

Challenges In Funding Small-Scale Trading Businesses (A Case Study Of Leather And Tarpaulin Enterprise)
Abstract
This study is aimed at investigating the challenges in funding small-scale trading businesses, using leather and tarpaulin enterprise as a case study. The choice of this business enterprise is quite fundamental to this study because it is an example of a small-scale trading businesses enterprise. Relevant literature to this study has been reviewed so as to find out the opinions of other authors and scholars about the problems that are encountered in funding a small-scale business in Nigeria.
For a proper understanding of this research work, the researcher find out that is quite elementary to first of all give a detailed explanation of the meaning of a small-scale trading businesses enterprise, before taking a basic look at the problems and effects that are involved in funding a small-scale trading businesses in Nigeria. The project work is divided into five chapters, each chapter having its own role to play in actualizing the potentials of the study as regards deriving a full understanding of the research work. Chapter one generally covers the introduction to the project research work. Chapter two covers the literature review. Chapter three on its own handles the issue of research methodology. Chapter four covers such areas as data presentation and data analysis, while chapter five which is the last chapter covers summary, conclusion and recommendation.
Table of Content
- Title Page
- Certification
- Dedication
- Acknowledgement
- Table of Content
- List of Tables
- Abstract
Chapter One:
Introduction
- 1.1 Background of the Study
- 1.2 Statement of the Problem
- 1.3 Objective of the Study
- 1.4 Research Questions
- 1.5 Research Hypothesis
- 1.6 Significance of the Study
- 1.7 Scope of the Study
- 1.8 Limitation of the Study
- 1.9 Definition of Terms
- 1.10 Organisations of the Study
Chapter Two:
Review of Literature
- 2.1 Conceptual Framework
- 2.2 Theoretical Framework
- 2.3 Empirical Review
Chapter Three:
Research Methodology
- 3.1 Research Design
- 3.2 Population of the Study
- 3.3 Sample Size Determination
- 3.4 Sample Size Selection Technique and Procedure
- 3.5 Research Instrument and Administration
- 3.6 Method of Data Collection
- 3.7 Method of Data Analysis
- 3.8 Validity of the Study
- 3.9 Reliability of the Study
- 3.10 Ethical Consideration
Chapter Four:
Data Presentation and Analysis
- 4.1 Data Presentation
- 4.2 Analysis of Data
- 4.3 Answering Research Questions
- 4.4 Test of Hypotheses
Chapter Five:
Summary, Conclusion and Recommendation
- 5.1 Summary
- 5.2 Conclusion
- 5.3 Recommendation
- References
- APPENDIX
- QUESTIONNAIRE
Chapter One
Introduction
1.1 Background to the Study
The quality of life in our society depends to a large extent on the quality of decisions both financial and otherwise, taken by business firms operating within the economy.
In Nigeria at the present stage of development the role of small-scale trading businesses enterprise is of vital importance. Having attained political independence, Nigeria leaders become consciously aware that political independence without economic independence has no useful meaning as far as the people’s economy and self reliance were concerned. Consequently, they embark on policies and measures to ensure that indigenous business men take control and run a significant sector of the economy. Example of such government policies and efforts were the promulgation of the Nigeria enterprises promotion Decree in 1972, and the privatization and commercialization Decree of 1987. These policies officially uphold the indigenous enterprises (usually small and private) and transfer the control of the strategic important share of the nation’s economy to them.
The definition of small and medium enterprises (SMEs) varies from country to country, region to region and from agency to agency in today’s world. Small and medium scale enterprises (SMEs) are generally the engine of equitable development and economic growth in developing economies.
However, Eze T.C. (2012) revealed in his study of the problems and prospects of management of small- scale business in Nigeria that since 1960 till date, SMEs have been given due recognition in developed nations such as United State, China and Japan and others for playing a vital role towards fostering accelerated economic development and growth and stability within several economies. He also stated that SMEs make up the largest proportion of businesses all over the world and play tremendous role in the provision of goods and services, improving standard of living and contributing to countries Gross domestic products (GDPs). SMEs is regarded as the basis for economic well-being of many developed nations (Aiden J.W. 2013).
The growth in the small and medium scale sector of the economy in Nigeria is necessitated by the unemployment situation in the country coupled with government and private sector entrepreneurs’ initiatives to encourage the unemployed and under employed youths to ventured into small and medium scale businesses. Many Nigerians are now venturing into SMEs business ventures in the area of fashion design, health, consultancy, Information Technology, farming, cosmetology, catering and decoration, events planning, entertainment, hair stylist, laundry services, transport services and some other businesses which depend on local raw material and which are not too cost intensive.
The Nigeria government and several Non-governmental bodies in Nigeria has recently created different platforms to create awareness on the importance of SMEs and the need for Nigerians to be a creator of employment rather than being a job seeker. Aiden J.W. (2013) in his studies also attest to these by stating that the Nigeria government plays appreciative role in promoting the survival and growth of small- scale enterprise and also encourages people to establish their own business so as to reduce the problem of unemployment, increase exportation of goods and services and to also reduce the problems associated with importation of goods and services in the country.
In Nigeria, credit has been recognized as an essential tool for promoting small and medium scale enterprises (SMEs), about 70% of the Nigeria population are engaged in the informal sector or in agricultural production. The federal and state governments have recognized that for sustainable growth and development the financial employment of the rural areas is vital, being the repository of the predominantly poor in society and in particular the SMEs. More so, funding of small-scale trading businesseses if given adequate attention by the government and policy makers will enhanced and improve the growth of numerous small scale enterprises that are groaning under the effect of inadequate funding and recognition. There various source of finance available to Small and Medium scale enterprises in Nigeria, the sources of finance are divided into internal source and external source of funding, the SMEs can finance their business internally by using their own personal savings and by seeking assistance from family and friends. The eternal sources of funding which are grants from government, bank overdraft, bank loan, venture capital, business angels and trade credit. The SMEs can source for funds from commercial banks, International development agencies, microfinance banks and from the central bank of Nigeria. The biggest source of funds to SMEs across the globe is the commercial banks. Moreover, many commercial banks are reluctant in funding SMEs because of supposed risks and uncertainties in SMEs business (Gbandi E.C. & Amissah G. 2014).
1.2 Statement of the Problem
Small and medium scale enterprises (SMEs) have been considered to be the bulwark for technological advancement and employment generation in Nigeria, the sector on the other hand has had its own fair share of neglect with simultaneous revolting impacts on the economy. According to Basil A.N.O (2005) SMEs in Nigeria are faced with different problems some of which are; inadequate equity capital, poor management practices, high rate of enterprise mortality, low level of entrepreneurial skills, shortages of skilled manpower, lack of access to source of finance and inadequate personal savings attributable to level of poverty and low return on investment, poor infrastructural facilities and lack of access to information to mention but few.
Furthermore, the performance of small medium scale enterprises has a great influence on its access to finance. SMEs with increasing sales and sales turnover have less constraint on accessing funds while poor or non-performing SMEs have been found to have limited access to finance, particularly with formal source like banks (Zarook, Rahma & Khanam, 2013). It is also easy for registered small scale enterprises to get access to external source of funding than the unregistered small scale enterprises. Regardless of the studies conducted by past researchers, little or no effort was made to examine the contribution of bank loan and overdraft to ssmall-scale trading businesseses and whether the expansion of the ssmall-scale trading businesses can be hindered by finance, management skill, family problem, power supply, government regulation and non-availability of raw material. This however calls for further investigation of this phenomenon with a view to broadening knowledge in the area of small and medium scale funding. It is from this foregoing that this study examines the challenges in funding small-scale trading businesses (a Case Study Of Leather And Tarpaulin Enterprise).
1.3 Objective of the Study
This study intends to evaluate examines the challenges in funding small-scale trading businesses using Leather And Tarpaulin Enterprise as case study. Specifically, the study will determine:
- To investigate the issues in funding small-scale trading businesses in Nigeria.
- To explain the various source of funding ssmall-scale trading businesses.
- To observe the nature of ssmall-scale trading businesses in Nigeria
- To explain the process of setting up a ssmall-scale trading businesses
- To look into the problems of ssmall-scale trading businesses in Nigeria
- To explain the effect of ssmall-scale trading businesses in Nigeria
- To examine the role of government in a ssmall-scale trading businesses
- To examine the functions of a ssmall-scale trading businesses in Nigeria.
1.5 Research Question
In order to achieve meaningful result from this research, the following research questions have been formulated as a guide to the researcher and shall be examined. Some of the questions are:
- What are the major problems associated with funding ssmall-scale trading businesses in Nigeria?
- Does weak financial base limits the capacity of ssmall-scale trading businesseses to meet their goals?
- Does government give loans to ssmall-scale trading businesses investors at a subsidized rate?
- Are personal savings and loans from relatives enough to set up a ssmall-scale trading businesses?
- Are the problems associated with ssmall-scale trading businesses having a negative impact on the business?
- Has government been able to effectively and efficiently impacted ssmall-scale trading businesses in Nigeria?
- Are ssmall-scale trading businesseses being over taxed by the Nigerian government?
- Does Nigerian government encourages ssmall-scale trading businesses in Nigeria?
- Is the registration of businesses by Corporate Affairs Commission (CAC) an obstacle to ssmall-scale trading businesseses?
- Are there increased in the rate of company income tax paid ssmall-scale trading businesseses owners?
1.6 Research Hypothesis
Based on the study, the following research hypotheses formulated will be empirically tested and result gotten will serve as a spring board for recommendations. This hypothesis is as follows:
- Ho: there are no problems associated with funding small-scale trading businesses in Nigeria.
Hi: there are problems associated with funding small-scale trading businesses in Nigeria. - Ho: weak source of finance does not limit the capacity of small-scale trading businesses.
Hi: weak source of finance limits the capacity of small-scale trading businesses.
1.6 Significance of the Study
The implications of this study is that it will benefits the entrepreneurs, SMEs, business promoters, consultants, policy makers, researchers and academics.
This study is aimed at explaining the process of funding ssmall-scale trading businesses within the context of its problems and effects in Nigeria. The research generated by the postulation of the study can enrich the literature on ssmall-scale trading businesses in Nigeria.
This study shall be helpful to many Nigerians in reducing the problem of how to raise funds for setting up ssmall-scale trading businesses enterprises and providing a technique of decision making when setting up a ssmall-scale trading businesses.
This research study will also be useful to the government in knowing the problems involved in funding ssmall-scale trading businesseses and knowing how to provide remedies to such problems.
It could also serve as a useful insight to business consultants, accountants, government agencies and the general public especially those who are into ssmall-scale trading businesses.
1.7 Scope of the Study
It is the desire of the researcher to investigate into the challenges in funding small-scale trading businesse. This study will use the Leather And Tarpaulin Enterprise as case study.
1.8 Limitations of the Study
A lot of constraints were encountered in the course of carrying out this research work. The researcher lacked sufficient resources to face the challenges of this research work. It was not easy to source for the adequate material to be used to carry out this research. Ineed the researcher found it difficult to collect certain information from the management staff of the organization and it was quite uneasy to educate the respondents on the best ways of filling the questionnaire.
1.9 Definition of Terms
Economic Development:
Economic development is the process by which the economic well-being and quality of life of a nation, region, local community, or an individual are improved according to targeted goals and objectives.
Small and Medium Scale Enterprises:
Small and medium-sized enterprises (SMEs) are businesses whose personnel numbers fall below certain limits.
1.10 Organization of the Study
This research work is organized in five chapters, for easy understanding, as follows.
- Chapter one is concern with the introduction, which consist of the (overview, of the study), historical background, statement of problem, objectives of the study, research hypotheses, significance of the study, scope and limitation of the study, definition of terms and historical background of the study.
- Chapter two highlights the theoretical framework on which the study is based, thus the review of related literature.
- Chapter three deals on the research design and methodology adopted in the study.
- Chapter four concentrate on the data collection and analysis and presentation of finding.
- Chapter five gives summary, conclusion, and recommendations made of the study.
Chapter Five
Summary, Conclusion and Recommendation
This chapter deals with the summary, conclusion and recommendation of the entire research work.
5.0 Summary
This study critically aimed at investigating the challenges in funding small-scale trading businesses, using Leather And Tarpaulin Enterprise as a case study.
The relevant literature of this study was reviewed so as to find out the opinions of other authors and scholars about the problems that are encountered in funding a small-scale trading businesses in Nigeria.
The project work was divided into five chapters, each chapter having its own role to play in actualizing the potentials of the study as regards deriving a full understanding of the research work. Chapter one generally covered the introduction to the project research work. Chapter two covered the literature review under which a full detailed explanation of funding small-scale trading businesses was given. Chapter three on its own handled the issues of research methodology. Chapter four covered such areas as data presentation and data analysis, while this chapter (chapter five) which is the last chapter covers summary, conclusion and recommendation.
It was discovered that many small – scale business enterprise needed more funds for expansion and growth but getting access to the funds are generally a problem in Nigeria
5.1 Conclusion
From the foregoing analysis and findings, we can derive empirical conclusions with respect to funding options available to small-scale trading businesseses and that adequate capital and credit have remained a key success factor for small-scale trading businesses. The ranges of finance available are numerous, but there are no easy accesses to these funds. Inadequate access to financial resources and credit facilities in formal financial institutions continued to persist because there are more discerning in their choice of small-scale trading businesseses they choose to finance. These institutions grant more short term commercial credit to small-scale trading businesses because of higher interest charges than disbursement from Small and Medium Scale Industries Equity Investment Scheme (SMIEIS) fund.
The conditions for accessing SMIEIS fund are stiff and unrealistic-there is no clear standard guideline for all banks to comply. The un-regulated informal financial intermediaries provide substantial and effective access to credit facilities through savings mobilization. The downside is that their portfolio does not address the problems of micro-enterprises whose level of financial need is still too low to meet the Fund’s optimal scale of investment.
5.2 Recommendations
To address the funding needs of these small-scale trading businesseses, the following recommendations are put forward:
- It is important for the small-scale trading businesseses to consider all alternative funding options, probably through professional advice, to select an appropriate funding mix that maximizes the value of the business enterprise.
- The small-scale trading businesseses should be enlightened on the advantages of using the stock market as a source of funding.
- For the Small and Medium Scale Industries Equity Investment Scheme (SMIEIS) fund to create expected impact on small-scale trading businesseses, they have to be an approved guideline for all banks to comply in the administration of the fund. The fund should be given a specific mandate to fund start-up and survival stages of small-scale trading businesseses that are mostly denied funding opportunities.
- Community Banks and development banks are a potentially important source of micro funding. Savings in them should be further encouraged, and their active participation in local business associations encouraged. The informal savings should be given a legal backing.
- Private leasing – there are some specialized leasing companies, and some Banks are developing leasing services for selected clients. They should be encouraged by government to provide cost-effective services to small-scale trading businesseses in view of the advantages of equipment leasing.

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