The Contribution Of Small And Medium Scale Business In The Economic Development
Small and Medium Businesses (SMBs) has been a productive and dynamic sector under the private sector arm of economy of the country. The spectacular thing about SMBs are their ability to keep the owners usefully engaged and extend this engagement to the teeming unemployed people. Countries all over the world has begin to realize the importance, impact and contributions of SMBs to its economic growth and are investing heavily in it. This study based on this premise was undertaken to assess the contributions of SMBs to the economic development of Akwa-Ibom state and in extension the country. The study adopted the descriptive survey method where the instrument of questionnaire was employed to draw responses from different SMBs owners. The study found out that SMBs have contributed immensely to the economic development of the state through provision of employment, easy access to goods and services, industrialization and a huge contribution to the nation’s GDP.
1.1 Background of the Study
Interest in the development of small and medium sized enterprises and their contribution in the development process continue to be in the forefront of policy debate in developing countries. The advantages claimed for small and medium scale business are various, including: the encouragement of entrepreneurship; the greater livelihood that small scale business will utilize labour intensive technologies and thus has an immediate impact on employment generation; they can usually be established rapidly and put into operation to produce quick returns. Small scale business development can encourage the process of both inter-intra-regional decentralization; and they may well become a countervailing force against the economic power of larger enterprises. More generally, the development of small scale business is seen as accelerating the achievements of wider economic and socio-economic objectives, including poverty alleviation.
This research is set out to examine the contribution of small and medium scale businesses in the economic objective of Akwa Ibom State. As far as the research has elaborate the development of small scale promotion which is identified as approach in development. The creation of economically viable enterprises which can stand on their own feet without perpetual subsidy and can make a positive contribution to the growth of real income and therefore to better living levels. This approach emphasis the importance of efficiency in new small scale enterprise. Small producers must be encouraged to adopt new method, move into new lines of production and in the long-run, wherever feasible, they should be encouraged to become medium or even large scale producers.
The presidential initiative on cassava production and export has increased the awareness amongst Nigerians of the industrial crop, popularly referred to as the ‘new black gold’. Started in July 2004, the initiatives seeks to generate $5 billion in export revenue by the year 2007. Fortunately, Nigeria, according to the food and Agricultural Organisation. FAO, in its 2008 report, is currently the largest producer of cassava in the world at 34 millions tons yearly but with a poor yield of an average of 10 tons per hectare over an estimated cultivated land size of three million hectares. Nigeria is closely followed by Brazil and Thailand, which have a capacity to produce 24 millions tons and 20 millions tons and a yield of 13.6tons per hectare and 19.4 tons per hectare respectively.
1.2 Statement of the Problem
In evaluating the activities, services, contribution and importance of small and medium scale business in particular, it appears in most cases that inspite of its economic importance on this sector, the level of its acceptance is always noticeable and really showing. In the light of the above, it is mind bothering as to whether the state is ignorant of this philosophy or not paying attention to the major contributions of small and medium scale business to the entire community.
Hence, this study is set to study the various ways that small and medium scale business contributes positively to economy of Akwa Ibom State with particular focus on Ibedmore Resource Nigeria Limited.
1.3 Objectives of the Study
The main objective of this study is to examine the contribution of small and medium scale business in Akwa Ibom State community development. Also to identify and consequently analyze the most effective and efficient way through which small scale enterprises could be financed and promoted, thereby taking into consideration various conditions such as economic,, political, social, psychological etc under which small scale enterprises are encouraged to operate with particular reference to the cassava processing industry in Nigeria. In so doing, the researcher intends giving an in-depth information and analysis on the various strategies through which small-scale enterprises can be developed and encouraged.
In view of the above, the researcher intends to find out the following:
- The role played by government towards promotion and development of small-scale enterprises.
- To identify the economic potential of small-scale enterprises in the Nigerian industries.
- To highlight the benefit to the government and the general populace.
- To identify the constraints confronting the development of small-scale enterprises in industries in Nigeria.
- To find suitable strategies that will improve the development, growth and survival of small-scale enterprises in the industry.
1.4 Research Questions
The following research questions were formulated with a view to providing answers to then in:
- What is the trend of the financial support given to small and medium scale enterprise in Nigeria.
- How do small scale entrepreneurs raise capital?
- What impact do small and medium scale enterprises makes to Nigeria’s economic growth?
- What contribution has the financial system made to the growth of small scale business in Nigeria?
1.5 Research Hypothesis
In order to achieve the objectives of this study, hypothesis were formulated in both null (Ho) and alternative form (HI)
- H0: There is no positive impact of small and medium Business to the economy.
H1: There is a positive impact of small and medium Business to the economy.
- H0: Poor Managerial skill is not one of the banes of small and medium business.
H1: Poor Managerial skill is not one of the banes of small and medium business.
1.6 Study Significance
The study proves to be necessary for the small and medium business owners as it highlights the challenges the SMBs encounter but much more its contributions to the economic development of the state and the nation as a whole. Furthermore, the study will be of importance for the reading community as it communicates the importance and contributions of SMBs. This will enhance the understanding of the students and possibly inspire some to join the league of SMB owners.
1.7 Study Scope and Limitation
This study covers the necessary and related information bothering on small and medium businesses. It focuses on their contributions and highlights the challenges but much more prescribe possible methods to continue this contribution.
1.8 Organization of Study
The study is divided into five chapters. Chapter one deals with the study’s introduction and gives a background to the study. Chapter two reviews related and relevant literature. The chapter three gives the research methodology while the chapter four gives the study’s analysis and interpretation of data. The study concludes with chapter five which deals on the summary, conclusion and recommendation.
Summary, Conclusion and Recommendation
It is important to reiterate that the objective of this study was to examine the contributions of Small and Medium Scale Businesses in the economic growth.
In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in examining the contributions of Small and Medium Scale Businesses in the economic growth.
This study was undertaken to examine the contributions of Small and Medium Scale Businesses in the economic growth. The study was introduced with chapter one where the statement of the problem was clearly defined. The study objectives and research hypotheses were defined and formulated respectively. The study reviewed related and relevant literatures. The chapter two gave the conceptual framework, empirical and theoretical studies. The third chapter described the methodology employed by the researcher in collecting both the primary and the secondary data. The research method employed here is the descriptive survey method. The study analyzed and presented the data collected in tables and tested the hypotheses using the chi-square statistical tool. While the fifth chapter gives the study summary and conclusion.
There is no doubt that small and medium scale enterprises are essential for rapid and sustained economic growth and development. They create employment, enhance capacity building for manpower and skills development, promote growth, reduce poverty, and facilitate industrial development among others. Several efforts has been made by successive governments to promote SMEs amidst the vast availability of human and materials resources. Despite these efforts, SME have not contributed significantly to the development of the Nigerian economy. Findings revealed that the potentials of SMEs have not been fully harnessed due to poor implementation of the seemingly promising policies and inadequate financing of the SME sub-sector. In spite of government policies aimed at providing financial and technical support for the promotion of SMEs, they have performed less satisfactorily largely because of operational bottlenecks including lack of depth of the financial system, inadequate infrastructural facilities, poor management practices and low entrepreneurial skills to mention but a few. Banks which are suppose to provide adequate credit facilities in compliance to government policies, usually place exorbitant interest rate alongside huge collateral securities that scare away investors. Borrowers are vulnerable to remain perpetually indepted to lenders upon securing the credit facilities. Therefore, it will be absolutely impossible for SMEs to contribute meaningfully to economic development in Nigeria due to absence of a business-friendly environment.
Based on the exploratory survey of the paper, the following recommendations are suggested for implementation.
- Government initiated programmes should be restructured, if not redesigned and should be centered on a participatory approach to enhance SME development.
- Government should encourage philanthropists and nongovernmental organisations (NGOs) to supplement their effort in providing moral, technical and financial support for the development of Small and Medium Scale Enterprises (SMEs).
- Government and financial institutions should develop a holistic approach to provide adequate training and organize workshops/seminars for entrepreneurs.
- National Orientation Agency (NOA) should organize programmes to change the orientation of youth/graduates/citizens from job seeking to skill acquisition and entrepreneurial development.
- Government should develop and implement policies that will stand the test of time and enable SMEs compete and survive in a commercial setting.
- Government should endeavour to provide a friendly business environment in terms of adequate infrastructural facilities, good roads, efficient telecommunication system and uninterrupted power supply for the growth and development of SMEs
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