Contribution Of Small-Scale Enterprise To Economic Development In Nigeria

Project and Seminar Material for Business Administration and Management BAM

Contribution Of Small-Scale Enterprise To Economic Development In Nigeria


Content of this project reveals the contributions of small sale enterprise to economic development and it’s enhancement through various ways it encouraged. It also paid attention to the findings of these enterprises.

This paper identified the problem associated with server lack of managerial and technical. It also advice the government to help in the development of small scale industry seeing that it helps in the creation of employment opportunity.

Chapter one of this project tells about the background of the entire study, how small scale enterprise has been a bedrock even before it’s recognition by the government. Chapter two elaborate more on the case study of the project. how the enterprise in question was given birth to and its measure to appreciate and grow higher.

Chapter three deals with the design of the research the method used in collecting relevant data, questionnaire and the treatment of data and statistical techniques used. Chapter four is all abut hypothesis.

Finally, the summary of finding, conclusions in the research and recommendations made by the researcher are all in chapter five. The purpose how small scale enterprises have contributed to economic development in Nigeria. If small scale business will put the recommendation on how to achieve economic growth and development to use, such as increasing availability of credit by raising interest rate ceiling and permitting a spread that makes it worthwhile for bank to lend to small scale business. Problems of small scale business will be a thing of the past.

Chapter One


1.1 Background to the Study

The contribution of small –scale business in fostering economic growth and development has been well articulated in different areas of the study. The specific attention on them based on their expected impact and potential contribution on broad and diversified production, as well as their accelerative effect in achieving macro objectives pertaining to full employment income distribution and the development of local technology. They are particularly most conducive for diffusion of management skills and emulation of indigenous entrepreneurship overtime.

The meaning of Small business provides varies from one country to anther and from one industry to another even within the same industry. In Nigeria for instance, the development plan 2003-2007 (Vol. 1. 353) described a small scale business as any manufacturing establishment employing less them ten people or whose investment is equipment and machinery do not exceed N 600 . According to the credit guiding of the central Nigerian (CBN), small scale business are classified as those business within an annual turnover of less than half a million.

The Nigeria Bank for commerce and industrial (NBC1) 2003-2007 defined small scale business as an industry with capital not exceed N 750, 00 including working capital but including working capital but excluding cost of land.

In Enugu state fund for small scale industry (EUSSI) established by the state government defined small industry with a capital investment of N150,000 in machinery and equipment alone this exclude working capital and cost of land.

Small scale business provides financial opportunity and a chance to develop wealth. It is a place where creative motivated individuals can use their talent and expertise to the fullest becomes it provides satisfying careers and job opportunities and it is also the back borne of the market economy of the world.

Every big business started as a small business and it started with an entrepreneur who at first earns little or no profit. It was the new ideas of small business that brought about Ekene Dili Chukwu transport, the fan Milk Nnewi Tokubo parts and even the many commercial Banks in Nigeria. Untried ideas become annulations that become concepts that change the business world. Small business is the basis for the economic well being of many development nations including USA and Japan.

Entrepreneurship is what makes a small business successful. Entrepreneurship occurs when an individual develops a new venture, a new approach to an old business or idea, or a unique way of giving the market place a product or service by using resources in a new way under conditions of risk. Small business triumphs and entrepreneurship are closely related to it. It is difficult to separate them.

The unemployment situation in the country coupled with the new government instinctive towards easing social tensions among unemployed (NDE) were intended to lure a lot of unemployment. Graduates and school leaver are now realized that government and the established private companies are not ready to come to their air directly, through paid employment due to the dividing state of the economy. Short of the alternatives, Nigerians including our graduates are therefore launching themselves into various small-scale business ventures, such as cottage soap and cosmetics production, fairing, restaurants, fast food, publishing, writing, block making, cleaning services, weaving, advertising and other same raw materials. The determination to succeed is also fast becoming the order of the day. Government has been playing appreciative role in promoting the survival and growth of small-scale enterprise in recognition of them flexible and adaptive nature as well as their re-generative power in promoting economic growth and development. Government also encourage people to establish their own small business so as to reduce the problem of unemployment in the country and also reduce the problem of importation of goods, moreso, to produce exportation products.

Government in believing that a dynamic and growing small manufacturing sub-sector can contribute significantly to the implementation of a wide range development effectives, has thus emaciated various policies to encourage their proliferation and make them veritable engines of growth and development. In the third and for the development plan and the on-going three years rolling plan, priority has been accorded industrialization with greater emphasis on small-scale enterprises. The basic activities of government policies as maintained in the monetary and fiscal policy measures, are to improve the financing and other supportive services of small-scale business by expanding and improving access to credit and infrastructural facilities, reducing their production costs, boosting their profitability, enhancing their survival and growth capacities as well as expanding their contributions to non-oil exports by making their products competitive in the export markets. Hardly could any major industry succeed without the services of small-business enterprise.

The major goals of any profit oriented business is to make profit. A company will make more profit if statistics it’s customers need better them the competitors.

There fore in the contribution of small-scale business, bakeries would produce what the customers want and by so doing they maximize profit and only bakeries that are effective and efficient can satisfy customers needs. In reality, it is possible to run a business without profit for a time, but it is not possible for to survive for one day without customers. Customers are the central theme of any business. Without a total commitment to them, contribution to economic growth and development will have limited and brief effects. In this study, Ify Bakery which is the case study of this topic is not an exception to the problems farced by bakeries in Enugu.

1.2. Statement of the Problem

Nigeria is currently witnessing an alarming rate of un- employment rate is growing tin geometric progression. The economy is also increasingly finding it difficult to cope as Nigerian economy is waning. A lot of experts have called for the creation of an enabling environment for small –scale enterprise to thrive. They cited Asian “Tigers” such as Malaysia, China, Sought Korea, Indonesia, Singapore and Thailand where both the government and individuals knowing the importance of small scale industrial development join forces together in fostering effective and sustainable small scale enterprises in their countries. Evidence also abound that in the above mentioned places, a lot is being done to empower the growth of this sub sector of the economy. The role small scale industries in the development of indigenous technology can not therefore be over emphasized.

1.3. Objectives of the Study

This study seeks to identify the role of the small scale enterprise in the overall development of the nation’s industrial sector.

It also aims at finding ways of making small scale enterp5rises more effective in order to enhance to economic development of the nation’s indigenous technology.

Moreover, in this study, attempt will be made to achieve the following:

  1. To assess the importance of the identified roles of small scale enterprises in the development of Nigerian Economy.
  2. To determine whether or not the Nigerian small scale enterprises make use of all the credit facilities available to them and the reasons for the stand they take in relation with their initial capital.
  3. To consider the nature and level of financial assistance desired by them and compares it with the already available forms of assistance desired by them and compares it with the already available forms of assistance.
  4. To evaluate the problems encountered I utilization of the available opportunities and or facilities as regards fixed assets like land and locations.
  5. To suggest ways by which these problems could be tackled in order to improve the financial condition of the small scale businesses and boost their source of their raw materials generation.
  6. To ascertain whether or not government policies have been favourable to the establishment of small scale enterprises especially as it concerns power supply.
  7. To assess the level of consumers’ preference to imported goods and determine the rate at which it affects the establishment and activities of small scale enterprises in Nigeria.

1.3. Significance of the Study

The study is thus important because of its potentiality in the development of the small business sector which has been characterized as the “man carrier of development and the engine of social and economic growth” in Nigeria. The study will also help in identifying why people don’t go into small –scale enterprise despite its numerous advantages. It will also find our problems encountered while running the business. The study will help government identify areas requiring attention, thus stimulating government into proper directing of loans and incentives to improve upon existing ventures. It will also provide useful guide for prospective entrepreneur that wish to choose self-employment as a career. And finally, it will serve as secondary data for subsequent studies by a prospective researcher.

1.4. Scope and Limitation

A good number of factors made the study difficult. Notably, is the time factor. The time available for the study was so short that the study was done almost in rush. Due to the limited time too, the researcher based his study only on selected small business enterprises within Nigeria. Another problem was combing coursework, office work, research work and financial constraints to carryout a full and unbiased study.

1.5. Research Question

  1. What are the roles of small scale enterprises in the development of Nigerian economy?
  2. Has lack of land and good location been a problem in the establishment of small scale enterprise in Nigeria?
  3. Does epileptic power supply in Nigeria hinders establishment of small business enterprises?
  4. Has unavailability of raw materials been a problem in establishment of small scale enterprises?
  5. Has government policies been unfavourable to establishment of small scale enterprise in Nigeria?
  6. Does the consumer’s preference to imported goods adversely affect the establishment of small scale enterprise in Nigeria?

1.6. Definition of Terms

Small Scale Enterprise:

The definition of small scale enterprise varies with people and countries such that it is better defined based on the characteristics. In the Nigerian context, small scale enterprise is any processing, serving or manufacturing industry with an investment in machinery and equipment above N500,000 [Waboi, 1987].

According to the centre for management development in a policy proposal to Federal Government in 1982, A small scale enterprise is a manufacturing, processing or service enterprise involved in a factory or production type operation employing up to 50 full time employees, investment in plant machinery are utilized in its operation.


According to Akpala [1990. pg 3] Management is the process of combing and utilizing an organization input [men, materials and money] by planning, organizing, directing and controlling for the purpose of producing output [goods and services].


According to Hagen, an entrepreneur is an individual who conceives the idea of business, design the organization of the firm, accumulates capital, recruits labour, establishes relations with supplies, customers and the government and converts the conception into a functioning organization business.


An opportunity is a potential gainful situation that must be recognized and exploited, an opportunity has the qualities of being attractive, durable and timely. It is anchored in product or services which creates or adds value for its buyers or end users.


This entails growth of the business, increases in goods and services and t he improvement of lives of the citizen.

Chapter Five

Summary of Findings, Conclusion and Recommendation

This research work “The Role of Small Scale Enterprises in the Development of economy in Nigeria” was conducted with the use of questionnaire to sample the opinion of traders on what impact has small scale enterprises in the development of indigenous technology capability in Nigeria.

5.1 Summary of Findings

The preceding analysis has revealed that small scale business has a vital role in the development of indigenous technology capability in Nigeria and through their wide dispersal. They should provide an effective means of mitigating rural urban migration and resources utilization. And this also will contributes in strengthening industrial linkages by producing intermediate products for use in large enterprise in Nigeria. The researcher also finds and showed that government tax policies have not been favourable in theestablishment of small scale enterprises in Nigeria. Government should know how it will be amending some of these tax policies they feel is affecting the establishment of small business in order to encourage more people into venturing into it. Government should also encourage the growth of small business by giving them the necessary assistance as regards to fund raising and equally advice them on how to utilize it effectively.

5.2 Conclusions

Hardly can any major industry succeed without the services of small business enterprises. The relative strength of their importance varies from one industry to another. The role of small scale businesses in the development of indigenous technology capability in Nigeria cannot be over-estimated. Firstly, the continuing growth in the economy of any nation depends to a large extent on the start ups of small businesses, which depends on locally fabricated machinery and local raw material inputs. Secondly, it is a considerable solution to balance of payment problems resulting from less dependence on imported inputs and also serves as a training school for theindigenous entrepreneurs and provides grounds for the acquisition of skill for a large number of workers.

5.3. Recommendations

The researcher after discussed the findings and conclusions recommended that the small scale business contributes in strengthening industrial linkages by producing intermediate products for use in large enterprise in Nigeria. The researcher also showed that government tax policies have not been favourable in the establishment of small scale enterprises in Nigeria for many years now. So government should know how it will be amending some of these tax policies they feel is affecting the establishment of small business in order to encourage more people into venturing into it. Government should also encourage the growth of small business by giving them the necessary assistance as regards to fund raising and equally advice them on how to utilize it effectively.

Also, small businesses should form mergers; by this their capital would be placed in a better position when dealing with lending institutions. Their tax burden will not be heavily felt again.

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