The Contributions Of Small Business Enterprises To The Growth And Development Of Nigeria’s Economy

Project and Seminar Material for Economics

Project and Seminar Material for Economics

Chapter One


1.1 Background To The Study

The impact of Small Scale Enterprises to the development cannot be neglected in every economy, more especially developing nations where sustainable economic development is highly desirable small business enterprises have such a crucial impact to play in the development of an economy in such a way that they cannot be ignore (Lawal, 1993).

According to Osuagwu (2001) small business enterprises involves the use of human and non-human resources towards the achievement of set goals and objectives. Small business enterprises should form one of the development objectives they can serve as a source of impact for multinational, thereby replacing existing foreign resources, they are also training ground for local skill ensuring a more equitable distribution of income and reducing the migrating of manpower from the rural to the urban areas.

Small scale enterprises are crucial for economic growth, poverty alleviation and wealth creation. In an economy like Nigeria, small business enterprises has always been faced with credibility problems, planners experience frustrations when they make their forecast (Owualah, 1999).

(Essang , 1994) Economic history is well stocked with enough it sights into the humble beginnings of present great corporation, evidence abound that almost all of the multinational giant corporation in America Europe and even Nigeria were cottage enterprises, growing as their industry grew and through their own sheer ability, marketing skills, and effort to reproduce and produce existing products better cheaply. Japan’s economy was dominated by traditional industries, cottage firms and by many SMEs, who drew their strength, not only from the abundance of capital, but from the role of marketing in guaranteeing the growth of small scale enterprise.

Small scale enterprises contributed greatly to Nigerians development by the provision of employment, marketing of goods and services and the growth and development of the rural areas. It has also brought about the growth of indigenous entrepreneurship in Nigeria.

This Research Work Tends Examine the Contributions of Small Business Enterprises to the Growth and Development of Nigeria’s Economy

1.2 Statement Of Problem

Small business (small scale) enterprises are faced with some problems such as low productivity among the small business enterprises. As a result of poor financial base and smallness of their market share, the productivity is very low. Therefore it is hard for them to compete effectively.

Another problem being faced by small business (small scale) enterprises isundercapitalization. Most of the small business enterprises are financed by the owners capital, which is never sufficient for the business.

This then leads to death of tangible assets which is usually caused by the fact that they don’t posses enough tangible assets which could serve as collateral to secure loans from credit institutions.

1.3 Objectives Of The Study

The main purpose of this research project is basically to evaluate the contributions and performance of small business enterprises in the Nigerian economy by giving primary consideration to the various socio­economics in the country. It also to identify the problems of small business enterprises and offer suggestions on how to improve their performance to improve Nigeria’s economy.

Other objectives are:

  1. To identify the problems of small business (small scale) enterprises and efforts made towards eliminating those problems.
  2. To examine the performance of small business (small scale) enterprises, their characteristics and mode of operations.

1.4 Research Questions

This research tends to provide answer to the following questions.

  1. Are small business enterprises contributing towards improving Nigeria’s economy?
  2. To what extent is the availability of credit facilities contributing to the survival of small business enterprises?
  3. What are the roles of small business enterprise in economic development?
  4. What is the impact of government policies on the performance of small business enterprises?

1.5 Research Hypotheses

  1. Ho: Small business enterprises do not contribute towards improving Nigeria’s economy
    H1: Small business enterprises contribute towards improving Nigeria’s economy.
  2. Ho: The availability of credit facilities do not contribute to the survival of small business enterprises.
    H1: The availability of credit facilities contributes to the survival of small business enterprises.

1.6 Significance Of Study

The study is being carried out in order to appraise the performance of small business enterprises in Nigeria’s economy. This study is also expected to be of benefit to the government as it will enlighten the tiers of government on the problems facing the small business (small scale) enterprises and the provision of suggestions to eliminate such problems.

This research will also enable small business (small scale) enterprises to appreciate the importance of their business to the nation and gear them towards improving performance through the identification of business opportunities and the efficient distribution of resources towards such opportunities.

1.7 Scope And Limitations Of The Study

This research covers some selected small business enterprises in Ikeja Local Government Area of Lagos State. These enterprises which vary in size, in the style and forms of management will be in the area of single product, multi-product and service enterprises and would be expected to serve as a microcosm of small business enterprise in the country.

In the course of conducting this research work it is expected that the following will constitute impediments to the effective conduct of the study

  1. Time constraint within which the study must be completed.
  2. Financial constraint
  3. Inaccessible and inadequate data

Nevertheless, I believe the above limitations will in no way affect the reliability and validity of the research study.

1.8 Research Methodology

This research shall be using primary data for proper and reliable presentation of information.

The primary data shall include questionnaire administration. The Questionnaire shall include a list of questions designed for the purpose of collecting data with the view to testing the research hypothesis. It shall be simple and easy to understand by the respondent.

1.9 Plan Of The Study

For each presentation, this study will be divided into chapters. Chapter One will give the introduction to the topic;

  1. Chapter two will be based on literature review, looking into the characteristics of small business enterprise, Merits and demerits of small business enterprise and the need or importance of small business enterprise in Nigeria:
  2. Chapter three will give the research methodology and the data requirement;
  3. Chapter four will present data gathered from respondents on tables and percentage, test the hypotheses formulated and interpret the analysis;
  4. Chapter five will summarize the study, draw conclusions and proffer recommendations.

1.10 Definition Of Terms

The several terms and acronyms used in this research work shall have the following meaning:

Small Business (Small Scale) Enterprises:

The Central Bank of Nigeria (CBN) 1996 Monetary Policy guidelines defined small business enterprises as those whose total cost excluding cost of land including working capital does not exceed ten Million Naira.


This is the ability to discover investment opportunities couple with the ability to organize the enterprise.


Small Scale Industries Credit Scheme. This was introduced in 1971 as a resolving grant by the Federal and State Governments to assist in meeting the Credit needs of small business enterprises.


Nigerian Export and Import Bank. This was established in January 1990 to manage a number of credit facilities introduced specifically to boost Nigeria’s non-oil export sector.


The National Economic Reconstruction Fund. This was also established in 1990 to provide relatively long term loans to small and medium business enterprise at relatively concessionary rate of interest.

The Contributions Of Small Business Enterprises To The Growth And Development Of Nigeria’s Economy

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The Contributions Of Small Business Enterprises To The Growth And Development Of Nigeria’s Economy


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