The Effect Of Small Scale Industries On Social Economics Development

The Effect Of Small Scale Industries On Social Economics Development
Abstract
The study investigates the impact of small scale industries on the Nigerian economy. The work shows that small scale industries significantly contributed to the economic growth in Nigeria despite poor funding by commercial banks. The work recommends among others that government should improve its monetary policies so as to reduce to an acceptable level, the rate of interests charged by commercial banks as well as encouraging rural based industrialization, whereby investors are encouraged to establish small and medium scale industries that would be based entirely on local raw materials, machines and equipments. The total population for the study is 200 staff of selected farms in AkwaIbom State. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up farm managers, farm officers, farm supervisors and farm attendants were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies
Chapter One
1.0 Introduction
1.1 Background of the Study.
In recent time, the fortune of small scale industries attracted the attention of government world-wide and thus has been the focus of general interest and research, especially in developing Countries due to the importance of small scale and medium scale Industries.
Their importance cannot be over emphasized as they constitute a whole virile vehicle for the generation of vast production of outputs and job creation. They are also act as catalyst for restructuring and diversifying the
productive base of an economy and for the Industrial economy and for the Industrial economy take-off and growth of such an economy. The small scale industries are seen to hold the key to future expansion of the Industrial sector.
In Nigeria, evidence has shown that in 1986, small scale industries accounted for 70% of all firms, employing millions of Nigerians (first Bank of Nigeria report, 1987). By the end of 1979, over 80% of all establishments licensed under the factory act were small and medium scale Industries (Onwuala, 1987). This made the importance of this economic unit to be unelectable.
Small scale industries in its widest sense implies the urgent response to the challenges of developing countries, of which Nigeria is not an exception.
Small scale industries should be practiced with due regards to the importance of available local raw materials in its environs because the challenges facing small and medium scale industrialist are enormous.
The importance of small scale industries to the economic development of any country, whether developing or developed, have been widely acknowledged and acclaimed. They are considered as there stimulate to private ownership and entrepreneurial skills, generate employment, promote industrial dispersal and rural- urban migration.
Clive carpenter (2001), said that across the world, small businesses are crucial for economic growth, poverty alleviation and wealth creation. Uayatudeen (2001) said that across the world, small businesses have such a crucial role to play in the development of an economy and that cannot be ignored.
According to William and David, most firms and small scale industries are compared with companies that economist usually study. But economists have concentrated on large scale Industries. The leading textbooks in economics have title discussions on small and medium scale business or entrepreneurs.
The partial combinations of small scale industries on the Nigerian economy are; creation of wealth, poverty eradication and employment generation as encapsulated in the national economic empowerment development strategies (NEEDS.) However small and medium scale Industries are bedeviled by numerous challenges which have hampered its development and growth and also its combination to national development. To this end, government has instituted various programs to address the challenges and constraints facing small scale industries growth.
- The programs and institutions Include:
- Setting up and founding of industrial estates.
- Establishment of national directorate of employment (NSE)
Establishment of the Nigerian bank of commerce and industry (NBC), the national economic re-construction fund (NERFUND),the Nigerian Industrial bank (NIDB) which has merged in to one agency in the bank of industry, the world assisted small scale enterprises loan scheme (SNEX), the Nigerian export and import bank (NEXIN) etc.
Setting up a small and medium scale enterprises development agency of Nigerian (SMEDAN); an agency which Co. ordinates development in small business sector.
Unfortunately, all these formal credit schemes have not been able to adequately address the fundamental problems which have constrained small scale enterprises access to credit; and any other enterprise establishing a small and medium scale industry requires capital to take off survive and eventually expand.
Nigeria’s major manufacturers produce food and beverages, cigarettes, textiles and clothing, soaps and detergents, footwear, wood products, motor vehicle parts, chemical products and metals while small and medium scale manufacturing engage in leather making, poultry making and wood carving.
The smaller industries are often organized in craft guides involving particular families who pass the skill from generation to generation.
People have lived in what is now known as Nigeria since at least 9000BC, evidence indicated that since at least 5000BC, some of them have practiced settled agriculture. In the early (centuries (AD), kingdoms emerged in the drier northern savanna, prospering from trade with north Africa. At roughly the same time, the western and southern forested areas yielded city- state and looser federations sustained by agriculture and coastal trade. These systems changed radically with the arrival of the Europeans in the late 15th century, the rise of the slave era in the 16th Century through the 19th Century. Nigeria achieved independence in the 1960, but has since been plagued by an unequal distribution of wealth and inflation.
The first well documented kingdom was the Yoruba kingdom, which was observed between the 11th -12th centuries. Over the next few centuries, they spread their political and spiritual influence beyond the borders of its small city states. Its artisans were highly skilled, producing among other things, bronze castings of heads in a very naturalistic style.
Terra- cotta, wood and Ivory were the common media instruments used.
Shortly after the 12th century, the kingdom of Benin emerged in the mid-western south region. Although it was separate from the Yoruba kingdoms; Benin legends claim that the kingdoms first rulers were descendant from an Ife prince. By the 15th century, the Benin kingdom was large, wood designing was what sustained the city’s trade (both within the region and later with Europe). Its legacy includes a wealth of elaborate bronze plagues and statues recording the nation’s history and glorifying its
rulers.
From the above paragraphs, it can be noted that small and medium scale industries are indeed necessary for the development of any economy.
Small and medium scale industries act as the major stepping stone to economic growth. In Nigeria today, small and medium scale industries are common but have no efficiently achieved or attained her goals.
Therefore, to encourage local businessmen and institutions in buying small and medium sized businesses, the government established the Nigerian bank for industry and commerce, which had an initial operating capital of 50 million naira. There was some concern in Nigeria that Nigerians might not be able to raise enough capital to take over the foreign owned businesses affected by the decree and that there might not be enough Nigerians with the technical and managerial skills necessary to replace extricate personnel.
1.2 Statement of the Problem
The small and medium scale Industries survey conducted in 2005 by the central Bank of Nigeria (CBN) provides some evidence that apart from the acute short of technology, managerial skills, poor management, adverse environment, and change in policy, capital is a source of great concern to the entrepreneur in the sector. Since one of the microeconomic goals of the Nigerian government is economic growth, we can assume that the government aims at the expansion of small firms.
In a continent where finance is a major constraint on development, the problem confronting the private sector in Nigeria above all small and medium scales Industries standout.
Most large scale industries in Nigeria have reduced their borrowings due to high interest rates and the short term nature of available loans. At the same time, banks are unwilling to lend to the small and medium scale sector with its high perceived rises. In this case, lending is not efficient to the real sector and loanable funds are currently used to finance primary consumer imports and to separate in foreign exchange markets. The research question from the above experience is thus; will small and medium scale contribute much to economic growth in Nigeria when they are not properly funded.
1.3 Objectives of the Study
The main objective of this study is the effect of small scale industries on social economics development. But for the successful completion of the study; the researcher intends to achieve the following sub-objectives.
- To determine the impact of small and medium scale enterprises on social economics development.
- To ascertain the possible problems which could hinder small business success?
- To ascertain the significant relationship between small scale industries and social economics development
- To investigate the impact of SMEs on poverty reduction
1.4 Research Hypotheses
For the successful completion of the study, the following research hypotheses were formulated by the researcher;
- H0: there are no impacts of small and medium scale enterprises on social economics development
H1: there are impacts of small and medium scale enterprises on social economics development - H02: there are no significant relationship between small scale industries and social economics development
H2: there are significant relationship between small scale industries and social economics development
1.5 Significance of the Study
The significance of the study is to establish an extent of growth and development and to expose the immense benefit derivable from small and medium scale industries. Also, this study will help to redress the belief of the society that small and medium scale industries can bring about economic and development in Nigeria.
1.6 Scope and Limitation of the Study
The scope of the study covers the effect of small scale industries on social economics development. The researcher encounters some constrain which limited the scope of the study;
a) Availability of Research Material:
The research material available to the researcher is insufficient, thereby limiting the study
b) Time:
The time frame allocated to the study does not enhance wider coverage as the researcher has to combine other academic activities and examinations with the study.
c) Organizational Privacy:
Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.
1.7 Definition of Terms
Small Scale Industries:
The official definitions of a small scale unit are as follows: Small-Scale Industries: These are the industrial undertakings having fixed investment in plant and machinery, whether held on ownership basis or lease basis or hire purchase basis not exceeding
Social Economic:
Socioeconomics is the social science that studies how economic activity affects and is shaped by social processes. In general it analyzes how societies progress, stagnate, or regress because of their local or regional economy, or the global economy
1.8 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
5.1 Introduction
It is important to ascertain that the objective of this study was to ascertain the effect of small scale industries on social economics development
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 addressing the challenges of small scale industries on social economics development
5.2 Summary
This study was on the effect of small scale industries on social economic development. Four objectives were raised which included: To determine the impact of small and medium scale enterprises on social economics development.To ascertain the possible problems which could hinder small business success? to ascertain the significant relationship between small scale industries and social economics development, to investigate the impact of SMEs on poverty reduction. In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of selected farms in AkwaIbom State. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made up farm managers,farm officers,farm supervisors and farm attendantswere used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies.
5.3 Conclusion
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 startups 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 the indigenous entrepreneurs and provides grounds for the acquisition of skill for a large number of workers.
5.4 Recommendation
The researcher 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 advise 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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