An Evaluation Of The Contribution Of Small And Mediums Scale Enterprises (SMEs) To The Economic Development In Nigeria (A Case Study Of Eight (8) Selected SMSe In Ilorin Metropolics)

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An Evaluation Of The Contribution Of Small And Mediums Scale Enterprises (SMEs) To The Economic Development In Nigeria (A Case Study Of Eight (8) Selected SMSe In Ilorin Metropolics)


Table of Contents


  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content

Chapter One

Introduction

  • 1.0 Background of the Study
  • 1.1 Statement of the Problems
  • 1.2 Objectives of the Study
  • 1.3 Research of the Study
  • 1.4 Significance of the Study
  • 1.5 Scope and Limitation of the Study
  • 1.6 Organization and Planning of Study

Chapter Two

Literature Review

  • 2.0 Definition of Small and medium scales Enterprises
  • 2.1 SMSE as a study for Economic Development
  • 2.2 SMSE and Employment Opportunities
  • 2.3 SMSE and Utilization of Local Resources for production
  • 2.4 SMSE and its financing
  • 2.5 SMSE and self Reliance
  • References

Chapter Three

Research Methodology

  • 3.0 Introduction
  • 3.1 Characteristics of the Study Population
  • 3.2 Sample Design and Procedure
  • 3.3 Method of Data Analysis
  • 3.4 Data Collection Instrument and Administration
  • 3.5 Sample size
  • 3.6 Limitation/Problem of Data Collection

Chapter Four

Presentation and Analysis of Data

  • 4.0 Introduction to Eight (8) Selected SMSE in Ilorin Metropolis
  • 4.1 Presentation of Data
  • 4.2 Respondents by Variables
  • 4.3 Analysis of research Question

Chapter Five

Summary, Conclusion and Recommendation

  • 5.0 Summary of Findings
  • 5.1 Conclusion
  • 5.2 Recommendations
  • References

Chapter One


Introduction

1.0 Background of the Study

This study will have its fundamental root from the contribution of small and medium scale enterprises (SMSE) o the economic development in Nigeria.

Apart from the potential development of small and medium enterprise for ensuring a self reliant industrialization in terms of the ability to rely largely on local raw materials. It is also a good strategy to boost employment and guarantee an even distribution of industrial establishments in the country including the rural area.

In all countries of the world, small and medium enterprises have emerged as an important agent of economic and social transformation. The promotion of small and medium enterprises (SMES) is no longer just the business of the world association for small and medium enterprises (WASME) and other Non-Government organization (NGOS) but as become a major policy thrust in industrialized and developing countries.

In industrialized countries, recent innovation in information technology, industrialized designation and global competition have propelled the spread of small business and forced large cooperation to search for new strategies to gain competitive operations. Small and medium enterprises (SMSE) could help to facilitate mobilization of capital and human resources that could otherwise be left idle.

An important feature associated with small and medium enterprises which is particularly relevant to our current economic problems is that, these industries characteristically, depend less on imported inputs relative to their total capital investment than large scale industry. Small and medium enterprises (SMSE seek to diffuse economic power by helping to check imbalance seek to diffuse economic power by helping to check imbalance between various locality of a country and between different income groups in the same locality.


1.1 Statement of the Problem

As it could be observed, the contribution of small and medium scale enterprises (SMSE) towards the development of Nigeria economy has not been able to achieve the desired progress due mainly to a number of constraints.

This research work has identified the associated problems militating against the contribution of SMSE towards the development of the economy and thus, summarized them as follows:

  1. Understanding how much time it will tale to build a market.
  2. Inability to maintain customer relation.
  3. Wrong choice of product
  4. Failure to understand changing economic condition
  5. Failure to keep complete accurate records so that proprietor drifts solution trouble without realizing.

Given the fact that many factor militate against small and medium enterprise and constitute the development towards the nation economy.


1.2 Objective of the Study

SMSE have been identified as a fundamental feature of the economy which can generate over 70% of economic activity as well as become the engine of growth required by the Nigerian government for the much needed sustainable development in terms of job and wealth creation.

  1. The aim of this project is to identify the contribution of SMSE to the economy development in Nigeria.
  2. To evaluate the various sources of finding SMSE including the special credit program and skill introduce the years in Nigeria.
  3. To highlight the major factors that have initiated against the effective contribution of SMSE in Nigeria economic development
  4. To examine the distribution of small and medium scale enterprises in Ilorin Metropolis.
  5. To suggest recommendation for the problem identified for future guidance.

1.3 Research Question

Corollary to the above, therefore this work aims at answering the following research questions.

  1. Can small and medium enterprises be used as a strategy for economic development in Nigeria?
  2. To what extent can small and medium enterprises provide employment opportunities for the populace
  3. How can small and medium enterprises base mainly on the utilization of local resources for production alone?
  4. What are the effective sources of finance to small and medium enterprises in Nigeria?
  5. In what ways can small and medium enterprises lead to economic self-reliance in this country?
  6. How can other sources be found and properly managed?

1.4 Significance of the Study

The study is tailored towards the education of policy makers in Nigeria on the importance of small and medium enterprises (SMSE) in the development of the economy which will in turn improve the standard of living of Nigerian citizens.

In developed countries, small and medium enterprises (SMSE) have remained the dynamic sector of the economy. The East Asia miracle was built on the foundation of throwing small and medium enterprises (SMSE).

Small and medium enterprises are widely seen as a panacea for unemployment and economic recession. Therefore, for the small and medium enterprises to serve the expected role of catalyst for rapid industrial and economic development there is need for more strategy for improved access to development finance for small and medium enterprises that would address the inability to provide collateral security for loan from normal credit institutions. Hence the relevance of this study which aims at other things examines further option for improving the flow of formal credit to small and medium enterprises (SMSE).


1.5 Scope and Limitation of the Study

This project attempts evaluating the various sources of findings the small and medium enterprises (SMSE) including the special credit programme and schemes introduced over the year in Nigeria to improve small and medium enterprises (SMSE) access to developing finance.

The scope of this study is limited to the available and functioning SMSE in Ilorin metropolis as at the time of this research work.

The study also access the impact of the formal institution and schemes/programme n terms of their ability to boost small and medium enterprises access to credit. It also highlights the major factors that have militated against their effectiveness.

The major limitation of this project centers on the problem of questionnaire the study recognizes. The fact that there are areas that needs probing into but due to lack of sufficient data, insufficient cost in terms of finance and time, such areas could not be covered.


1.6 Organization and Planning of the Research

For ease of presentation, this project is structured into five chapters.

The first chapter introduces the subject matter which includes the background of the study, statement of the problem and the objective of the study. The scope and limitation were also highlighted.

Chapter two provides the review of relevant interaction, various definitions of SMSE and the importance of SMEs in economic development and self reliance.

Chapter three takes a look at the research methodology. This embrace the characteristics of the study population, sample procedure and sample size. If also looks at data collection, instruction and administration.

Chapter four looks at the presentation and analysis of data with regards to various sources of finance available to small and medium enterprises (SMEs). It also enamines the distribution of small and medium enterprises in Ilorin metropolis.

Lastly, chapter five which is the end of the project deals with the summary of the entire write-up, the conclusions and recommendations for improvement.


Chapter Five


Summary, Conclusion and Recommendation

5.0 Summary of Findings

The role of the small and medium Enterprises (SMSE) as a catalyst for economic growth and development has been well documental in this research work. As identified in the literature review, it is globally accepted that the growth of SMSE is crucial to sustainable development in any country, developed or not. In fact, SMSE make up over 90 percent of business worldwide and account for between 60 and 70 percent of employment.

Accordingly, they contribute significantly to the provision of productive employment opportunities, generation of income and ultimately, the reduction of poverty. Cognizant of these various roles become a source of concern to all stakeholders as this has been a major problem affecting their growth.

Specially, successive governments in Nigeria have in the last three decades shown much interest in ensuring dequate financing for small and Medium Enterprises (SMSE) by establishing various schemes and specialized financial institutions to provide financing to this sector. These includes small scale industry credit scheme (SSICSs), Nigerian Industrial development Bank (NIDB), Nigerian Bank of Commerce and Industry (NBCI) and National Economic Reconstruction Fund (NERFUND).

Due to the problems been faced by small and Medium scale enterprises (SMSE) that restricted the access to credit in spite of all the above enumerated credit scheme, this research has suggested scheme. It is the policy of this study that if introduced, the credit guarantee and insurance scheme will go a long way in reducing the associated risk involved in lending to small and medium scale enterprises (SMSE).


5.1 Conclusion

Over the years, government has recognized the vital role of small and medium scale Enterprises (SMEs) can play in ensuring meaningful and sustainable growth towards its achievement. A number of polices and programmes have been introduced to assist the growth of this class of enterprises. One major area of assistance is that of improving the access of small and medium scale enterprises to credit facilities through the establishment of a number of special credit institutions and programme to target the small and medium scale enterprises (SMEs).

In order to fully tap the potential of the informal sector of the economy where small and medium scale enterprises play key roles, the banks must be alive to their responsibility in ensuring that the while essence of setting aside the 10 percent of their profit after tax equity investment and promotion of small and medium enterprises is not defeated.

This research work also asset that for us to realize the dream of making the SMSE sector highly productive, the challenges is, undoubtedly, that of the government, banks and the SMSE promoters themselves. The keen interest given to the promotion of small businesses, as a matter of urgency, should be translated to positive action that will impact positively on the operation of these firms in not too long distance future.


5.2 Recommendations

On the basis of this study, the following recommendations ensued.

5.2.1 Commercial Banks

The resultant effect of the various analysis carried out in this study pointed to the fact that commercial banks and other allied financial institution have a significant role to play in solving the small firm’s financing problem. In view of this fact, it is recommended that Nigerian banks intensify their efforts towards making fund available to SMEs with sound business idea by:

  1. Making their demand for collateral securities less tedious
  2. Discouraging discriminating lending attitude towards small firms
  3. Making the loan granting process less cumbersome
  4. As much as banks are in business to make profit, there should be a concerted efforts towards bringing down the interest rates on loans to SMEs.
  5. Participating in the management of equity investment in SMEs.

All these measures will help find a lasting solution to funding problem and encourage the growth of SMEs and the economy at large

5.2.2 Central Bank of Nigeria

There is need for central bank of Nigeria to step up their supervisory role in nesuring that banks complies with the guidelines of the SMIEIS scheme. This will enable the regulatory authority to monitor the implementation and gathering of necessary statistics to quantity the impact of the scheme.

The CBN should also look into the review of the SMIES in conjunction with other stakeholders with view to coming up with measures that will guarantee the realization of the objectives behind the introduction of the scheme.
At the same time, the CBN must play a leading role in evolving industrial banking culture, new banking philosophy, orientation and attitudinal change among financial players.

5.2.3 Government

Government in its effort to realize its dream of making the SMEs sector highly productive must ensure that the following are in place.

  1. Creation and sustenance of enabling business environment for the SMEs
  2. Facilitate stable macro economic measures to boost capacity building, including increased government patronage.
  3. Pass enabling legislation to provide tax reforms and incentives which may include:
    • Reduction in tan paid by SMEs
    • Granting 100% investment allowance on bank’s contribution to SMIES scheme
    • Fostering entrepreneurial spirit for promotion of SMEs

Above all, government must strive more in the provision of adequate infrastructure, particularly power generation.

5.2.4 Promoters of Small and Medium Scale Enterprises

Even though some SMSE promoters are skeptical about the sincerity of the banks with regards to financing as a result of the various bottlenecks involved in getting the loans, it is a well known fact that SMEs too has faulted in their approach to business. This has to do with too much concentration on financing while little premium is placed on leadership capacity, management moral and esteem, information management, accounting and financial managements, personnel development, packaging and promotion of their products and empowerment of their employees.

In view of the aforementioned, the following are recommended for the growth of SMEs.

  1. Development of well tailored business plan, particularly at the starting stage.
  2. Ensuring effective and prudent utilization of available funds
  3. Seek necessary education on leadership and managerial abilities
  4. Join business association relevant to their areas of business. This will ensure awarness on current development within the sector they operate.
  5. Put in place necessary books, records and structures that will keep track of their business activities.

For business to be successful and grow, besides the highlighted measures above, promoters must understand that it couldn’t be a one man show. They will require managers, financiers, partners who will bring other ideas to add up to make their original idea grow.


An Evaluation Of The Contribution Of Small And Mediums Scale Enterprises (SMEs) To The Economic Development In Nigeria (A Case Study Of Eight (8) Selected SMSe In Ilorin Metropolics)


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