Factors Affecting Small And Medium Scale Enterprises And It’s Contribution To Economic Growth: A Case Of Selection SMEs In Abuja

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Factors Affecting Small And Medium Scale Enterprises And It’s Contribution To Economic Growth: A Case Of Selection SMEs In Abuja


Abstract


This study was carried out to critically assess factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs in Abuja as a case study. The study was specifically carried out to ascertain the contribution of SMEs to economic growth in Nigeria, ascertain the factors affecting SMEs in Nigeria, and ascertain other effective approaches will ameliorate the constraints faced by SMEs. The survey design was adopted and the simple random sampling techniques were employed in this study. The population size comprises of owners of selected SMEs in Abuja. In determining the sample size, the researcher conveniently selected 147 respondents while 141 were received and validated. Self-constructed and validated questionnaire was used for data collection. The collected and validated questionnaires were analyzed using mean scores. The result of the findings reveals that the contribution of SMEs to economic growth in Nigeria includes: employment generation, utilization of local resources, transformation of indigenous technology, promotion of even development and reduction of income disparities. The findings also revealed that the factors affecting SMEs in Nigeria includes: lack of fund, poor management practices and low entrepreneurial skill, corruption, lack of infrastructural facilities, shortage of skilled manpower. The study recommends that the government should 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 To mention but few.


Table of Content


  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content
  • List of Tables
  • Abstract

Chapter One:

Introduction

  • 1.1 Background of the Study
  • 1.2 Statement of the Problem
  • 1.3 Objective of the Study
  • 1.4 Research Questions
  • 1.5 Research Hypothesis
  • 1.6 Significance of the Study
  • 1.7 Scope of the Study
  • 1.8 Limitation of the Study
  • 1.9 Definition of Terms
  • 1.10 Organisations of the Study

Chapter Two:

Review of Literature

  • 2.1 Conceptual Framework
  • 2.2 Theoretical Framework
  • 2.3 Empirical Review

Chapter Three:

Research Methodology

  • 3.1 Research Design
  • 3.2 Population of the Study
  • 3.3 Sample Size Determination
  • 3.4 Sample Size Selection Technique and Procedure
  • 3.5 Research Instrument and Administration
  • 3.6 Method of Data Collection
  • 3.7 Method of Data Analysis
  • 3.8 Validity of the Study
  • 3.9 Reliability of the Study
  • 3.10 Ethical Consideration

Chapter Four:

Data Presentation and Analysis

  • 4.1 Data Presentation
  • 4.2 Analysis of Data
  • 4.3 Answering Research Questions
  • 4.4 Test of Hypotheses

Chapter Five:

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • APPENDIX
  • QUESTIONNAIRE

Chapter One


Introduction

1.1 Background to the Study

The pursuit of economic development has been a major goal of many developing nations of the world. Developing countries are confronted with several problems such as high rate of poverty and unemployment which have continued to hinder the attainment of socio-economic development. For any nation to attain development, industrialization, gainful and meaningful employment are important indices used as a measurement of economic development. This is often depicted by income per capital, equitable distribution of income, the welfare and quality of life enjoyed by the citizen of that nation. Small and Medium Scale Enterprise (SME) has proved to be a major tool adopted by the developed nations to attain socio- economic development. In recent time, small scale industrial sector is considered to be the backbone of modern day economy. Historical facts show that prior to the late 19th century, cottage industries, mostly small and medium scale businesses controlled the economy of Europe. The Industrial Revolution changed the status quo and introduced mass production (Thomas, 2001). The twin oil shocks during the 1970s undermined the mass production model, which triggered the unexpected reappraisal of the role and importance of small and medium sized enterprises in the global economy (Wendrell, 2003). In Nigeria, the introduction of SME can be traced back to the year 1945 when the essential paper No. 24 of 1945 on “A Ten year plan of development and welfare of Nigeria 1946 was presented”. Small and Medium scale Enterprise was considered an all time necessity at the beginning; which has gained prominence today and is expected to increase its importance in the future (Basil, 2005).

SMEs are faced with challenges which affect their ability to function and contribute optimally to the economy. Studies have shown that a significant percentage of SMEs dies before reaching five years of establishment. Due to the positive contribution of small scale businesses to the economic development of the nation, there is the increased need for the government to be seriously involved in the support and encouragement of the small scale ventures to enable them realize their full potentials to the benefit of the whole nation.

Nevertheless, despite the efforts and contributions of past and present government towards promoting SMEs in Nigeria, the contribution of this sector to the economy still remain relatively small in terms of its impact on Gross Domestic Product (GDP), unemployment and poverty reduction. The rate of unemployment in this state is still high and majority of the population still live in poverty. Ekezie (1995), Bacdom (2004), Iromaka (2006), Aremu, (2010) among others attributed the lack of credit as one the major constraint to the realization of the benefits of SME.

In the light of the above, this paper attempt to examine the factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs in Abuja as a case study.


1.2 Statement of the Problem

In developed countries such as the United Kingdom, and United States small businesses are managed effectively with positive results. The positive management of small businesses in developed countries and some developing countries such as the Philippines and South Africa contributed to their economic growth (Dugguh, 2015). According to Dugguh (2015), small businesses in Nigeria are faced with numerous challenges that resulted in their failure. Dugguh (2013) further stated small businesses must develop strategies that will mitigate challenges and sustain operations. Researchers have continued to identify the challenges facing small business and the strategies of mitigating these challenges (Kayode & Ilesanmi, 2014). Also, Samujh claimed researchers had neglected the small business sector (Samujh, 2011). Thus, there is not enough information on the survival strategies of SMEs in Nigeria.


1.3 Objective of the Study

The main objective of this study is to examine the factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs in Abuja as a case study, specifically the study intends to:

  1. Ascertain the contribution of SMEs to economic growth in Nigeria.
  2. Ascertain the factors affecting SMEs in Nigeria.
  3. Ascertain other effective approaches will ameliorate the constraints faced by SMEs.

1.4 Research Questions

  1. What are the contribution of SMEs to economic growth in Nigeria?
  2. What are the factors affecting SMEs in Nigeria?
  3. What are other effective approaches will ameliorate the constraints faced by SMEs?

1.5 Research Hypotheses

  • Ho: There are no factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs
  • Ha: There are factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs

1.6 Significance of the Study

This study when completed will be a valuable help to various stakeholders for implementations with the concerned efforts of all and sundry including: governments at all levels, SME promoters etc.

Policy Makers:

It guides them in making policies and regulations that will create enabling environment for small and medium scale enterprises.

SMEs:

This study will enable them to identify the problems confronting the development of small and medium scale enterprises and also the surviving strategies available for them

Investors / Entrepreneurs:

It will enable them to know what they expected of government in the promotion of small and medium scale enterprises. It will also enable them to know the cost involvement in establishing the small and medium scale enterprises.

Companies:

They will also benefit from this study, since they are interested in the overall success, operational and financial efficiency evaluation of the firm. Student/Researchers: This study will also be a benefit to them, since they are curious in studying or knowing more about the topic and in their research work.


1.7 Scope of the Study

The scope of this study boarders on the factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs in Abuja as a case study. Hence the study will be delimited to selected SMEs in Abuja.


1.8 Limitation of the Study

Like in every human endeavour, the researcher encountered slight constraints while carrying out the study. Insufficient funds tend to impede the efficiency of the researcher in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size. More so, the researcher simultaneously engaged in this study with other academic work. As a result, the amount of time spent on research will be reduced.

Moreover, the case study method utilized in the study posed some challenges to the investigator including the possibility of biases and poor judgment of issues. However, the investigator relied on respect for the general principles of procedures, justice, fairness, objectivity in observation and recording, and weighing of evidence to overcome the challenges.


1.9 Definition of Terms

Small and Medium Enterprises (SMEs):

These SMEs or units engage in small-scale business ventures of which their turnover rate is small. An individual, family or group of people who have come together pooled their resources to start the business venture may own small and medium sized enterprises.


1.10 Organization of the Study

The study is categorized into five chapters. The first chapter presents the background of the study, statement of the problem, objective of the study, research questions and hypothesis, the significance of the study, scope/limitations of the study, and definition of terms. The chapter two covers the review of literature with emphasis on conceptual framework, theoretical framework, and empirical review. Likewise, the chapter three which is the research methodology, specifically covers the research design, population of the study, sample size determination, sample size, and selection technique and procedure, research instrument and administration, method of data collection, method of data analysis, validity and reliability of the study, and ethical consideration. The second to last chapter being the chapter four presents the data presentation and analysis, while the last chapter(chapter five) contains the summary, conclusion and recommendation.


Chapter Five


Summary, Conclusions and Recommendations:

5.1 Introduction

This chapter summarizes the findings on the factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs in Abuja as a case study. The chapter consists of summary of the study, conclusions, and recommendations.


5.2 Summary of the Study

In this study, our focus was to examine the factors affecting small and medium scale enterprises and it’s contribution to economic growth using selection of SMEs in Abuja as a case study. The study was specifically carried out to ascertain the contribution of SMEs to economic growth in Nigeria, ascertain the factors affecting SMEs in Nigeria, and ascertain other effective approaches will ameliorate the constraints faced by SMEs.

The study adopted the survey research design and randomly enrolled participants in the study. A total of 141 responses were validated from the enrolled participants where all respondent were owners of selected SMEs in Abuja.


5.3 Conclusions

Based on the findings of this study, the researcher concluded that;

  1. The contribution of SMEs to economic growth in Nigeria includes: employment generation, utilization of local resources, transformation of indigenous technology, promotion of even development and reduction of income disparities.
  2. The factors affecting SMEs in Nigeria includes: lack of fund, poor management practices and low entrepreneurial skill, corruption, lack of infrastructural facilities, shortage of skilled manpower.
  3. The other effective approaches will ameliorate the constraints faced by SMEs includes: unlimited access to international markets, the existence of efficient laws, regulations and rules, Strong institutional capacity and poor management skills.

5.4 Recommendation

Based on the responses obtained, the researcher proffers the following recommendations:

  1. Government should 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.
  2. 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.
  3. Government should as matter of urgency assist prospective entrepreneurs to have access to finance and necessary information relating to business opportunities, modern technology, raw materials, market, plant and machinery which would enable them to reduce their operating cost and be more efficient to meet the market competitions.

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