Financing Of Small Scale Business The Problems And Effects In Nigeria (A Case Study Of Royal Marble Hotel, Benin City)

Project and Seminar Material for Business Administration and Management BAM

Project and Seminar Material for Business Administration and Management BAM


This study is aimed at investigating the issues of financing small scale business, looking at the problems and effects in Nigeria, using Royal Marble Hotels, Benin City as a case study.

The choice of this business enterprise (Royal Marble Hotel) is quite fundamental to this study because it is an example of a small scale business enterprise.

Relevant literature to this study has been reviewed so as to find out the opinions of other authors and scholars about the problems that are encountered in financing a small-scale business in Nigeria.

For a proper understanding of this research work, the researcher find out that is quite elementary to first of all give a detailed explanation of the meaning of a small scale business enterprise, before taking a basic look at the problems and effects that are involved in financing a small scale business in Nigeria.

The project work is divided into five chapters, each chapter having its own role to play in actualizing the potentials of the study as regards deriving a full understanding of the research work.

  • Chapter one generally covers the introduction to the project research work.
  • Chapter two covers the literature review.
  • Chapter three on its own handles the issue of research methodology.
  • Chapter four covers such areas as data presentation and data analysis, while
  • Chapter five which is the last chapter covers summary, conclusion and recommendation.

Chapter One


1.1 Background To The Study

The quality of life in our society depends to a large extent on the quality of decisions both financial and otherwise, taken by business firms operating within the economy.

In Nigeria at the present stage of development the role of small-scale business enterprise is of vital importance. Having attained political independence, Nigeria leaders become consciously aware that political independence without economic independence has no useful meaning as far as the people’s economy and self reliance were concerned. Consequently, they embark on policies and measures to ensure that indigenous business men take control and run a significant sector of the economy. Example of such government policies and efforts were the promulgation of the Nigeria enterprises promotion Decree in 1972, and the privatization and commercialization Decree of 1987.

These policies officially uphold the indigenous enterprises (usually small and private) and transfer the control of the strategic important share of the nation’s economy to them.

This change in ownership structure of the Nigeria enterprises imposes tremendous challenges to the managerial and entrepreneurial capabilities of Nigeria businessmen. This is because the performance of this indigenous small- scale business sector becomes a critical factor in the growth and development of the economy.

Every existing small scale business (including Royal Marble Hotel) in the economy today has passed through and some are still passing through these problems. This is why the research had to obtain some useful data that would be relevant to this study from Royal Marble Hotel, Benin City.

1.2 Historical Background Of Royal Marble Hotel

Royal Marble Hotels is located at Government Reservation Area (GRA) in the ancient kingdom of Benin City, “the heart beat of the nation.” The hotel is nested in an area of colourful garden flower and is conveniently located close to the city center, the Benin Airport, the Oba of Benin Kingdom palace, the National Museum of Benin of historical greatness.

Royal Marble Hotel’s primary mission is to bring in hospitality industry beyond mere accommodation, but providing a peaceful and secured homely environment for visitors or travelers from all parts of the world.

Royal marble Hotels, an ultramodern hotel, first in the Niger-Delta zone of the blackest populous nation, Nigeria. In the very heart of the ancient city and charming city of Benin, Royal Marble Hotels was planned with all the character of a small town with gardens, the room, suites, restaurants, conference and banquet halls, bar, swimming pools, gym, etc. all flow into each other, creating a unique and welcoming atmosphere; The national museum, zoo, golf field, among other things and some are 1 kilometer from the hotel.

The hotel houses 110 elegant and well equipped suites that come in numerous sizes and structures, to accommodate the tastes of various guests.

The services at the hotel include a bar, laundry services, a pool bar, restaurant, an internet café, gym facilities, a casino, security services, and many more services. The restaurant is a fully serviced 24hours and offers numerous dishes including African and Cosmopolitan cuisines.

Activities that are available for guests include trips to the national museum, the zoo, golf fields all situated within a one kilometer radius.

1.3 Statement Of The Problem

Small scale enterprises are no doubt faced with a countless of problems, but most notable among them is the financial constraint caused by the sources of fund used in financing the project. An enterprising project has a long maturity or growth period and to finance such, firms requires long term sources of fund.

Another major problem that affects small scale business in Nigeria is the political landscape which is often unstable and there is a high incident of corruption in government which has affected the level of development of small scale business in Nigeria.

Another problem is the issue of registration of small scale business enterprise in Nigeria. Those who are in charge of the registration such as the Corporate Affairs Commission (CAC), usually over charge and impose unnecessary delay to the registration of the business. This is a hug problem to financing small scale business in Nigeria.

There is also a problem of multiple taxation in small scale business in Nigeria. Small scale business enterprises are heavily taxed, reducing their capability of productivity.

1.4 Objectives Of The Study

The objectives of this research study is to investigate the issues of financing a small scale business in Nigeria and to ascertain the level of importance on the overall benefit that are derived in small scale business enterprises. Specifically, the study will determine:

  1. To investigate the issues in financing small business enterprise in Nigeria.
  2. To explain the various source of financing small scale business.
  3. To observe the nature of small scale business in Nigeria
  4. To explain the process of setting up a small scale business
  5. To look into the problems of small scale business in Nigeria
  6. To explain the effect of small scale business in Nigeria
  7. To examine the role of government in a small scale business
  8. To examine the functions of a small scale business in Nigeria.

1.5 Research Question

In order to achieve meaningful result from this research, the following research questions have been formulated as a guide to the researcher and shall be examined. Some of the questions are:

  1. What are the major problems associated with financing small scale business in Nigeria?
  2. Does weak financial base limits the capacity of small scale businesses to meet their goals?
  3. Does government give loans to small scale business investors at a subsidized rate?
  4. Are personal savings and loans from relatives enough to set up a small scale business?
  5. Are the problems associated with small scale business having a negative impact on the business?
  6. Has government been able to effectively and efficiently impacted small scale business in Nigeria?
  7. Are small scale businesses being over taxed by the Nigerian government?
  8. Doe Nigerian government encourages small scale business in Nigeria?
  9. Is the registration of businesses by Corporate Affairs Commission (CAC) an obstacle to small scale businesses?
  10. Are there increased in the rate of company income tax paid small scale businesses owners?

1.6 Research Hypothesis

Based on the study, the following research hypotheses formulated will be empirically tested and result gotten will serve as a spring board for recommendations.

This hypothesis is as follows:

  1. Ho: there are no problems associated with financing small scale business in Nigeria.
    Hi: there are problems associated with financing small scale business in Nigeria.
  2. Ho: weak source of finance does not limit the capacity of small scale business.
    Hi: weak source of finance limits the capacity of small scale business.

1.7 Significance Of The Study

This study is aimed at explaining the process of financing small scale business within the context of its problems and effects in Nigeria. The research generated by the postulation of the study can enrich the literature on small scale business in Nigeria.

This study shall be helpful to many Nigerians in reducing the problem of how to raise funds for setting up small scale business enterprises and providing a technique of decision making when setting up a small scale business.

This research study will also be useful to the government in knowing the problems involved in financing small scale businesses and knowing how to provide remedies to such problems.

It could also serve as a useful insight to business consultants, accountants, government agencies and the general public especially those who are into small scale business.

1.8 Scope And Limitation Of The Study

This study generally covers such areas as financing of small scale business, looking generally at its problems and effects in Nigeria. It also covers such critical area as the sources of funding small scale business. The researcher covered a small scale business enterprise for sourcing for relevant data. The area covered in this study is limited to Royal Marble Hotels, Benin City in which data regarding small scale businesses were obtained.

However, during the conduct of this research work, some factors posed constraints to the determined efforts of the researcher to carryout the research study with ease. Such factors include:

a. Management Restriction:

Management refuse to allow access to information that is considered very confidential like detail information of the organizational corporate profile. As a result of the restrictions, the researcher was able to work with only the information that was accessible.

b. Time Constraint:

Time is also another limiting factor that acts as hindrances in carrying out this research study. This is as a result of the fact that other academic activities were still being attended to in the course of carrying out this research work.

c. Financial Constraint:

Money also acts as a problem in the conduct of the research work. Traveling expenses were incurred in getting the materials for the research work other expenses incurred generally during this research project work.

1.9 Definition Of Terms


This is a fact of performance which relate to the rate of resource utilization (i.e. cost incurred in the course of the work.


This can be defined as the effect of a situation or a thing. It could be a positive effect or negative effect.


It is a situation where there is an insufficient or inappropriate amount of something in relation to another.

Financial Capacity:

It is the level of finance or amount of money available for an organization, individual or government.


The gradual growth of something so that it becomes more advances, stronger a new event or stage that is likely to effect what happens in a continuing situation. It could be in political and economical.


Performance is an action or achievement considered in relation to how successful or non-successful a worker contributed in organization productivity.


These are factors in the environment that place the organization at a advantages over its competitors.


This is the low level of performance in an establishment which hinders its growth.


This is used to describe the selected group of people at the helm of affairs in any organization. They work with and through others in realizing the objective of the organization.


Financial organization which keeps money in accounts for its client, lends money and exchanges currency.

Financial Institution:

Banks, insurance companies, savings and loans.


Could be defined as the joy which the employee derived from the work situation.

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