The Role Of Federal Government In The Promotion Of Small Scale Business In Nigeria

The Role Of Federal Government In The Promotion Of Small Scale Business In Nigeria

Abstract

This study is on the role of federal government of Nigeria in the promotion of small and medium scale enterprise in Nigeria. The total population for the study is 200 staff of Dangote group of company, Lagos 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 production managers, human resource managers, senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

Chapter One

Introduction

1.1 Background of the Study

Small scale business constitute an important component of the Nigerian industrial sector. The importance of this sector cannot be over emphasized, especially in a typical developing country like ours where the level of youth unemployment is rising beyond control. Hence small scale industries generate employment opportunities per unit of capital investment because they are generally more labour intensive which are more capital in nature. A large scale industry that cost N20million for instance, may employ a mere 70 (seventy) workers or less. Where as a small scale industry that cost just N150,000 (one hundred and fifty thousand naira) may employ about 20-30 workers.

Small scale business specialized in the production and marketing of various products and services ranging from food, beverages, drinks/sachet water, cosmetics, spare parts and many others.

Kilby (1969) acknowledge the diversity of terms of the degree of specialization and division of labour and the quantity of raw materials and output and the character of markets being served by small scale businesses. As a result the bulk of Nigerian business falls within the small scale business which account for over 80% of the number of enterprises in the country. (Ekunna 1992 Pg.160)

Several number of small scale business are successful while other fail or are staggering for survival due to poor background management, lack of qualified manpower, poor capital base, lack of marketing research and appropriate technology and credit rating among banks and other lenders. These problems continue to militate against the establishment, survival and growth of small scale business in Nigeria. Although successful government in Nigeria have been emphasizing on the importance of small scale business and have established institutional support agencies to facilitate industrialization.

However, small scale business still operate in uncertainty and are faced with serious obstacles, this raises the questions of whether the federal government is actually up to the responsibility in the promotion of small scale business in Nigeria.

1.2 Statement of the Problem

Several studies have identified financial constraint as the major obstacle to Small and Medium Scale Enterprises Development in developing countries including Nigeria. For instance, Adelaja (2003) argued that the access to institutional finance has always constituted a pandemic problem for SME development in Nigeria. He recalled that in the past, a number of schemes have been put in place to provide special credit lines/windows for SMEs but this achieved very limited impact.

The primary focus of this study emanates from the fact that small scale enterprises owners do not have sufficient finance to carry on their due to the low saving culture of the people in this part of the world. The reason for this is not far fetch: low level of income basically. While it is an established fact that Small and Medium Scale Enterprises face financial challenges, no research has been conducted to investigate the effect the financial problem on their contribution to economic development. Asaolu et al (2005) and many other authors and researchers have deduced that the financial challenges mar the developmental role of Small and Medium Scale Enterprises. But this may not be true especially in the case of Nigeria where the informal sector, which is constituted largely by the Small and Medium Scale Enterprises play a very important role in the development of the nation’s economy. Therefore, this study seeks to evaluate the promotion of Small and Medium Scale Enterprises (SMEs) in Nigeria and their contribution to economic growth.

1.3 Objective of the Study

The main objectives of this study are to evaluate the impact of federal government in the promotion of small scale business in Nigeria.

This study will specially seek to achieve the following:

1. To evaluate the marketing challenges facing small scale businesses.
2. To identify the sources of funds to the activities of the industry.
3. To find out the extent of government involvement in promoting the activities of the business.
4. To bring to light the contribution of the industry to the development of national diploma in marketing.

Finally, it is my hope that the students of marketing and others in related discipline will find this study very informative and useful tool in their respective studies.

1.4 Research Hypotheses

For the successful completion of the study, the following research hypotheses were formulated by the researcher;

1. H0: there are no marketing challenges facing small scale businesses
   H1: there are marketing challenges facing small scale businesses
2. H02: there are no sources of funds to the activities of the industry
   H2: there are sources of funds to the activities of the industry

1.5 Significance of the Study

The significance of this study lies basically on its contribution to knowledge and its benefits to individual and organization. The current economic crises in Nigeria have deciminated the growth of infant industries and encourage the establishment of similar business venture in both small and large scale proportions. Although successful governments have vowed to support individuals and group initiatives in the establishment of small scale businesses. The current state of most small scale business in Nigeria is a far cry particularly when structural adjustment programme (SAP) was introduced, which brought about the problem of devaluation of the naira and the scarcity of foreign exchange of raw materials from abroad which has adversely affected production unit especially under a depressed economy. This study is an attempt to evaluate the role of government in the promotion of small scale business in Nigeria as a country

1.6 Scope and Limitation of the Study

The scope of the study covers the role of federal government of Nigeria in the promotion of small and medium scale enterprise in Nigeria. 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

The following terms and abbreviations used in the extended essay are defined below:

SSICS

Small Scale Industries Credit Scheme

SME

Small and Medium Enterprises

NIDB

Nigerian Industrial Development Bank

NERFUND

National Economic Reconstruction Fund

NDE

National Directorate of Employment

Small Scale Enterprise:

Apart from size, it is a type of business that is self initiated, largely self financial, closely self managed and is of relatively small in size when considered as part of the industry.

Management:

Is the part of loaning organizing, directing and motivating others so as to enhance productivity with maximum utilization of available resources and achieving the organizational goals or objectives.

Resources:

These are the primary inputs that needs to be put together into function before the proper management activities really take place. These activities include; men, materials , money and machines.

Enterprises:

This is one of the fundamental principles of management that is concerned with the division of labour and assigning of responsibilities with authority for the well being of business unit

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 role of federal government of Nigeria in the promotion of small and medium scale enterprise in Nigeria

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 the role of federal government of Nigeria in the promotion of small and medium scale enterprise in Nigeria

5.2 Summary

This study was on the role of federal government of Nigeria in the promotion of small and medium scale enterprise in Nigeria. Four objectives were raised which included; To evaluate the marketing challenges facing small scale businesses, to identify the sources of funds to the activities of the industry, to find out the extent of government involvement in promoting the activities of the business, to bring to light the contribution of the industry to the development of national diploma in marketing. 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 Dangote group of company, Lagos 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 production managers, human resource managers,senior staff and junior staff was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

Based on the findings obtained from the analysis of the hypotheses, it could be concluded that government capacity building programmes significantly impacted on the development of SMEs in Nigeria. This implies that increase in the number of capacity building programmes by government will lead to the development SMEs. The findings also lead us to the conclusion that there exist a significant relationship between the provision of financial support by government and the development of SMEs in Nigeria. In order words, an improvement in the financial support by government to SMEs will motivate the growth of SMEs on Nigeria. Also, the provision of industrial or business clusters by government has significantly impacted on the development of SMEs in Nigeria, a significant relationship exist between the provision of infrastructure by government and development of SMEs in Nigeria. The findings also leads us to conclude that provision of technology by government significantly relates to the development of SMEs in Nigeria and lastly there exist a significant relationship between the provision of enabling business environment by government and the development of SMEs in Nigeria.

5.4 Recommendation

Based on the findings of this research, we present the following recommendations;

1. Since the issue of inadequate human capacity is a challenge to SMEs in the country, government should continue to develop and provide capacity building opportunities to enhance process improvement for this sector
2. Furthermore it is recommended that the government should continue and in fact enhance the provision of loans and/or grants to SMEs through affordable and reliable windows of financial support
3. Also, there is a need to improve the general infrastructure like power, road and rail network, communication systems as these were found to be critical to the development of SMEs in Nigeria.
4. For a study of this nature, the findings would have been more robust if more independent variables were studied. It is therefore recommended that future researchers should evaluate the role of variables such as supply of farming inputs, construction of irrigation channels, banning of imports and provision of assistance for storage and marketing as they affect the dependent variable.

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