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

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


The federal government of Nigeria has continued to support scale business enterprises in its bid to promote the general economic development of the country and to lay a solid foundation to industrialization. In this essay, an attempt is made to create awareness amongst students as well as the general public on the various forms of support the federal government gives the important aspect of the national economy. The essay covers three main chapters: chapter one contains the introduction, objectives of the study, scope, significance of the essay, definition of terms. The second chapter reviewed various literatures from different authors on the topic. The chapter also discussed generally what small and medium scale business is, the role of government in promoting small businesses and its advantages. Chapter three contains findings, conclusions, recommendations and bibliography.

Chapter One

1.0 Introduction

Small and medium 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 and medium 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 and medium scale industry that cost just N150,000 (one hundred and fifty thousand naira) may employ about 20-30 workers.

Small and medium 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 and medium scale businesses. As a result the bulk of Nigerian business falls within the small and medium scale business which account for over 80% of the number of enterprises in the country. (Ekunna 1992 Pg.160)

Several number of small and medium 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 and medium scale business in Nigeria. Although successful government in Nigeria have been emphasizing on the importance of small and medium scale business and have established institutional support agencies to facilitate industrialization.

However, small and medium 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 and medium scale business in Nigeria.

1.1 Objective of the Essay

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

This study will specially seek to achieve the following:

  1. To evaluate the marketing challenges facing small and medium 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 myhope that the students of marketing and others in related discipline will find this study very informative and useful tool in their respective studies.

1.2 Scope of the Study

As the title of this essay indicates, the study focuses its attention to federal government support to small and medium scale business enterprises in Nigeria, it causes various policy, guidelines, direct and indirect financial assistance and other programs and initiatives designed to promote this vital sector of the country.

1.3 Significance of the Essay

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 has deciminated the growth of infant industries and encourages 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 and medium scale businesses.

The current state of most small and medium 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 and medium scale business in Nigeria as a country.

1.4 Definition of Terms

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

  • (SSICS) Small and medium scale Industries Credit Scheme
  • (SME) Enterprises
  • (NIDB) Nigerian Industrial Development Bank
  • (NERFUND) National Economic Reconstruction Fund
  • (NDE) National Directorate of Employment

Small and Medium 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.


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.


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.


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.

Chapter Five

5.0 Finding, Conclusion and Recommendation

An attempt is made in this chapter to summarize the whole study on the role of the federal government in the promotion of small and medium scale business. It is based on this study that a conclusion is drawn and some recommendations are put forward for the promotion of small and medium scale business in Nigeria.

5.1 Findings

In completing a study of this nature successfully, its objectives must be observed and in doing this, the researcher decides to look at the general problems of the small and medium scale enterprises.

Many observers have often noted that small and medium scale enterprises are usually plagues with problems which have been too over weathering for many of them to succeed in contributing to the economic and industrial sector.

However, several studies have been undertaken with a view to identifying and assisting in solving the problems which hinder the development of small and medium scale enterprises. The problems discovered here include marketing, finance, inadequate supply of right type of skilled labour and raw materials, strict government policy, inadequate provision of infrastructural facilities, the lack of entrepreneurship and managerial ability.

5.2 Conclusion

Based on the above study, the researcher can conveniently decide that although small and medium scale businesses are the bed rock of the economy development in Nigeria, the present economic crisis, couple with policy inconsistency, poor capital base and other constraints are serious threat to the survival and growth of small and medium scale business sub-sector in Nigeria. Unless and until urgent measures are put in place to create and enabling environment for the growth and development of small and medium scale business, this important sector will continue to decline in number and strength.

5.3 Recommendations

The recommendation drawn on the study work is based upon the general problems of small and medium scale business, and at the same time on the federal government in the promotion of small and medium scale business.

  1. Adequate funds should be provided by the government to credit agencies and direct them to give preference to scale business and agricultural sector in granting loans at a reasonable rate of interest.
  2. Government in collaboration with higher institutes of learning like university of technology and polytechnics should endeavour to improve indigenous technology that will suit the Nigerian environment.
  3. A good measure should be design by government to check the non implementation of budgetary and fiscal policies that affect the industrial development of Nigeria.
  4. Scale business should be kept informed by manufacturers association of Nigeria and other industrial support agencies of the latest development in the business world and educate the entrepreneurs on the need to produce and market quality products.
  5. Small and medium scale business should be made to register with industrial development centers so that training program for machine operators, repairs and maintenance could be carried out.
  6. The three (3) tiers of government that is, federal, state and local government should provide full support to small and medium scale business through patronage and encouragement.

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