The Role Of Government In Promoting Small Scale Industries In Nigeria (A Case Study Of Anambra East Local Government)

Project and Seminar material for Public Administration

Abstract

This study is aimed at finding out the role government should play in promoting small scale industries. This study has been divided into five chapters thus;

Chapter one is the introduction, sitting out the background of the study. The researcher highlighted that the performance of small scale industries should be promoted by the government.

This study is of paramount importance because it helps to discover the problems facing the small scale industries in the course of not been promoted by the government

Chapter two is a review of related literature, it started by the definition of small scale industries, the government involved, assistance provided by the government to small scale industries, government policies for promoting small scale industries.

Chapter three decals with the research design and methodology employed in the study. here data were collected from secondary source

Chapter four, stated the findings or result collected in the course of this research work.

Finally, Chapter five states the conclusion and recommendation of the study.

Table Of Contents

Preliminary Page(s)

• Title page
• Approval page
• Dedication
• Acknowledge
• Abstract
• Table of contents

Chapter One

1.0 Introduction

• 1.1 Background of the study
• 1.2 Statement of the problem
• 1.3 objectives of the study
• 1.4 Research questions
• 1.5 Significance of the study
• 1.6 Scope of the study.
• 1.8 Definition of Terms

Chapter Two

2.0 Literature Review

• 2.1 introduction
• 2.2 government
• 2.3 support system
• 2.4 Financing
• 2.5 monetary policy development in favour of small scale
• 2.5.1 Benefits of small scales enterprises
• 2.5.2 Problems facing the small scales industrialists
• 2.6 Financing the project
• 2.6.1 Technical know – how
• 2.6.2 Personal matters and general administration
• 2.6.3 Improving funding of small scales

Chapter Three

3.0 Research Methodology

• 3.1 Introduction of the Study
• 3.2 Research design
• 3.4 Population
• 3.5 Sample technique
• 3.6 Validity of the instrument
• 3.7 Method of data analysis

Chapter Four

4.0 Presentation and Analysis of Data

• 4.1 Introduction
• 4.2 Presentation of data
• 4.3 Analysis of data
• 4.4 Research Findings

Chapter Five

5.0 Summary, Conclusion and Recommendations

• 5.1 Summary of findings
• 5.2 Conclusion
• 5.3 Recommendations
• Reference
• Appendix
• Questionnaire

Chapter One

1.0 Introductions

Large — scale manufacturing has been the main thrust of Nigeria’s development program over time. However, it is being widely acknowledged that Nigeria should be the Centre Piece for effective short and long run development of any nation such as Niger. Both the federal and state government on one hand and general public on the other attest to the fact through their efforts toward the development of the country side of Nigeria.

In realization of this and in pursuance of its attainment, the federal government created the directorate for foods, roads and rural infrastructure (FRRI) to work in partnership with the rural communities toward provision of amenities such as rural roads, water boreholes and production of more foods As well several states, which Anambra is one of them have adopted rural

development program which is charged with the responsibility of developing and coordinating Nigeria activities in the state. From the on-going, there, it is clear that the government and people of the country now attach much importance to rural development the nee to achieve integrated this study with the objective of determining the role of government in promoting he establishment of small scale industries in the rural areas can play in this regard.

1.1 Background Of The Study

The successive development plans of Nigeria have laid emphasis on the attainment of self reliance. The need for this national objects is because must of expected from individuals from the view point of providing employment opportunities self reliance in basic food and material production high per capital income, foreign exchange and the production of industrial raw materials.

Okporobie (1989) observes that Nigeria small scales continued to decline despite the so called priority given to the sector. However, the discovery by the state government aht this policy as not enough by itself led to the state government request with effect from 1970/80 that all local government must reserve a proportion of the minimum credit allocation to indigenous borrowers for small scales Nigeria enterprises. The target prescribed in 1979 was ten percent (100/c) which subsequently rose to sixteen percent (16%). Even though available data showed that performance of local government against this directive has beer disappointing.

The state government intends to spare no effort in ensuring that governments fully comply without compromising the smooth functioning of the nation banning system. He observed also, that without the development of small scales in Nigeria, the nation’s quest for industrialization must address the basic issues of creating linkages without the economy to begin to produce real input to our government council activities. Priority attention must therefore be given to these local governments for which domestic inputs could easily be produced. This will bring about agro allied local government like food processing and other by-products.

The objectives should be to maximize the value added in their processing and local government council as final goods immediately inputs.

Nzewi and Oze (1985:56) observed that empirical evidence indicates that strong producer incentives to small scales industrialists are necessary not also only meet the food requirement but also to provide growing input supplies and demand as a foundation for sustained industrial growth.

The present economic constraint may well turn out to be a blessing in disguise to our industrialization effect particularly for dynamic local government. For instance, the market determines exchange rate through seeing with its result id nigh cost of imported inputs may as an impetus for industrialists to intensify their search for local substitutes.

EKEANYONG AND Nyong (1992) observed that small scales enterprises are regarded as an organic part of a viable structure for the attainment meaningful economy development in developing economy like Nigeria.
They are significantly more cost effective in bringing about development than large enterprises because of the perceived linkage and multiple effects which small scale enterprises have no the performance of the economy and economic growth in general.

Osayameh (1989) observes that the strength that make small scales enterprises more amendable for assistance areas as follows:

1. Personal commitment of the proprietor whose Life saving usually form the start up capital
2. Low initial capital out lay requirement
3. Ease of entry and exit and prevalence of just Minimal legal constraints.

Amenability to business advisory services because of their small size which makes them more responsive to improvement suggestion less Olashore (1987) observes that the four main sources of enterprises financing open to small scales industry in Nigeria are:

1. Formal financing institutions such as local governments merchant government, Insurance companies and the development bank.
2. informal financing landlords, credit and savings associations “esusu” friends and relations personal savings and
3. Other financial scheme, NERFUND NEXIM in 2001, there was an introduction of small and medium local government equity investment scheme (SMIEIS) in which N359 million was set aside to data by government under small medium local government Equity investment scheme.

Through Union bank small and medium scale enterprises (SMES) department, the bank has remained in fore front OF smes financing nations was extended to the SMES as at 31st March 2004. Small scales [industry is any industry not exceeding #750,00 including working capital but excluding cost of land. It is also defined by center for industrial research and development of Obafemi Awolowo University lie Ife as those local government whose total assets in plant, equipment than 50 employees.

1.2 Statement Of The Problem

Since independence, Nigeria has four national development plans, but unfortunately we are still in search of a development strategy to launch as on the play form of developed nations, Hitherto, the development plans have laid emphasis on large manufacturing concerns.

It therefore, becomes imperative that other strategies such as small — scale industries programmes be given a trial in search for a messiah strategy. Thus the study aims of addressing the problems of searching ‘lor the best development plan by finding out and analyzing the benefits of small — scale industries with a view to determining their relevance in Nigeria and ultimately natura! dr”c’’”t.

The study aim a Joing this by identifying the specific contributions of the establishment of small scale industries can make especially in the Nigeria, it will equally identify the categories of business that qualify as small-scale business and the types needed in the rural areas.

It therefore, becomes imperative that other strategies such as small — scale industries programmes be given a trial in search for a messiah strategy. Thus the study aims of addressing the problems of searching for the best development plan by finding out and analyzing the benefits of small — scale industries with a view to determining their relevance in Nigeria and ultimately natura! c”c’t.

The study aim at doing this by identifying the specific contributions of the establishment of small scale industries can make especially in the Nigeria, it will equally identify the categories of business that qualify as small-scale business and the types needed in the rural areas.

1.4 Research Questions

1. To what extent has Anambra East finance small scales?
2. What are the problems encountered small scales Industrialists in obtaining 1980 -2010?
3. What are the various measures introduced to boost industrial production and its financing and how this has affected the realization of the set goals?

1.5 Significance Of The Study

This study will highlight problems associated with the role of government in promoting of small scales industry in Nigeria. It will give information on the possible areas for improvement. Furthermore, the study will help local government to assess and appraisal their role in financing small scales industry in Nigeria.

Moreover, suggestions and recommendations made in this paper will help policy makers formulate new economic policies maintain or modify the existing one.

It will equally serve as a guideline to researches who may wish to decide with this study in the future. It will also help small scales entrepreneurs to make sufficient preparation in their request for credit assistance. It will guide the entrepreneurs in making credit demands that are compliance with government monetary policy. The last but not the least it will help the entrepreneurs to display competence in preparing justification for their project. It is rear to see most of them coming up with cash projections, projected balance sheets.

1.6 Scope Of The Study

The scope of the study is the role of government in promoting of small scales in Nigeria. A case study of Anambra East L.G.A It does not cover a critical appraisal of the state government in financing medium and large scale business.

1.7 Limitation Of The Study

However, the were constraints imposed on the researcher this includes the following:

Time:

Carry out a study of this nature needs a relatively long time during which information for accurate or at least near accurate instances could be drawn. The period of the study was short, hence time posed as a constraint to the researcher.

Cost:

The researcher would have extended the survey to areas but limitation here already completed work.

Dearth: (Scarcity) Of Statistical Data:

Lack of statistical data from our financial institutions like state government (CBN) ministry of financial and economic development, commercial and merchant bank posed a constraint local governments adhere strictly to the rule of secret, in banking thus they refused to release information.

1.8 Definition Of Terms

Small Scale Industry:

Any industry with capital not exceeding 750,000 including capital but excluding cost of land. It is also defined by center for industrial research and development of Obafemi Awolowo University TIe Ife as those local government whose total assess in plant equipment and working capital do not exceed 250,000 with not more than so employees.

Local Government Financial Institutions

That acquire deposit from savings surplus unit and give out loans to savings deficit units.

Industrial Development Center

Provide management, technical, consultancy and extension services for the small scales.

Indigenization Decree:

A decree that most business become, at least 60% owned by Nigerians.

Sole Proprietorship:

Is a business owned and conducted by one person presumably assisted by one more person for intakes wife and children. SS/CS small scales industry credit scheme.

Chapter Five

5.0 Summary, Conclusion And Recommendations

In the preview chapter, the researcher presented and analyzed data. This chapter is essentially articulate it discuses the main kernels of the research findings and proffers pertinent recommendations.

5.1 Summary Of Findings

From the study the extent to which Anambra East LGA. has helped to finance small scales was impressive during the period under review. This is because the average annual percentage loan and advances to small scales was sixteen (l6%) when compared with the average annual prescription by the government.

The-problems uncounted by the small scales industrialists in obtaining finance from Anambra East L.GA was that some of small scales industrialists approached bankers with ill conceived projects were to be stood.

The government saw no degree of confidence in the project with the applicants demonstrated through the equity participation. Some of the applicants failed to include the feasibility study of their proposed project, while some did not possess enough assists or guarantors which would have served as securities other problems were lack of managerial experience on part of the small scale industrialists. Non provision of adequate collateral security.

On evolution of the various measured to boost industrial production and its financing, from the study it was discovered that local governments have been willing to meet the demands of small scales borrowers due to the relatively poor performance of many of integrity among the lack of financial has made loans made to small scales in the lending scheme which are ultimately the cause of variability in small scales industrial financing by Anambra East L.G.A as the government preferred to grant their loans and advances mostly on the otherwise secured security.

5.2 Conclusion

This project work exanimate the role of government in promoting small scales industrial in Nigeria. A case study of Anambra East L.G.A small scales enterprises are regarded as an organic part of a viable structure for the attainment of meaningful economic development in developing economics like Nigeria. They bring about development than larger enterprise because of the perceived linkage and multipliers effects which the small scales have no the performance of the economy and economic growth in generally.

The optimism after years of persistent effort sing to achieve economic emancipation of the country by imported technology that the only alternative is to adopt a more local and positive strategy. The best alternative industrialization strategy is the establishment and continues financial assistance to the small scales.

In essence, if the described objective of using SME as catalysts of development is to be achieved, than a critical appraisal of the state government should be mutually supportive.

5.3 Recommendations

In view of the foregoing review the following recommendations are suggested for improvement of the role of government in promoting of small scales in Nigeria.

1. Risk In Small Scales Lending

In order to reduce the risk in small scales lending, the Central bank of Nigeria and he government can do more than they are currently doing be boarding the credit guarantee scheme. Rediscounting by the state government can sample possibilities for encouraging local government to gain experience in medium and long-term lending operation. A number of procedures can be adopted such as preferential discount rates multiple discount rate or quotes favouring certain purpose.

2. Technical And Managerial Assistance

The bank themselves can ensure minimum risk of the loan losses by providing technical and managerial resources to various kinds of their small scales industrial customers. This could embrace also assisting and management. At the same time, small scales industrialists can avail themselves of such services Provided by the government such as the industrial development.

3. Rural Banking

In order to make credit available to small scales industrial sector, the government and the public should more use of the rural banking programme. The branches of each bank in the rural communities should be given free hand to take certain decision concerning advancement of these loans and advances to rural small scales industrials they should be able to act as management consultants identifying problems and suggesting solutions.

4. Saving Scheme:

The government should combine savings scheme for small scales industrial sector with their credit programme such as a scheme would provided further means of financing the government and create attachment of the industrialist to the government and also solve the problem of very short moratorium period granted government to small scales which has provide inadequate for the funding of industrial activity in which the borrowers are engaged in there by carting repayment programme problem,

5. Insurance Scheme:

The Federal government has established an insurance scheme to protect the hazard interest in industrial production; this should also extended to the small scales industrial sector.

This policy should be implanted immediately without further delay. It will encourage local government to lend medium and long term funds. It will also enable to grant a longer period of moratorium on loans for the small scales.

6. Improving Infrastructure Facility:

Improving telecommunication and other infrastructure facilities will go a long way in easing the problems of currently be setting commercial government financing of small scales business.

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