The Role Of Small Scale Business In The Development Of A Nation

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The Role Of Small Scale Business In The Development Of A Nation


The main purpose of this study is to know the roles of small scale business in the development of a nation. Every nation no matter the nature and rate of available human and material resources under its disposal can hardly attain growth and economic development if the small scale business sectors of such nature is neglected or not given adequate financial supports cum other incentives that make for the survival of this business. The total population for the study is 200 staff of selected SMEs in 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 farm managers, farm officers, insect fumigators and farm supervisors was used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

Chapter One


1.1 Background of the Study

Small-scale industries play a vital role in the Material welfare of many nations today’s especially the developing nations.

They makes specific contributions depending on the form and objectives. Some produces raw materials, distribute products or provide services while others them the raw materials into finished goods or products. The need of most developing countries is to attain self-reliance and resilient economic status capable of generating an internally sustaining growth. Small-scale industries are the roots and pillars upon which h this can be achieved. The activities of any small-scale industry in any give economy cannot be over emphasized especially mow the country is in political disarray and needs be called to orderliness.

Moreover, they provide avenues for the development of entrepreneurial capabilities and managerial skills.

As the business requires low capital for setting it-up, such industries spring up in different parts of the country making maximum use of local raw materials.

Despite the large number of small-scale industries in the country, Common Nigerians, While urban concentration, unemployment and other vices which these industries were meant to eliminate persist.

It is as a result of negative effect in our economy that need for the diversification of economic activities through several ways of reviving the Nigerian economy become comparative one, of which is an effective and efficient role played by small- scale industries in economic development of Nigeria.

In the earning of industries, Nigeria and other countries were merely producers of raw materials for use in European industries.

While the raw materials which have been turn into the finished goods were more concerned with the maintenance of law and order, and putting in structures for easy evaluation of raw materials than industrizing the colonies

Since Nigeria lacked the necessary tools for capital investment, technical and managerial skilled necessary to promote and operate viable enterprises, foreign investors in a bi d to tap the abundant resources in the country took the initiative of establishing small-scale industries.

Stales morse, in his book modern small-scale industries for developing countries page 1-10 wrote, at the end of the second world war in 1945, the parliament of the united kind of autho-rised the appropriation of the sum of $ $200 Million for the promotion and advancement of British colonies and other dependent territories. In order to determine how the and was to be allocated and for what scheme the Nigerian government prepared, “A Nigeria”. This plan made provision for the capital expenditures of $ 55 million.

Department of scheme were called for by the government, greater emphasis was placed on the provision of social Amenities a stepping stone for industrial development. Only 0.4 percent was embarked for industrial development. The department for commerce and industry was later established for the development and improvement of marketing products for export .

In 1954, Economic programmes of Nigeria emphasis was shifted from expansion to social services to gearing the economy towards to the building of infrastructures . industrial expansion get more attention than in earlier plans accounting for two percent of the cost of the plan. After independence, Nigeria pursued a policy of attracting foreign investment simultaneous with the policy of increasing Nigeria’s participation in small-scale industries, as a foundation towards a larger scale production. Recognizing then significance of these small-scale industries, the Nigerian government instituted various prog ammes to encourage enterprises in this sector. Such incentives were credit scheme, finaccia and managerial assistance programmes, industrialist promotion act and various. Kinds of tax relief were made available to small-scale industrialist indeginisation of industries was introduced in 1972 in t he economic sector of the country. It was also meant among other things to protect infant industries.

1.2 Statement of the Problem:

The establishment, management and running of small-scale industries in Nigeria have produced a less diminishing effort compared to the increasing allocation made in this sector.

The problems ulitating against successful investment in small-scale industries could be traced to the following factors, lack of raw materials input s, sharp fluctuations in the rate of interest, exchange rate of the local currencies, malpractice’s in the form of barbering and corruption as well as “419” or obtain of the country’s geographical and political environment and finally lack of infrastructure facilities and skilled manpower inclusive.

To eliminate these problems government should ensure that the rate of interest and exchange rate are stable. There fore government should not spare corrupt businessmen who engaged in illegal dealing. In addition, infrastructural facilities should be embraced by the government to encourage small-scale by the government to encourage small-scale industrialist

1.3 Purpose of the Study

The major purpose of conducting this objective was to find out the role of small-scale industries in developing countries like Nigeria. How they relate with financial institutions, their customers, government, the public and other public corporation and organization towards the industrialization of the country.

The study also looked into the achievements of small-scale industries in the Nigerian economy the problems of impending the survival and sustainance of small-scale industries in Nigeria is looked into, and consequently the solutions to such problems. Therefore the objectives or purposes of the study can be summarized clearly as listed below.

  1. To identify the role of small-scale industries in the economy
  2. To investigate factors militating against improved performance by small-scale industries.
  3. To initiate appropriate measures for the enhancement and prolification of small enterprise.
  4. To recommend solution to the problems of small-scale industries.

1.4 Scope of the Study

The researches had to limit the scope of the research to certain geographical small-scale industries in umuahia and Aba both in Abia State Nigeria.

However more attention were given to small-scale industries at Aba Urban, because of its industrial complex in in the production of goods and service. Aba is known as the Japan of Africa. It has done well in given people the insight of what small-scale industries is all-about, given assistance to opening up a small – scale industries and how to manage it effectively.

1.5 Research Questions

  1. What is the amount used in starting industry.
  2. What is the duration of your industry.
  3. What is the number of people employed.
  4. How does your industry being financed.
  5. What is the qualification of people employed in your industry.
  6. How do you obtain your raw materials.
  7. Does you industry receive aid from the government.
  8. Does the government impose tax on the industries?
  9. How is the trend of patronage by Nigerians?
  10. What is the problem of the industry?
  11. How the problem could be solved.
  12. What is the contribution of the industry to development of the nation?
  13. What is your industry’s involvement on research activities?
  14. Does the. Present economic situation affect your industry.
  15. What is the annual income of your industry?

1.6 Research Hypotheses

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

  1. H0: small scale business plays no role in the economic development in Lagos State
    H1: small scale business plays role in the economic development in Lagos State
  2. H02: there is no significant relationship between small scale business and the economic development in Lagos State
    H2: there is a significant relationship between small scale business and the economic development in Lagos State

1.7 Significance of the Study

All the developing countries are aware of the big gap between them and the developed countries. As a result of the gap, they are very interested on bridging the gap.

Small-scale industries are considered necessary to the nation because of the following reasons.

  1. They provide employment opportunities to our skilled and unskilled labour force.
  2. Small-scale industries leads to better utilization of raw materials with the country.
  3. Small-scale industries help in raising the national income and this increase the standard of living.
  4. They lend to rapid development of infrastructural facilities like road, electricity etc.
  5. Small-scale industries help in rectifying the problem of balance or trade value.
  6. They help in reducing the dependence on the out-side world for industrial products.
  7. Small-scale industries contribute immensely on the healthy competition thereby eliminating the danger of monopoly.
  8. Small-scale industries aid in the diversification’s of the economy.

1.8 Limitations of the Study

The limitations encountered on the process of carrying out the study are as following;


Money was needed for going round in the involved city’s towns. Fund is also needed for typing and the production of the final volume as complied.

Therefore, lack of fund was a serious problem on the process of carrying out the study as fully wanted .
Collection of the data: The nonchalant attitude of some of the staffs in our firms or visited firms constituted a major problem on the this study.

However, some officials were reluctant to release essential in formation and tended to treat issue as sacred and top sacral.

All of these factors listed above were a set-back and stumbling block to the collection of data and limits the efforts of the research.

1.9 Definitions of Terms:

Small-Scale Industries:

These are the industries whose capital investment in machinery and equipment is not exceeding N250.000 (Two hundred and fifty thousand naira ) and employing between on to fifty workers.

Industrial income of an economy during the course of a certain period. Industrial development measures, the increase in the volume or number of goods and services after allowing for price change.


An article to district specification and intend for sale under a separate brand. A product is the combination of both raw materials and services. It is a packaged of customers satisfaction and benefits.


This refers to the person who provides the necessary financial, human and material resources for the establishment and up keep of an industry.

Skilled Manpower:

Labour force or worker who receive comparatively long training in one type of skill or more and make expert Judgement in the discharge of their duties.

Raw Materials:

These refer to the natural substance from which product is made or manufactured

1.10 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), 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 effects of small scale business on the economic development of Nigeria (a case study of Lagos State).

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 small scale business on the economic development.

5.2 Summary

This study was on effects of small scale business on the economic development of Nigeria. Four objectives were raised which included; To determine the roles which the small scale business have played in economic development of Lagos State, to suggest the future prospect of small business in economic development of Lagos State, to determine the problems small scale business are facing in Lagos State, to ascertain the relationship between small scale business and the economic development in Nigeria. 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 selected farms in 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 farm managers, farm officers,insect fumigators and farm supervisorswas used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies

5.3 Conclusion

Hardly can any major industry succeed without the services of small business enterprises. The relative strength of their importance varies from one industry to another. The role of small scale businesses in the development of Nigeria economy cannot be over-estimated. Firstly, the continuing growth in the economy of any nation depends to a large extent on the startups of small businesses, which depends on locally fabricated machinery and local raw material inputs. Secondly, it is a considerable solution to balance of payment problems resulting from less dependence on imported inputs and also serves as a training school for the indigenous entrepreneurs and provides grounds for the acquisition of skill for a large number of workers.

5.4 Recommendation

The researcher after discussed the findings and conclusions recommended that the small scale business contributes in strengthening industrial linkages by producing intermediate products for use in large enterprise in Nigeria. The researcher also showed that government tax policies have not been favorable in the establishment of small scale enterprises in Nigeria for many years now. So government should know how it will be amending some of these tax policies they feel is affecting the establishment of small business in order to encourage more people into venturing into it. Government should also 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. 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.

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