Strategies For Enhancing And Promoting Capital Formation Among Small Scale Enterprises In Nigeria (A Case Study Of Heritage Company Enugu)

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Strategies For Enhancing And Promoting Capital Formation Among Small Scale Enterprises In Nigeria (A Case Study Of Heritage Company Enugu)

Abstract

In this project, the explanation of the stratifies for Enhancing and promoting capital formation amount the small scale enterprises in Nigeria is made.

The importance of this to the growth of small-scale business in Nigeria is advanced. The general performance of small-scale enterprises in the country is X-vated, using heritage company Enugu, as a case study.

The results of this X-ray are follows.

  1. The net profit of Heritage Company, Enugu is not big enough for the expansion of its operation rapidly.
  2. There is slow increase in the quality of inventories in the stories due to high cost and low profit.
  3. In order to accumulate adequate capital for expansion, there must be compulsory savings by the company and management.

Chapter One

Introduction

Robert H. Heywood, Bruce and Graham 1997, started that capital is the money used by expensive piece of heavy equipment such as bulldozer a sawmill or a tractor-trailer.

According to Abner 1990, capital is the most important of all the factors of production. He noted that the more a country uses her capital, the higher the rate of industrialization and therefore, the rate of development, to him, the reason for this is because the developing countries have less of capital that they are still primary producers largely. He listed some of these developing countries and they includes the followings:

  • Ghana and other West African countries
  • Latin American countries e.g Brazil India
  • North and central African countries e.g Pakistan
  • East and southern African countries e.g Kenya.

FC Okechukwu 1999 as an accountant, sees capital as funds (usually in the form of assets). Contributed by the owners of the business and out residual revenue after meting expenses and outside interest. As a result for a business that is starting operation. All assets contributed by the owners to set up the business will be regarded as capital.

In the course of his explanation, he mentioned that Pandef sees capital as the total funds invested in the business. He went further to say that Batty sees capital as the funds used in the business.

Baruam. 1998 reports that another defends of the growth of capital formation in West African is the inequitable distrisation of income. He noted also, that the very rich people in West Africa tends to become richer while the poor masses become poorer. He further stated that about 10% of the population of West Africa countries control about 667% of the income again he stated that the few rich people of West African countries can heads their wealth and impound what they can seize, there by invest less in lout productive enterprises there is no sufficient capital to top the human (labour) and Natural (land) resources in West African.

David Begg 2002 defined capital as the stock of produced goods that contribute to the production of other goods and service. He stated that industry and business organization needs to increase their capital stock, their machinery equipment, factory and office buildings. He also stated that industry has to modernize its capital equipment and the new growth industries such as information technology needs to interest for future production.

Roy Harrod, an English Economist 1940, in his post war theories on capital, emphasized on human capital. He defined human capital as the skill and knowledge embodied in the minds and hands of the population.

Increasing education training and experience allows workers to produce more output from the same level of physical capital.

George J. Stigler 1975, Defined capital as anything “other than a free human being” which yield valuable services over and appreciable period of times. He believes that capital consists of all economic foods except people and perishable such s hydroelectric dams etc. He also view capital as an accumulated fund of general productive power, past income incorporated in particular physical germs or particular forms.

1.1 General Background of the Subject Matters

The growth of small-scale enterprises in Nigeria is being disturbed by inadequate supply of capital and poor performance.

In Nigeria, many small-scale enterprises are bankrupt because of lack of capital which implies, lack of irresistible funds for further growth of a business organization.

These problems help the researcher to undertake this study.

1.2 Problems Associated with the Subject Matter

The purpose of this study are as follows:

  1. To discuss these problems that hinder capital formation by the small scale enterprises in Nigeria.
  2. To emphasize on the causes for these problems in Nigeria.
  3. To suggest the strategies for promoting capital formation among small-scale enterprises in Nigeria.

1.3 Problems that the Study will Concern With

This problem is limited to the heritage company, Enugu.

1.4 The Importance of Studying the Area

The findings and suggesting of this study if carried out will promote the growth of small-scale enterprises in Nigeria.

1.5 Research Questions

In order to achieve the purpose of this study, the following research questions.

  1. What are the factors that hinder capital formation among small scale enterprises Nigeria
  2. What are the strategies or wants of promoting capital formation among the small-scale enterprises in Nigeria?

1.6 Definition of Terms

Capital:

The capital as was stated in the project refers to as funds or wealth invested for further production of represents a stock of wealth which exists at a particular time; set aside for production and these stock of wealth includes: money, machines; buildings and stock of foods.

Capital Formation:

The capital formation as used also in this project writing refers to the act of increasing the capital, stock or capital base of a company or firm or a nation.

Chapter Five

Summary Conclusion and Recommendation

5.1 Summary

This chapter of the study is set aside to determine summarized the descriptive analysis done in the precious chapters. It also gives the conclusion and makes some recommendation.

In the summary the purpose of this study was to examinethe strategies for enhancing and promoting capital formation among small scale enterprises in Nigeria. Specifically the study discussed the problems that hinder capital formation by the small scale enterprises in Nigeria, emphasized on the causes for these problems in Nigeria and, suggested the strategies for promoting capital formation among small-scale enterprises in Nigeria.

In order to carry out this study research questions formulated to guard the investigation.A total of30 staff of Heritage Company, Enugu were randomly selected as enrolled participants for the survey.The study was anchored on the modern theory, and the classical theory.

5.2 Conclusion

In the conclusion the study is beyond doubt and abundantly clear that small scale enterprises in nigeria find it difficult to get capital.

From results obtained and analyzed, the study reveals that:

  1. The factors that hinder capital formation among small scale enterprises Nigeria include:
    1. Deterioratingforeign exchange rate
    2. Increase in general price level
    3. High real interest rate and
    4. Double digit inflation
  2. The strategies or wants of promoting capital formation among the small-scale enterprises in Nigeria include:
    1. Access to loans.
    2. Financial involvement by the government and
    3. Investments

5.3 Recommendation

Recommendation on the basis of findings. The researcher made the following recommendation with the belief that when studied and applied, would help to improve the standard already at hand. The researcher recommends that:

  1. Access to loans by small scale enterprises should be ensured by the central bank and other financial institutions.
  2. The federal government should invest in the small scale industry as they are one of the major sources of employment in Nigeria.
  3. The heads of small scale businesses should be properly trained and guided on steps to take to avoid problems of finances or to effectively tackle it.

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