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Since Nigeria attained independence in 1960, considerable efforts have been directed towards the nation’s industrial development. The initial efforts were government-led through the vehicle of large industry, but lately emphasis has shifted to Small Scale Industries (SSIs) following the success of SSIs in the economic growth of Asian countries (Ojo, 2003). Thus, the recent industrial development drive in Nigeria has focused on sustainable development through small business development. Prior to this time, particularly judging from the objective of the past National 4-Year Development Plans, 1962-68 and 1981-85, emphasis had been on government-led industrialization, hinged on import-substitution.

      Since 1986, government had played down its role as the major driving force of the economy by a process of commercialization and privatization (Beyene, 1999). Emphasis, therefore, shifted from large-scale industries mainly to small scale industries, which have the potentials for developing domestic linkages for rapid and sustainable industrial development. Attention was focused on the organized private sector to spearhead subsequent industrialization programs. Incentives given to encourage increased participation in these sectors were directed at solving and/or alleviating the problems encountered by industrialists in the country, thereby giving them greater leeway towards increasing their contribution to the national economy. Interest in the role of Small Scale enterprises in the development process continues to be in the forefront of policy debates in developing countries. The advantages claimed for Small Scale enterprises (SSEs) are various, including: the encouragement of entrepreneurship, the greater likelihood that SSEs will utilise labour intensive technologies and thus have an immediate impact on employment generation (Ayozie&Latinwo, 2010); they can usually be established rapidly and put into operation to produce quick returns; SSIs development can encourage the process of both inter- and intra-regional decentralization (Ogujiuba et al., 2004); and, may become a countervailing force against the economic power of larger enterprises (Salami, 2003). More generally the development of SSIs is seen as accelerating the achievement of wider economic and socio-economic objectives, including poverty alleviation (Safiriyu and Njogo, 2012; Ayozie and Latinwo, 2010; Udechukwu, 2003).

The role of finance has been viewed as a critical element for the development of Small Scale enterprise previous studies have highlighted the limited access to financial resources available to smaller enterprises compared to larger organisations and the consequences for their growth and development (Hossain, 1998; Wattanapruttipaisan, 2003; Berger and Udell, 2004; Ogujiuba et al., 2004; etc). According to Valverde et al (2005) bank credit play a crucial role in providing external financing to Small Scale Industry (SSIs). But in Nigerian context, this crucial source of finance for Small Scale Industry is apparently non-functional (Kadiri, 2012). This is evident in the ratio of loans to Small Scale Industry to Commercial banks’ total credit, which shows that a meager 0.16% of commercial banks’ total credit was granted to Small Scale Enterprises in the last quarter of 2011 (CBN, 2011). More worrisome is the fact that this ratio has been falling over the years and continued unabated in the post-consolidation era (Iorpev, 2012).

Typically, smaller enterprises face higher transactions costs than larger enterprises in obtaining credit (Olorunshola, 2003). Poor management and accounting practices have hampered the ability of smaller enterprises to raise finance. Information asymmetries associated with lending to small-scale borrowers have restricted the flow of finance to smaller enterprises. In spite of these claims however, some studies show a large number of small enterprises fail because of non-financial reasons.

The panacea for solving problems of economic growth in developing countries, often reside in the development of small scale industries. The establishment of those industries has been the centrepiece of industrial development of many countries such as India, Malaysia, Pakistan and Indonesia, to mention a few. It is expected that the gains to be derived from the establishment of small-scale industries will be translated into the generation of employment at a low investment cost. These industries will also be able to harness raw materials locally and serve as raw inputs to the large-scale industries. Therefore, this study seeks to investigate the financial problems and survival strategies of small scale industries.


The key problem facing most small scale enterprises is lack of finance whether for the establishment of new industries or to carry out expansion plans. The inability to attract financial credit or resources has hindered or stifled the growth of small scale enterprise. The reasons for the lack of fund include the following:

  • High rate of inflation that led to the vast depreciation of Naira exchange rate, thus making it difficult for most Small Scale enterprise to obtain required inputs for expansion.
  • Low level of savings in the economy, which leads to low capital formation.
  • High rate of interest charged on loans, which scares off potential Small Scale enterprise.
  • The unwillingness of retail banks to grant credit to Small Scale enterprise because of the low creditworthiness of these enterprises has also hampered their growth over the years.

Bothered by the persistent decline in the performance of the industrial sector and with the realization of the fact that the small and medium scale enterprises hold the key to the revival of the manufacturing sector and the economy, the Central Bank of Nigeria successfully persuaded the Bankers’ Committee in 2000 to agree that each bank should set aside 10 percent of its annual pre-tax profit for equity investment in small and medium scale enterprises. To ensure the effectiveness of the program, banks were expected to identify, guide and nurture enterprises to be financed by the scheme. The activities targeted under the scheme included agro-allied, information technology, telecommunications, manufacturing, educational establishments, services, tourism and leisure, solid minerals and construction. The scheme was formally launched in August 2001. As at end-December 2009, the cumulative sum set aside by banks was N42.2 billion. The sum of N28.2 billion or 67.1 per cent of the sum set aside had been invested (CBN, 2009). But the fact still remains that with these provisions made are in most cases not accessible to the Small Scale Industries. The main thrust of this study is to evaluate the financial problems and survival strategies of Small Scale enterprise in Aguata Local Government Area of Anambra State.


The purpose of this study on the financial problems and survival strategies of small scale enterprises and specifically, is to;

1.   To ascertain if the financing options available to the SSE are practically obtainable to support the capital required for their operation.

2.   To examine the extent to which Small Scale enterprise contributes to economic development.

3.   To identify the problems they encounter in sourcing out funds.

4.   Identify survival strategies needed by Small scale industries.


Ho:There is no significant relationship between the problems encountered by the small scale enterprises in their source of funds.

Hi: There is significant relationship between the problems encountered by the small scale enterprises in their source of funds

Ho:There is no significant relationship between the survival strategies adopted by the small and medium scale industries and the survival of small and medium scale enterprise.

Hi. There is a significant relationship between the survival strategies adopted by the small and medium scale industries and the survival of small and medium scale enterprise.     


Small-Scale Enterprises in Africa rely largely on own savings, not only to grow but also to innovate, firms often need real services support and formal finance assistance. This study will be of benefit to the operators of the Small and Medium Enterprise, the government, and the general public on the possible financing options and survival strategies available to the Small and Medium Scale enterprise and give the possible means of accessing them  


This study is primary concerned with financial problems and industrial strategies of small scale enterprises. This study/project work covers Aguata Local government Area of Anambra State. During the course of this research work, the researcher encountered some constraints, which limited the scope of the study. These constraints include but are not limited to the following;

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.


SMALL-SCALE:  an activity or organization that is small in size and limited in extent, small in scope especially small in output or operation.

STRATEGY:  A general plan or set of plans intended to achieve something. It isa method or plan chosen to bring about a desired future, such as achievement of a goal or solution to a problem. 

ENTERPRISE: is a company or business, often a small one.  For-profit entity created to shield the owner(s) from liability should the enterprise become subject to a lawsuit.

SMALL AND MEDIUM SCALE ENTERPRISE:small and medium enterprises (SMEs)as enterprises with a total capital employed not less than N1.5 million, but not exceeding N200million, including working capital, but excluding cost of land and/or with a staff strength of not less than 10 and not more than 300

LOAN: is money, property or other material goods that is given to another party in exchange for future repayment of the loan value amount along with interest or other finance charges


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 

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