ABSTRACT

This project work is derives from a concern, with the contemporary Nigerian situation. Our quality of life or standard of living and our total well being depend to a large extent on the roles of small scale Industries in the Economic Development of Nigerian. Therefore, this project work tries to examine the factors militating against the growth of small scale industries. In the face of the problems associated with the growth of small scale industry in Nigeria, the researcher will now examine how to improve on the growth of small scale and contributions of the sectors of the economy to the Economic development of Nigeria.

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CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

There is a tendency to confuse Nigeria entrepreneurship with small scale industries and indigenous enterprise, this is because indigenous enterprises and small scale industries are used interchangeably. This is understandable because Nigerian owned enterprises are invariably small scale enterprises.

The enterprises abound in the country ad cover almost every sector of the economy. Mining crafts, consumer goods construction, printing, services such as repairing, servicing and supply of various items, retailing, transportation e.t.c.

Small scale industries as the name implies, are mostly run by individuals and are relatively small in size. The establishment are on the average small, both in terms

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of capital, investments, turnover and number of people employed. The word small is highly subjective The Central Bank of Nigeria Credit guidelines defined a small industry as any manufacturing or service enterprise whose annual business turn-over does not exceed N500,000.OO (Five hundred thousand naira.

The difficulties of deriving a single , simple definition of a small scale firm were amply illustrated in the Botton Committee report (1971).

The Committees terms of reference had defined small firms as broadly those with not more than 200 employees, but in practice.

It found this definition totally inadequate. Instead it suggested that a definition was needed which emphasized those characteristics that a definition was needed which emphasized those characteristics of small firms which might be expected to make their performance and their

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problemssignificant different from those of large firms. They conclude that the main characteristics had to be taken into account.

i. A small scale industry is one that has a relatively small share of its market.

ii. It is managed by it’s owners or part owners in a personalized ways, and not through this medium of a formalized management structure.

iiL Tt is independent, in the sense that it does not form part of a large enterprises, that it’s owner/managers are free from outside control when taking their principal decision.

These characteristics formed the economics definition of the small scale industries. However to make this operational, the committee needed a statistical definition although it recognized that no single quantifiable definition could be entirely satisfactory. In

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attempting to reflect the three characteristics above, the committee found that for statistical purposes, the criteria for a small industries would have to vary from sector for manufacturing, it retrained the usual “200 employees or less” through in construction and mining the upper unit for small-scale industry was reduced to 25 employees or less.

Griffths and wall (1984) pointed out that the definition often used for small-scale industries varies widely from less than 50 employees to less than a thousand employees.

Retrospectively, one would see that although, Nigerians have engaged in economic activities since their immemorial, such activities. Continued to be on substance basis. Agriculture for example, was i most cases carried on simply to feed, the immediate families other activities, such as poultry, rearing etc caterers, for

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personal needs and markets in the immediate localities only.

Thus, rubber and saw-milling were among the early industries in Nigeria. The establishment of the mass production of such crops. These industries were established in order to commodities which previously were being imported.

This study is meant primarily to show the role of small-scale industries in Nigerian economy, in order to enable a metropolis like Ethoipe East local governments of Delta State to trap It’s abundant natural and human resources that are necessary for laying the foundation for building advanced mechanized economy, there is need to encourage the establishment of small-scale industries.

1.2 STATEMENT OF PROBLEM

Since time immemorial, small scale industries have

been in existence, but it seems that there are certain

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problems militating against the growth of small industries in Nigeria.

i. There is the problem of raising the money to launch a business venture by an entrepreneur and to avoid under capitalized which often leads to failure.

ii. Another problem is that of poor organization, inadequate planning and lack of management skill and experience coupled with his unwillingness to seek professiorta advice, which built the barrier between him and form of f assistance.

iii. Technological problems: Many Nigerian entrepreneurs face difficult problem in the selection and purchase of the technology needed to run their business.

iv. Competition from expatriate companies and

v. Infrastructural problems.

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1.3 RESEARCH QUESTIONS

To guide the conduct of this research, answers will be sought to the following research questions:

i. Do small scale industries provide employment opportunities for skilled and unskilled labour?

ii. Does the establishment of small scale industries bring about socio-economic development of the area?

iii. Do small scale industries produce goods and render services needed by the growing population?

iv. Has the existence of small scale industries improved the problem’s standard of living?

1.4 SIGNIFICANCE OF THE STUDY

The purpose of this study is to find out the roles of small scale industries in the economy development in Nigeria and to help industries and entrepreneurs to

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effectively manage the causes of failure of small scale industries.

1.5 PURPOSE OF THE STUDY

This study is of great importance because the fmdings and recommendation of this study will help to effectively manage, if not eliminate the causes of failure of small scale industries.

The study will also add to the field of academics by providing a reference to other researchers and interested parties in the future.

1.6 SCOPE AND DELIMITATION

This study will examine, explain and evaluate strategies aimed at solving problems related to the management of small-scale business.

This research work is expected to cover all the areas where these small scale industries exist. The investigation is based on the roles of small scale industries in the

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development of Ethiope East Local Government Area of Delta State,

1.7 DEFINITION OF TERMS

In this context, the following terminologies were defined in regard to her frequent use in the research work so as to

aid their understanding:

i.) Small-Scale Industries: A business that is owned and operated by relatively few persons, who has a relatively small sales revenue and possesses relatively little capital.

ii.) Standard of Living: A composite quantities and qualities of goods such as foods, clothing and house furnishing and services, such as housing, transportation and medical care, which economic unit (an individual family or group) considers essential.

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iii. Sole Proprietor: A type of business organization in which one individual owns the business.

iv.) Partnership: An association of two or more persons joining in business, each providing labour, capital, skill either together or separately with the ultimate aim of making profit.

v.) Roles: The degree to which something is involved in a situation or an activity and the effect that it

have on it.

vi.) Economic Development: Connected with the

growth of the trade or industry of the country, an

area or a society.

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CHAPTER TWO

REVIEW OF LITERATURE

2.1 SMALL SCALE INDUSTRIES IN NIGERIA

The small scale Industries, which can conveniently be referred to as indigenous enterprise occupies a unique

position in any free enterprise economy. In developing countries, the role of a small scale industries, indigenous, enterprise assumes greater significance.

Having attended Political independence, newly

independent country like Nigeria also desire to rapidly restructure their economy in order to achieve economic

self-reliance and independence.

The indigenous enterprise/small scale industries plays a significant role in the industrial process. BeéT providing the means by which productive activities are indigenous owned and controlled, it enable the eëonoxn to

mobile resources talents, that might not otherwise be put

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into productive use. Small scale industries account for as much as 30% of non-agricultural wage employment in the Nigeria economy, and has a considerable potential for unemployment, both at the technical and management levels.

It provides Nigeria the opportunity of acquiring managerial and technical skills. It is also a potent means for acquiring or developing techno1o that are suitable to local needs.

Ensures even geographic spread of industries. Economic independence has become the bedrock of the policy of newly independent and developing nations. One major effort to realize these aspiration is through the

“ organization of business enterprise. The Nigeria e’i’lterprise promotion Act of 1992 and 1997 are positive effect in this direction. The main objective of the Nigeria enterprise promotion Acts are:

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1. Create opportunity for Nigeria indigenous business men.

2. Maximize local relation of profit

3. To raise the level of intermediate capital goods production.

4. To raise the proportion of Indigenous ownership of industries. Investment and

5. To increase Nigeria participation in decision making in the larger commercial and industrial establishment.

2.2 FACTORS MILITATING AGAINST THE GROWTH OF SMALL SCALE INDUSTRIES

In the third world countries the effect Of the factors militating against the growth of small-sc ,tle industiies tends to be very acute and pronounced. Such militating factors include capital shortage, personaJ and manpower development problems, stiff competition from large firms,

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resistance to changes and expansion ownership interference in all activities etc.

(1) Organisation Problems

According to Okeke (1992), an• earlier study conducted in this areas tends to indicate that 20% failure among small scale industries is due to poor management and bad organization expertise arising from inefficient and unskilled activities of personal in such organization. The inability to recruit and retain competent skills personal harmpers the growth and development of small scale industries. Technical and management manpower is generally in short supply in Nigeria economy. For example, shortage of executives capacity has been identify as a major bottleneck to the execution of Nigeria development plans. With respect to the Nigeria enterprise, the situation is especially critical for several reason.

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Firstly, the owner’s (EnterpreneurS) of small scale business have to compete with government establishment and foreign-owned business for limited pool of manpower available within the economy since the remuneration, prospects for advancement and public image or status are lower in the private indigenous enterprise they end up with lower quality personnel than others.

Secondly, small scale industries do not engage in positive recruitment efforts, rather they relay on referral from friends and relation to get their personnel. This method is unlikely to yiel.d suitable talented individuals who can execute complex business plans.

Thirdly, there is total neglect of educational institution and consultancy services, in the recruitment of managerial and technical staff, which indicate not only the:

lack of knowledge of potential of these resources, but unwillingness to invest time and resources in the prbcess.

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ii. Capital Shortage:

He further stated that large firm are rarely capital- starved as against the experience of small scale industries, since the bank are often willing to help. Such big establishment could even float share to members of the public, a method that could readily raise money for them.

Most small scale industries in Nigeria are sole proprietorships which stated with personal savings of the owners or loans from friends and relatives. Okeke (1992) stated that small scale industries cannot obtained such assistance due to limited resources, which do not suffice as securities, they work with limited resources because they do not get capital assistance to expand adequately. In the process, for some of them a vicious circle of under- development emerge and most small-scale industries would therefore resort to waiting indefinitely for help from government and commercial banks help, which often

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