CHAPTER ONE

INTRODUCTION

1.1     BACKGROUNG OF THE STUDY

Amidst academic discussions, issues has been raised on economic development bring to mind subject like poverty alleviation, unemployment, reduction and most importantly, socio – economic development of nations.

The reason for this can simply be traced to the fact that the major way out of economic predicament lies on such subjects.

Since global economic dynamic have left countries of the world in search of a more variable approach to sustain their economic as well prosperity, small and medium scale has arguably been seen as a catalyst for sustainable socio-economic development of any country (Awaiko, 2006, Adebu – Suyi, 2000, Harper, 2003). The rapid growth of the private sector in economic like China and India (Mohapatra, Rozelle and Goodhue 2007) in addition to the realization of the need for a private sector strength in many fragile and failed countries like Somalia and the democratic Republic of Congo (Naude, 2007) has gone a long way to induce policy markets to have more interest on the role of small and medium scale in the generation of economic growth and development in different countries.

The idea that small and medium scale in closely and positively linked to economic development according to Desjardin (2003), has undoubtedly made its way since the early work of Schumpeter (1911).

Small and medium scale (SMS) is a base for the development of appropriate technology and provide a veritable ground for skilled, unskilled and semi –skilled workers.

In fact, small and medium scale enterprise is believed to be capable of providing production self – employment to a number of educated and less educated young men and women coming out of school colleges, polytechnic and universities (Jeroh 2008).Since the 1970 therefore developing countries has been compelled in the face of those problems to look for alternatives approaches to development. One of these approaches has been the redirection of efforts and encouragement of small and medium scale enterprises (SMSE).

Small and medium scale enterprises (SMSW) are catalyst in the socio – economic development of any countries. They are a veritable vehicle for the achievement cost and development of entrepreneurial capabilities and indigenous technology.

Small and medium scale enterprise (SMSE) contribute substantially to the Gross Domestic product (GDP), export earning and employment opportunities of these countries.

No doubt, the small and medium scale enterprise (SMSE) still stands to be the most critical factor in the economic development of any nation. The small and medium scale enterprise organizes and utilizes the various factor of production and finally sets productive machinery in action towards overall economic development. Consequently the availability of the small and medium scale industry is therefore the undisputed precondition for economic growth and development.

This is because small and medium scale enterprise contributed a lot to the achievement of the macro objective of economic, full employment income distribution, poverty reduction, development of local technologies amongst others.

Over the years, the Nigeria government as (Jeroh, 2008) noted has made attempted to encourage the establishment and promotion of small and medium scale industry in the country so that the benefits attributable to small and medium scale industry development in any country would be enjoyed in Nigeria.

It is however disinterring to notice that dispute the interest of government in the recent past (Ogboghro, 2006) small and medium scale enterprises is still plagued with a lot of obstacles and challenges in Nigeria.     

This paper however looks at the meaning of small and medium scale enterprise as a process in addition to the role of small and medium scale industries as a tool of national and economic development of a nation economy.

1.2     STATEMENT OF PROBLEM

One major problem working against the small and medium scale enterprises (SMSE) is the inadequacy of finance capital. This is a critical problem failing many small and medium scale enterprises which has affected their scale of operation.    

Majority of them have limited access to foreign exchange as well as institutional credit. In addition, small and medium scale enterprises (SMSE) in Nigeria are confronted with multiple taxes, several changes on loans on importation etc. Coupled with their ever charging dimensions which pose very serious challenges inimical to their growth. Also availability of infrastructural facilities is grossly inadequate in Nigeria. These are mainly in the areas of access roads electricity water supply and telecommunication.

 Private provisioning of these facilities is usually at great cost reduces the finds available to their activities. Lastly low entrepreneurial skill is another factor hindering the smooth operation of most small and medium scale enterprises organizational success in manning hugged in entrepreneurial skill / management.

Unfortunately many small and medium scale enterprises lock exposure to management theories / practice which impact negatively on their performance.  

1.3     OBJECTIVE OF THE STUDY

The board objective of the study is to examine the role of small and medium scale industries in the development of Nigeria economy. These specific objectives of the study are;

i.                   The objective of the study also aimed at accessing the contribution of small and medium scale industries in improving the rural infrastructure and the living standing of the people.

ii.                 To examine the role of small and medium scale industries plays in servicing large scale industries with intermediate goods and row materials.

iii.              To evaluate the role of small and medium scale enterprise in promoting growth in the Nigeria economy.

iv.              To evaluate the role of small and medium in scale in employment creation.

v.                 To examine the role of small and medium scale enterprise in capacity of building entrepreneurs.

1.4     HYPOTHESIS OF THE STUDY

In the study one hypothesis was development and empirically tested and its result from the basis of conclusion and its recommendations.

Ho:    The contribution of small and medium scale enterprises to output in the Nigeria    economy is not significant.

Hi:     Contribution of small and medium scale enterprise to output in the Nigeria economy is significant.

1.5     SCOPE OF THE STUDY

The scope of the study is limited to activated of small and medium scale enterprise (SMSE) in Nigeria economy in the course of the study, we focused on the activities of the small and medium scale industries.

1.6     JUSTIFICATION OF STUDY

The justification of the study is to height the contribution of small and medium scale enterprise in economic development of Nigeria, in order to alert private sector and government agencies in promoting small and medium scale enterprises.

In addition, the study would encourage school leaves to becoming enterprises, thereby reducing the rate to unemployment.

1.7     LIMITATIONS OF THE STUDY

This study brings to light how small scale business to finance their business. This limitation is as follows:

i.                   This project work was constrained by time and academic work, which prevented me from going into many details.

ii.                 Some of the conservative business men were unable to disclose their source of fund, in which they used in setting up the business which deceived the research work.

iii.              Difficulties in obtaining information from the respondents.

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