CHAPTER ONE

INTRODUCTION

1.1      Background of the study

Small business enterprises in Nigeria were characterized as essentially backward and cog in the wheel of the overall development of the Nigeria economy. As a result of this, there has been a prevalent feeling that such businesses could be assisted only for social reasons, not as a promising opportunity for national development. Obviously, too little attention has been paid to the benefits to be derived from helping small enterprises of modernize and grow. This attitude arose partly amongst both the citizens and government and mainly from the very nature of the small business which made it difficult for its impact to be felt in the economy. The latent contributions which small business can make are now attracting recognition. This awareness is manifest in the ever-increasing number of Nigerians who daily strive to put up their personal ideas and abilities to effective use [by starting small business] ventures. Evidence around the world indicate that small scale enterprise provide an effective means of stimulating indigenous entrepreneurship, enhancing greater employment opportunities per unit of capital invested and aiding the development of technology. Through their wide dispersal, they provide an effective means of mitigating rural-urban migration and resource utilization. Furthermore, by producing intermediate products for use in large scale enterprises, small businesses contribute to the strengthening of industrial linkages. Accordingly, due to the recognition of the roles of small business, the Nigerian government has since 1970 initiated programmes for the assistance of small businesses, especially, in the areas of finance, extension and advisory services including, training and provision of infrastructures. All these are designed to enhance the development of small businesses. Successive governments in Nigeria have for the past three decades shown great interest in the financing of small businesses by establishing specialized banks and other credit agencies/schemes to provide customized funding. In spite of all the contributions and the attention given to it by the government, the small business enterprise is still confronted with problems peculiar to what many may refer to as the ‘Nigerian factor’. One of such problems is the lack of funds, “It takes money to do business”. From the time a business idea is conceived of [the promotional state] until after it has ceased to operate, there are financial implications in every activity at every point in time associated with the businesses. It is therefore not surprising that the issue of financing is of major concern to small business organization. Despite that, the role of SMEs in Nigeria cannot be underestimated. It is noteworthy that most of the small businesses in Nigeria are sole proprietorship and partnerships

1.2 STATEMENT OF THE PROBLEM 

Small scale industries have been facing plethora of financial problems that emanate from the absence of collateral security, high rate of business failure, low productivity, Poor management and effect of activities of small scale industries have not been felt by these drawbacks, the Nigerian government has been using the annual budgets and specialized agencies such as the small and medium enterprises development agency of Nigeria (SMEDAN). The product of these small scale industries have not even contributed to the growth of the Gross Domestic Product of the country. (OLUBI 1998) The import restriction of the federal government have not affected the operations of these industries in line with the above, the research seeks to fill in this gap by assessing the effects of the small scale industries on the Nigerian economy.

1.3 OBJECTIVE OF THE STUDY

The general objective of the study is to assess the effect of small scale industries on the Nigerian economy. The specific objectives are:
1)  To ascertain if there is any significant relationship between small industries and the Gross Domestic Product of Nigeria.
2)   To find out the effects of the import restriction on the operations of small scale enterprises in Nigeria.

3)  To assess the importance of the identified roles of small scale enterprises in the development of Nigerian Economy.

4)   To determine whether or not the Nigerian small scale enterprises make use of all the credit facilities available to them and the reasons for the stand they take in relation with their initial capital.

1.4 RESEARCH HYPOTHESES

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

H0: there is no any significant relationship between small industries and the Gross Domestic Product of Nigeria

H1:there is any significant relationship between small industries and the Gross Domestic Product of Nigeria

H02:there are no effects of the import restriction on the operations of small scale enterprises in Nigeria

H2: there are effects of the import restriction on the operations of small scale enterprises in Nigeria

1.5SIGNIFICANCE OF THE STUDY

This study will be significant to the Delta state Government on finding effective ways of improving and re- aligning the activities of the small scale industries to improve the economy of the state. The study will also be significant to the researcher and academic institutions in Nigeria especially Tansian University Oba Umnunya Anambra State as it would not only serve as a reference point for further studies, but also the basis for the award of B.Sc in Economics.

1.6 SCOPE AND LIMITATION OF THE STUDY

The scope of the study covers effect of small-scale industries on the Nigeria economy. The researcher encounters some constrain which limited the scope of the study;

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.

c) Organizational privacy: Limited Access to the selected auditing firm makes it difficult to get all the necessary and required information concerning the activities.

1.7 DEFINITION OF TERMS

SMALL-SCALE INDUSTRY: The Ministry of Small Scale Industries (SSI) is a defunct Indian government ministry. It was merged with the Ministry of Agro and Rural Industries to form the Ministry of Micro, Small and Medium Enterprises. The ministry was tasked with the promotion of micro and small enterprises (MSEs).

ECONOMY:An economy is an area of the production, distribution, or trade, and consumption of goods and services by different agents

EFFECT:A change which is a result or consequence of an action or other cause.

1.8 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), 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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