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CAUSES OF FAILURE OF SMALL SCALE INDUSTRIES IN NIGERIA: A CASE STUDY OF ENUGU STATE

ABSTRACT

This study is set to investigate the causes of failure in small scale enterprises in Nigeria, with a view to proffer solutions. In every economy there are simple system as well as complex one. At the simple stage of organization, ownership of business is not always distinct form management; this means that supervision of the business is in the hand of the owner. When the scope of business organization increases, it becomes very difficult for one person to co-ordinate, direct and control. At this point, that ownership and management become differentiated. Therefore, it becomes very difficult for the owner to supervise the business enterprise. It will be easier here for management to pursue goals that are different from the objectives set by the owner; which brings about conflicting objectives that can result in business failure. In Nigeria, it will be difficult to believe that a small-scale business enterprise that is owned and managed by the owner can collapse within a twinkle of an eye. Is it as a result of finance, management inefficiency or government policies? This is what the research work is set to uncover. Based on the findings, the researcher concluded that the failure of government in providing a conducive business environment has affected the performance of small scale business also poor management of resources in no small measure has equally affected the growth of small scale business in Nigeria. Therefore, the researcher recommends that government should try as much as possible to provide a stable and conducive environment and hence organization’s should ensure that both human, capital and material resources are effectively utilized.

CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

In Nigeria various criteria are use for its definition. The small-scale industries in 1973 defines, such enterprise as those having investment capital, (ie land, building, machinery, equipment and working capital of up to N 60,000 and employing not more than 50 persons).But according to the federal ministry of commerce and industry to the Nigeria bank for commerce and industry (NBCI) in 1981/82 (for the purpose of the revolving loan scheme for industries. Such enterprise where regarded as those costing not more than N 500,000) including the cost of land but excluding working capital.At a recent workshop on industries hold at the administrative staff college of Nigeria (ASCON) Badagry, participants agreed that a small-scale industry should be defined as an enterprise whose cost does not exceed N 750,000 (total cost excluding land).

ASCON wants this definition to remain in force until 1990.Therefore, in 1972 the Nigeria enterprise promotions decree other wise known as industrialization decree was promulgated.The decree was aimed at affording Nigerians greater participation in economic activities especially in industrial sector of the economy, this sector in this organization-industries in Nigeria are principally concentrates in some part of the country like we have in Enugu and places in Nigeria including some local government areas that have a number of units engaged in transitional industries and it is estimated that over 5000 small-scale units are accounted to exist in this state according to the official published in 1987 by the Anambra State Ministry of Finance and Economic Development (statistics division) Enugu. Industries although have received very little government assistance, occupies a significant position in the nation asset which has the greatest alteration for and is indeed the prime mover in any manufacturing industry, is the existence of a large market.The decree gave impetus to Nigerians include those of fixtures publishing and allied products, jewelry, saw milling fabricated metal product etc.

The small scale industry like Ify Bakery Bread Industry apart from being hampered by finance, technical and managerial, marketing and economic problems and so on, have the problem of lack of trust among the industrialists, they are not always ready to share ownership of their business even when it involves their own relations.This is the type of industries we need in the rural areas if we hope to cope with the problem of unemployment and continued populations drift from the rural areas to urban cities.Industries in most cases make use of the local raw materials and labour rather than capital intensives. This encourage the development of local technologies.

1.2  Statement of the Problem

My research work revealed that the continuous failure of these small-scale industries is probing a great public interest as to its cause and effect; economy are food scarcity, unemployment increase in social imbalance, adverse balance of payment positions experienced by the country, reduction in per capital income tax etc.
The following are the outline of the problem facing small-scale business:
1.  Lack of accounting Record.
2.  Problem of obtaining finance such as loan and over draft.
3.  Little or no research.
4.  Poor state of technology and skilled manpower.
5.  Problem of marketing their product.
6.  Problem of obtaining raw materials and components.Some of these problems should be systematically studies so that they could be solved once and for all. But what ever is the case, the question to be answered in this study is that problems to small-scale industries like Ify Bakery Bread Industry, What factor influence them and what should be done so as to alleviate these problems. Should these problems be properly looked into, they can provide opportunities to small-scale industries in the state in particular and country in general.
1.3  Objective of the Study
The objective of the study is to provide possible solution to the stated problem of small scale business in Nigeria narrowed with the case study of Ify Bakery Bread industry and these are;
1.          To let the small scale industries to know that Accounting record will help their business to grow;
2.          To enable them understand some government effort and other means of substitution to the problem of obtaining loan;
3.          To let them understand the important of research and invest in it;
4.          To advise them on investing in technology;
5.          To tell them the different market strategies involves and;
6.          Finally to emphasis on matter of sourcing for raw material.
1.4  Research Question.
The following research questions were formulated:
1.          What are the causes of failure of small scale industries in Nigeria?
2.          What has the Nigerian government done to encourage small scale enterprise in Nigeria?
3.          What step could be taking to revive the failed small scale industries to enhance economic growth in Nigeria?4.          Is there any relationship between small scale and economic growth of Nigeria?
1.5  Significance of the Study
Small scale industries are found significantly in every nook and cranny of Nigeria. They could be likened to front line troops in the battle for every development of a nation; by and large, it provides a greater employment opportunities; it increase local raw material output, (use of local raw material) to promote greater linkages and backward integration to raise the general level of economic activity.
The significance of small scale business to any economy are noticeable. They includes contribution to the economy in term of output of goods and services; creation of jobs at relatively low capital cost, especially in the fast growing service sector providing a vehicle for reducing income disparities develop a pool of skilled and semi skilled workers as a basis for the future industrial expansion; improve forward and backward linkages between economically socially and geographically diverse sectors of the economy; providing opportunities for developing and adapting appropriate technological approaches and so on.
The study also will help the small-scale industrialist to look to know whether their resources are efficiently utilized in achieving the organizational roles.Finally, the study exposes what could be done by government agencies or associations to help small-scale industries in the tasks facing them and what can be done by way of better management to help the individual small-scale industries to improve their operations and increase the productivity and profitability.
1.6  Scope of the Study
This work is limited to the cause of failure of small-scale industry. The scope of this study would have been unlimited but for the complex nature of the research work which ordinary involved getting in touch with the respondent who often times are reluctant towards giving information needed. So this research work is just confined to Ify Bakery Bread Industry.
1.7  Limitation of the Study
This study would have been more extensive in the absence of the following constraints from:
a.          Cost and finance estimates as a student I depend solely on the little amounted of money  i got from parents and relatives.
b.          Time schedule and the denial of personal comfort also the areas involved in the collectives of data and administrations of questionnaires was vast and this created financial constraints as regard transport fares.
c.           There was unco-operative attitude amongst some of the respondents and officials of the various federal and state ministries of industry. On several occasion, I had to book appointment to see one officer or other.
d.          Low response rate as regards questionnaires more over, some of the questionnaires not returned.
e.          I cannot claim of insufficient literature on the topic to review but I could only review the ones which I could lay hand 

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