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EFFECT OF SMALL-SCALE INDUSTRIES ON THE NIGERIA ECONOMY

ABSTRACT

Many economists developed and developing have come to realize the value of small scale industries, they are seen to be characterized by Dynamism Witty innovation, efficiency and their small size allows faster decision making process. This study seeks to find out the effect of small industries on Nigerian economy, the specific objectives are to ascertain the relationship between the product of small scale industries and the Gross Domestic Product of Nigeria and the effect of import restriction and operation of small scale industries, the hypothesis and research questions are formulated in line with the objectives of the study the validity and reliability of the instrument were tested. The statistical test was carried out at 0.05 level of significance, The findings are that product of small-scale industries significantly contribute to the Gross Domestic Product of Nigerian Operations of small scale industries or significantly affected by the import restriction based on the findings of this research, the study recommends that Government should review the nations and map out strategies to prevent the small scale entrepreneurs from total collapse, managers of small scale should ensure efficient planning at the idea stage to minimize future programs that may occur.

CHAPTER ONE

INTRODUCTION

1.1   BACKGROUND OF THE STUDY

For the past decades, small scale industries 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 provides 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 scale industry 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   OBJECTIVES 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.

1.4 RESEARCH QUESTIONS

The following research questions are used as guide to effective carrying out of the research.

1.  What is the significant relationship between small scale industries and the Gross Domestic Product of Nigeria.

2.  To what extent do import restriction of the federal Government affected the operations of small scale industries.

1.5     HYPHOTHESIS

The following hypotheses are formulated to guide the study:

Ho1:  There is no significant relationship between products of small scale industries and Gross Domestic Product of Nigeria.

Ha1:  There is significant relationship between products of small scale industries and Gross Domestic Product of Nigeria.

Ho2: The operations of small scale enterprises are not significantly affected by the import restrictions.

Hi2: The operations of small scale industries are significantly affected by import restrictions.

1.6    SIGNIFICANCE 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.

The study is also important because of its potentiality in the development of the small business sector which has been characterized as the “man carrier of development and the engine of social and economic growth” in Nigeria.  The study will also help in identifying why people don’t go into small –scale enterprise despite its numerous advantages.  It will also find our problems encountered while running the business. The study will help government identify areas requiring attention, thus stimulating government into proper directing of loans and incentives to improve upon existing ventures.  It will also provide useful guide for prospective entrepreneur that wish to choose self-employment as a career.  And finally, it will serve as secondary data for subsequent studies by a prospective researcher.

1.7    SCOPE AND LIMITATION

A good number of factors made the study difficult.  Notably, is the time factor.  The time available for the study was so short that the study was done almost in rush.  Due to the limited time too, the researcher based his study only on selected small scale industries Delta State, Nigeria.  Another problem was combing course work, office work, research work and financial constraints to carryout a full and unbiased study. 

1.8    DEFINITION OF TERMS

Small Scale Enterprise: The definition of small scale enterprise varies with people and countries such that it is better defined based on the characteristics.  In the Nigerian context, small scale enterprise is any processing, serving or manufacturing industry with an investment in machinery and equipment above N500,000 [Waboi, 1987]. According to the centre for management development in a policy proposal to Federal Government in 1982, A small scale enterprise is a manufacturing, processing or service enterprise involved in a factory or production type operation employing up to 50 full time employees, investment in plant machinery are utilized in its operation. Management: - According to Akpala [1990. pg 3] Management is the process of combing and utilizing an organization input [men, materials and money] by planning, organizing, directing and controlling for the purpose of producing output [goods and services].

Entrepreneur: According to Hagen, an entrepreneur is an individual who conceives the idea of business, design the organization of the firm, accumulates capital, recruits labour, establishes relations with supplies, customers and the government and converts the conception into a functioning organization business.

Opportunity: An opportunity is a potential gainful situation that must be recognized and exploited, an opportunity has the qualities of being attractive, durable and timely.  It is anchored in product or services which creates or adds value for its buyers or end users.

Development: This entails growth of the business, increases in goods and services and the improvement of lives of the citizen.

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