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EFFECTS OF
SMALL AND MEDIUM SCALE BUSINESS ON ECONOMIC DEVELOPMENT
ABSTRACT
The purpose
of this research work is to critically assess the extent of which small and
medium scale business is used as an instrument for economic development of
small and medium scale business were thoroughly in the study of dissertation.
The research applied the use of survey methods in carrying out the research design
and simple percentage was used to analyze data collect. The preceding analysis
has revealed that small scale business has a vital role in the development of
Nigeria economic and through their wide dispersal. They should provide an
effective means of mitigating rural urban migration and resources utilization.
And this also will contribute in strengthening industrial linkages by producing
intermediate products for use in large enterprise in Nigeria.
CHAPTER ONE
INTRODUCTION
1.1
Background of the Study
Entrepreneurship
is one of the economic variables that attract the attention of governments and
researchers both in the developed and developing countries in the last two
decades. Several efforts and initiatives are being made by governments and
Non-Governmental Organizations (NGOs) to promote entrepreneurship through Small
and Medium Scale Business (SMSB) which contribute greatly to the overall
economic growth and development of Nigeria.
For the past
decades, Small and Medium Scale Business enterprises in Nigeria were
characterized as essentially backward and component 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 and Medium Scale Business to 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.
Baig (2007)
opine that the private sector through small and medium scale business can
contribute to economic growth, job creation, and national income and hence to
national prosperity and competitiveness. According to her, the private sector
contributes substantially to the Gross Domestic Product (GDP), and thus
unleashing domestic resources (financial and entrepreneurial) is likely to
create a more stable and sustainable pattern of growth. However, the major
component of private sector, Small and Medium Enterprises (SMEs) is generally
considered as the engines of economic growth, cornerstones for creativity and
innovation, and seedbeds of entrepreneurship (Baig, 2007; Charles, 2011).
SMEs
according to the World Bank refer to those businesses with maximum of 300
employees and annual revenue of $15 (Dalberg, 2009). Central Bank of Nigeria
(CBN) sees SMEs as those businesses with less than 50 employees (medium scale
businesses less than 100). Essentially, SMEs are business entities that are
independently owned and operated, and meets employment or sales standard, whose
investment in machinery and equipment does not exceed six hundred thousand
naira.
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”.
1.2
Statement of the Problem
Nigeria is
currently witnessing an alarming rate of unemployment which is growing in
geometric progression. The economy is also increasingly finding it difficult to
cope as Nigerian economy is declining. A lot of experts have called for the
creation of an enabling environment for small and medium scale business to
thrive. They cited Asian “Tigers” such as Malaysia, China, Sought Korea,
Indonesia, Singapore and Thailand where both the government and individuals
knowing the importance of small scale industrial development join forces
together in fostering effective and sustainable small scale enterprises in
their countries. Evidence also abound that in the above mentioned places, a lot
is being done to empower the growth of this sub sector of the economy. The role
of small scale industries in the development of indigenous technology cannot
therefore be over emphasized, hence this research is set out to analyse the effect
of small and medium scale business on economic development of Abuja and Nigeria
at large.
1.3 Objective of the Study
This study
seeks to identify the effect of the small and medium scale business on the
economic development of Abuja with a particular interest in Mr. Biggs
Restaurant. To achieve the above mentioned aim the following specific
objectives shall be pursued:
To examine
the roles of small and medium scale business in the economic development of FCT
Abuja.
To identify
the problems / challenges faced by small and medium scale business in Abuja and
Nigeria at large.
To proffer
solution / recommendation to the identified problems
1.4 Significance of the Study
The study is
thus important because of its potentiality in the development of the small and
medium business which has been characterized as the “main 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 and medium scale
enterprise despite its numerous advantages. It will also find 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.
1.5 Research Questions
What are the
roles of small and medium scale business in the economic development of Abuja
the Federal Capital Territory?
What are the
sources of fund available for small and medium scale business?
Does
government policy affect the establishment and management of small and medium
scale business in Abuja?
What are the
challenges faced by Small and medium scale business in Abuja?
1.6 Research
Hypothesis
The
following hypotheses are formulated to test the effect of small and medium
scale business on economic development of FCT Abuja.
H0: Small
and medium scale business has no effect on the economic development of FCT
Abuja.
Hi: Small
and medium scale business has positive effects on the economic development of
FCT Abuja.
1.7 Scope of
the Study
The scope of
this research is limited to the effects of small and medium scale business on
economic development of FCT Abuja with particular interest in Mr. Biggs
Restaurants. The collection of data and its analysis shall be based on
information gotten from Mr. Biggs Abuja alone as this topic has wide scope of
to be covered.
1.8
Limitation of the Study
Certain
Limitations were encountered in the course of this study. Key among these
includes:
Unavailability
of Data: One of the greatest challenges the researcher encountered in this
study relates to access to and collection of data due to extreme data gaps and
scarcity. This compelled the researcher to limit the study to Small and Medium
Scale Business thus excluding Cottage and Micro Enterprises whose challenges
though comparable, could be fundamentally different from those of SMEs.
Time and
Funds: Another limitation of this study relates to time, funds and logistics
constraints, which limited the intensity of the spread or area of coverage of
the study. Even though SMEs are spread throughout the length and breadth of
Nigeria with negligible concentrations in some States and less urban areas,
this study focused largely on small and medium scale business in Abuja the
Federal Capital Territory.
Resistance
of Respondents: The researcher was also limited by the reluctance of some
respondents to complete the questionnaires promptly and those who even failed
to complete them at all. This thus limited the number of respondents involved
in the study despite the researcher’s efforts and approaches to them explaining
the potential benefits of the study to them.
1.9
Definition of Relevant Terms
Small Scale
business: – Small scale business is any processing, serving or manufacturing
industry with an investment in machinery and equipment below N500,000 (Waboi,
2012).
Management:
– According to Akpala (2000) 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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