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This study, the effect of organizational challenges facing owners of medium enterprises in a recessive business environment in Enugu metropolis. The effect of organizational challenges were carefully examine and the aim of the study is to assess the organizational challenges facing owners of the medium scale enterprises in a recessive business environment. The survey research design was adopted and a sample size of 270 (two hundred and seventy) was gotten using Yamene 1964 formula out of the population of 828 (eight hundred and twenty eight) employees in Enugu metropolis. In determining the number of questionnaire administered to the respondents, stratified random sampling and the kumar proportionate were adopted. The data for the study was gathered with a four point likert scale questionnaire. The study revealed that power supply, skills, raw materials and low capital base constitute a major challenge facing owners of medium scale owners of medium scale enterprises in Enugu metropolis. The study concludes that medium scale enterprises can excel in productivity, financially and otherwise if all these challenges enumerated are taken care of. The study recommends that planned efforts should be made ahead of time to facilitate successful and timely implementation of a sound and uninterrupted power supply which can be done through an understanding synergy between owners of medium scale enterprises and government of the federal Republic of Nigeria.


Title page                                                                                                                             i

Approval page                                                                                                                               ii

Dedication                                                                                                                          iii

Acknowledgements                                                                                                        iv

Abstract                                                                                                                               v

Table of contents                                                                                                              vi


1.0 INTRODUCTION                                                                                                      1

1.1Background of the Study                                                                                        1

1.2 Statement of the Problem                                                                                      2

1.3 Objectives of the Study                                                                                           4

1.4 Research questions                                                                                                  5

1.5 Statement of Hypothesis                                                                                        5

1.6 Significance of the Study                                                                                        6

1.7 Scope of the Study                                                                                                    7

1.8 Limitations of Study                                                                                                            8


2.0      LITERATURE REVIEW                                                                                    12

2.1      Theoretical literature                                                                                         12

2.1.1  Concept of small and medium scale business                                           12

2.1.2 Categories of small and medium scale enterprises                                 18

2.1.3  Prospect of small and medium enterprise in Enugu east senatorial zone

2.1.4  Challenges of small and medium scale enterprises in Nigeria           21          Financing small and medium scale enterprises (SMEs) by commercial banks                                                                                                22

2.2      Empirical Literature                                                                                          24


3.0 RESEARCH DESIGN AND METHODOLOGY                                                 32

3.1      Introduction                                                                                                          32

3.2      Research design                                                                                                   32

3.3      Sources of data collection                                                                                 33

3.3.1  Primary source of data                                                                                      34

3.3.2  Secondary source of data                                                                                  34

3.4      Tools for data collection                                                                                                34

3.5      Population of the Study                                                                                     36

3.6      Sample and sample techniques                                                                      37

3.7      Instrumentation                                                                                                   37

3.8      Reliability and validity of data and test instrument                               38

3.9      Data analysis techniques                                                                                   38


4.0 PRESENTATION AND ANALYSIS OF RESULT                                           39

4.1      Introduction                                                                                                          39

4.2      Analysis of data                                                                                                    39

4.3      Test of hypotheses                                                                                              59

4.4      Discussion of results                                                                                           63



5.1      Introduction                                                                                                          64

5.2      Summary of findings                                                                                          64

5.3      Conclusion                                                                                                              65

5.4      Recommendations                                                                                             65

5.5      Area for further research                                                                                 67

REFERENCES                                                                                                       68

APPENDIX I                                                                                                           71



1.1   Background of the Study

It has been a contemporary issue in the recent studies on the challenges usually faced by the owners of medium scale enterprises mainly during the time of economic recession. It is obvious that the contributions of the medium scale enterprises towards the growth of the Nigeria economy cannot by any sight of imagination be over emphasize. Medium scale enterprises are usually regarded as the engine of the economic growth and equitable development in a developing economy.

Medium scale enterprises (MSE) have been recognized as indispensable components of natural development in both developed and developing economies. This subsector of the economy is globally acknowledged to contribute substantially in enhancing employment creation or generation, poverty alleviation, equitable distribution of resources, income redistribution, technical and technological innovation, entrepreneurial skills development, more uniform industrial and economic region? Moreover, they have been touted strategic in ensuring food security and encouraging rapid industrialization andreversal of rural-urban migration.

Consequently, both the federal, state governments and local governments recently have stepped up efforts to promote the development of medium scale enterprises through increased incentive scheme, including enhanced budgetary allocations for technical assistance programmes. New lending schemes and credit institutions such as the National Economic Reconstruction found (NERFUND), World Bank-assisted medium-scale enterprises loan scheme (MES), Nigeria Export and Import Bank (NEXIM) and the Community Bank have also emerged at both the national and local levels to boost the flow of development finance of small and medium scale enterprises which have so far depended largely on personal funds and credit from informal sources for both their investments and working capital.


1.2   Statement of the Problems

Notwithstanding the immeasurable contribution of the medium scale enterprises towards the economic growth in Nigeria, there are numerous organizational challenges facing this active sector over the years without solution. It is tradition in Nigeria that most medium scale enterprises in Nigeria die within their first five years of existence.The growth and development ofmedium scale enterprises in Nigeria have been slow and in somecases even stunted, due to a number of problems and challenges confrontingthis important sector of the economy. Some of the problems highlightedinclude: deplorableinfrastructural facilities funding and financing challenges; inadequatemanagerial and entrepreneurial skills; corruption and lack of transparencyarising from government regulations and regulators; poor power supply, low capital base, inadequate market research, lack of succession plan; inexperience, lack of proper book keeping; inability to separate business and family or personal finances, lack of business strategies, inability to distinguish between revenue and profit, inability to procure the right plant and machinery, inability to engage or employ the right caliber of staff and cut-throat competition among others.

Beckman (2002) contends that most of the problems of MEs are external to it. Among them are those related to capital shortage, taxation and regulations, product liability patent and franchising abuses. The internal problems of MEs in Nigeria include: inadequate working capital, stiff competition from larger companies, difficulties in sourcing raw materials, low capacity utilization, lack of management strategies, poor educational background of operators, and huge financial problems while the external problems include: policy inconsistencies and so many others. This study then aims at looking at ways these impediments could be rectified to enable business in Nigeria, especially Enugu metropolis, flourish.

1.3   Objectives of the Study

As a central objective, this study seeks to assess the organizational challenges facing owners of the medium scale enterprises in a recessive business environment. The specific objectives are to:

  1. To determine if power supply is a major challenge facing owners of medium scale enterprises in Enugu metropolis.
  2. To examine the effect of low capital base on the performance of medium scale enterprises.
  3. To determine whether business skills constitute a major challenge in the performance of medium scale enterprises.
  4. To ascertain the effect of raw materials on the organizational performance.


1.4   Research Questions

From the aforementioned research objectives, the following research questions were formulated

  1. What is the extent of power supply availability on the performance of small and medium scale enterprises in Enugu Metropolis?
  2. How does capital base constitute a major challenge to owners of small and medium scale enterprises?
  3. What skills are needed by owners of small and medium scale enterprises for success in Enugu metropolis?
  4. Does raw material constitute as a major challenge facing owners of medium scale enterprises in Enugu metropolis?

1.5   Research Hypotheses

Based on the above research questions, the following hypothesis were formulated

  1. Ho: power supply does not constitute a major challenge facing owners of medium scale enterprises in Enugu metropolis.
  2. Ho: Low capital base does not constitute a major challenge facing owners of medium scale enterprises in Enugu metropolis.
  3. Ho: Business skill does not constitute a major challenge facing owners of medium scale enterprises in Enugu metropolis.
  4. Ho: Raw material does not constitute a major challenge facing owners of medium scale enterprises in Enugu metropolis.

1.6   Significance of the Study

This study is significant in that it attempts to pinpoint some of challenges facing owners of medium scale enterprise in Enugu metropolis. It has both theoretical and practical significance. Theoretically, the finding of the study will be useful to both students and scholars who wish to advance their knowledge on the challenges facing owners of medium scale business enterprises in Enugu and Nigeria at large. On the other hand, the findings will be of practical significance to the management of Innonson Technical and Industrial Company Limited, and other medium scale business organizations, employees and the government, as it will help them improve their inability to manage those challenges facing them in the organization.

Significantly, the findings are expected to make the sole proprietor to see the need to improve staff strength through employment and development of skilled manpower. This will help them to plan adequately and suggest the need to organize seminars to the general public on the danger of the aforementioned challenges,  Adding to the above, it will specifically create an awareness on how the challenges facing the owners of the medium scale enterprises can be managed.

1.7   Scope of the Study

The research work covered the challenges facing the owners of medium scale business enterprises in Enugu Metropolis with special concern to Innonson Technical and Industrial company Limited. Nevertheless, it focused generally on enumerating the challenges and tested ways of averting/managing it.

1.8   Limitations of the Study

The study was limited by the fact that it relied solely on one enterprise and some of the personnel did not volunteer the necessary information. Finally, time available for me was limited when compared to other activities I need to engage myself in the school.

Definition of Terms

  1. Medium Enterprise: Company with total cost including working capitalbut excluding cost of land is above hundred million naira (100,000,000)and a staff strength of between seventy-one (71) and two hundred (200)full time workers and with an annual turnover of more than twentymillion naira (20,000,000).
  2. Small scale Enterprise: An enterprise whose total cost including workingcapital but excluding cost of land is between ten million naira(10,000,000) and one hundred million naira (100,000,000) and workforcebetween eleven (11) and seventy (70) full time staff and a turnover of notmore than ten million naira (10,000,000) in a year.
  3. Large Enterprise: Any enterprise whose total cost including workingcapital but excluding cost of land is above three hundred million naira(300,000,000) and a labour force of over two hundred (200) workforceand an annual turnover of more than twenty million naira (20,000,000).
  4. Micro Enterprise: A firm, whose total cost including working capital butexcluding cost of land is not more than ten million naira (10,000,000)and/or with a labour size of not more than thirty (30) full time workersand/or a turnover of less than two million naira (2,000,000).
  5. Economic Growth: This means the enhancement of profit generated bythe designed economic resources of a nation or individual.
  6. Investor: This is a person who commits fund into business undertakenwith a view of financial return.
  7. Business Firm: This means a business organization in which anindividual or group of individuals organizes and operates to have profit inreturn.
  8. Financial Institution: This is a financial system of any country’sset of institutional and other arrangements put in place for the transferof savings from those who generate them to those who ultimately usethem for investment or consumption.


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