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Title page i
Approval page ii
Dedication iii
Acknowledgment iv
Table of contents vi
Abstract ix
1.1 Background of the study 1
1.2 State of research problem 3
1.3 Objective of the study 5
1.4 Hypothesis 6
1.5 Justification of study 7
1.6 Scope of study 8
1.7 Plan of the project 9
2.1 Introduction 11
2.2 Theoretical issues 14
2.3 Empirical studies 17
2.4 Theoretical framework 21
3.1 Method of data analysis 34
3.2 Model of specification 35
3.3 Techniques of model 36
3.4 Evaluation of model 36
3.4.1 Evaluation based on statistical criteria 36
3.4.2 Evaluation based on econometric criteria 37
3.5 Sources of data and collection 38
4.1 Presentation of result 39
4.1.1 Interpretation of result 39
4.2 Evaluation based on economic apriori criteria 40
4.3 Evaluations based on statistical criteria 40
4.3.1 T-Test 40
4.3.2 F-statistics 41
4.4 Evaluation based on econometric criteria 43
4.4.1 Normality test 43
4.4.2 Test for heteroscedasicity 44
4.4.3 Test for multicollinearity 45
5.1 Summary 48
5.2 Conclusion 49
5.3 Recommendations 50
Bibliography 54
This research work centers on the power supply and the performance of
small and medium scale industries in Nigeria from 1986 – 2010.
carrying out this study, secondary data were collected and empirical
analysis was made to achieve these objectives, multiple regression
were used in anglicizing the data. In investigating this problem, the
researcher introduces 2 hypotheses that power supply changes has no
significant in Nigerian econometric mode were used for evaluation and
testing of the hypothesis. The researcher made use of the ordering
least square (OLS). The out come of the model shows and confirms
that power supply changes has a negative impact on Nigerians. And
that a unit change in power supply has a positive impact on both the
gross domestic product and balance of payment in Nigeria. Based on
the findings, certain recommendations were made which include
government increasing its efforts in tackling the issue of corruption and
1.1 Background of the study
The economy is a complex dynamic factor, requiring greater
attention in terms of its analysis and efficient management for
productivity, stability growth and increased standard of living of people
operating Nigeria.
Since 17th century efforts was made to promoting economic
growth and have focused on the small and medium scale industries
(SMIS) as the keys and the development of an economy and
manufacturing sector in general. The role of small and medium scale
industries in the overall growth and development of an economy‟s
manufacturing sector in particular and the economy in general cannot
be over emphasized. Small and medium scale industries are indeed
high potentials for development in term of employment generation and
wealth creation in any economy. Empirical studies have shown that the
small and medium scale industries (SMIS) have in many state has
enhanced greater employment opportunities per unit of capital in vested
and aided the development of local technology. This explains the deep
interest which developing nation has shown in the promotion of small
and medium scale industries since the 1970s.
Moreover, the potentials of small and medium scale industries in
contributing substantially to the economic growth and development of
Nigeria has been hampered by various constraints, inducing long term
capital inadequate financing unavailability of information for potential
investors, poor management practices and low entrepreneurial skill,
over bearing regulatory and operational environmental, unfavorable
tariff policy and infrastructural deficiencies such as inadequate power
These constraints also limit the performance of small and medium
scale industries in Nigeria.
Although, it is a widely held view that the availability of credit as
the most critical to the performance of small and medium scale
industries (SMIS), but some studies have shown that a large number of
small and medium scale industries fail because of non financial reasons
such as infrastructural deficiencies (Liedhorm et al 1994). One of the
infrastructual facility affecting the performance of the SMIS in Nigeria is
power supply (electricity). Due to inadequate provision of power supply
constitutes one of the greatest constraints in SMIS development. The
current situation whereby each investor is too provide electricity is, to
say the least, tasking to the SMIS investors who generally lacks
adequate capital for the business and the result of this is low return on
investment due to high operations cost. Therefore, adequate power
supply is necessary to ensure cost effectives in vestments in small and
medium scale industries (Charles Soludo, 2005).
It is however, noteworthy, there is need to objectivity access the
Nigeria and impact of power supply on the performance of the SMIS
sub-sector of the Nigeria manufacturing sector.
1.2 Statement of Research Problem
Small and medium scales industries in both developed and
underdeveloped nations plays an important role in the process of
economic development and industries. In spits of the relevance of the
small and medium scale industries to Nigeria economy and industrial
development, on that sector faces a lot of problems.
Although there are various factors affecting the performance of
small and medium scale industries sub sector ranging from inadequate
capital to unfavorable tariff policy, however, the poor state of power
supply in Nigeria is one of the significant factors militating against the
performance of small and medium scale industries.
The equality and quantity of a country‟s power supply determines
its ability to create competitive industries. Since the performance of
SMIS in any state is greatly influenced by the electricity supply. Given
the pathetic state of power supply in Nigeria it is no wonder that the
contribution of the development the state, manufacturing sector and the
economy in general is very negligible or unsupported by the
An overview of the performance of the small and medium scale
industries in Nigeria shows that past policies made limited impact on the
sector for example, it is estimated that SMIS account for about 80
percent of the total industries employment in Nigeria, but only contribute
15-20 percent of total manufacturing output.
Power supply has remained unreliable and power out-age load
shedding and rationing have become very frequent. Power supply had
been erratic and unreliable that many businesses have resorted to
purchasing private generators at prohibi
-ost. The substantial investment in private generating plants is
estimated to be of capacity of over 250mm, which is almost half of
power holding company of Nigeria (PHCN) available capacity.
1.3 Research Questions
The study would therefore provide answers to the following
fundamental questions.
(1) How does power supply affect the performance of small and
medium scale industries in Nigeria?
(2) Are there linkage between power supply and the performance
of small and medium scale industries in Nigeria?
(3) What contributes to failure of power supply and manufacturing
1.4 Objective Of The Study
The objectives of this research study are to provide a clear picture
on the activities of effects of power on the performance of small and
medium scale industries. The specific objectives of the study are:
(i) To examine the impact of power supply on the performance of
small and medium scale industries in Nigeria
(ii) Solutions polices options and recommendation
(iii) To identify the problems of that might be against the
effectiveness of small and medium scale industries in Nigeria.
1.5 Hypotheses
The broad objective of this study is to assess the performance of
power supply to small and medium scale industries in the state. The
specification objectives of the study a
re as follows:
(1) (Ho; No significant dependence) the performance of small and
medium scale industries is not dependant on the quality and
availability of adequate power supply in Nigeria.
(2) (H1; Have significant dependence) the performance of small
and medium scale industries is dependent on the quality and
1.6 Justification of Study
This study is significant of selected growths. It will add to the
available literature on the study area. Power supply is a problem to the
state government and its citizens. From experiences our various
industries, there is no doubt that the small and medium scale industries
over the year have been at the receiving end of the economic
environment in the state. Infact, the contributions of the sector has
been declining over the years. Hence, this study will create awareness
to the government to see the extent to which neglect of infrastructural
facilities such as electricity is hampering the performance of SMIS in
meeting their potentials of the providing employment per unit
investment capital, facilitating the development of indigenous
entrepreneurships, enhancing local resources utilization and value
added expanding non oil exports at competitive prices, improving
balance of payment position and bring about disagreed overall growth
and development of the state economy.
The lack of power supply in the state serves as external diseconomics for SMIS adversely affecting their performance, productivity
and profitability.
1.7 Scope of the Study
The research work is concerned basically with the roles to lay
emphasis on power supply and the performance of small and medium
scale industries in the state and will cover those SMIS in state that have
electricity as relevant infrastructural for their production process. The
analysis covers a period of 1986-2010.
The basic limitation of this study is the completing nature of
sources of statistical inputs. The data obtained from the annual bulletin,
journal, and statistical data text books, magazines and seminars reports
etc. consequently the information given is extracted from the CBN and
others sources of secondary data.
1.8 Plan of the Project
This study will be structured into chapters. Chapter one will cover
the introduction of study statement of the problem, objectives of study,
hypothesis, justification of the study, scope and limitation of the study.
Chapter two also will be review of the relative literature which will
include the conceptualization of terms, the theoretical framework and
empirical literature.
Chapter three also is research methodology of the study which
includes the sources from which data will be collected and the method
of data collection is field survey. This chapter also highlights how the
sample will be designed, in terms of the technique questionnaire as an
entrustment of data. Chapter four will include the presentation of result
and analysis which will follow the objectives of the study and nature of
the results obtained and also the testing of hypothesis.
Chapter five also consists of summary, conclusion and
recommendation based on the finding of the research.


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