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Title                                                                         i

Approval                                                                  ii

Dedication                                                               iii

Acknowledgement                                                  iv

Table of contents                                                    vi

Abstract                                                                  x




1.1  Background of the study                                1

1.2   Statement of the problem                              3

1.3   Purpose of the study                                       5

1.4   Significance of the study                        6

1.5   Research Question                                         7

1.6   Scope of the study                                          9

1.7   Definition of the terms                                   9



Literature Review

Summary of Literature Review




  • Design of the study 36
  • Area of the study 36
  • Population of the study 37
  • Sample of the study 37
  • Instrument for Data collection 37
  • Validation of the instrument 38
  • Distribution and Retrieval of instrument 38
  • Method of Data Analysis 38



Data Presentation and Analysis




  • Summary of the findings 57
  • Conclusion                                 58
  • Recommendations 59
  • Limitations of the study 61
  • Suggestion for further studies 62

References                                                      63

Appendices                                                      65



The major purpose of this study is to determine factors influencing small and medium enterprises in Nigeria. To determines the extent finance house strick condition have affected the development of small and medium enterprise in Nigeria and also assess the extent poor financing has affected small and medium business operations. This study will help small and medium enterprise to assess and appraise their role in solving the problems of unemployment in Nigeria. It will guide the compliance with government monetary policy. It will also equally server as a guideline to researchers who may wish to decide with this study in the future. The following findings were made is the course of analyzing the data. There has been a phenomenal growth in the number of small and medium ventures for past few years. The nature and dimension of small and medium enterprise in Nnewi North made profit of about N5000 daily. The following recommendations are made in the belief that they will promote and stabilize small and medium enterprise of implemented. To overcome the problem of financial constraints, the government should re-introduce the small business credit scheme to that beneficiaries can use them to run the small and medium enterprise.









In recent years, particularly since the adoption of the economic laicism programme in Nigeria in 1986, there has been a decisive switch emphasis from the grandiose, capital intensive, large scale industries project based on the philosophy of import substitution to small scale industries with immense potentials for developing domestic linkages for rapid – sustainable industrial development. Apart from their potential for ensuring a self reliant industrialization, interms of ability to rely largely on local raw materials small scale enterprises are also in a better position to boost employ raw materials, small and medium enterprises are also in a better position to boost employment, guarantee a more even distribution of industrial development in the country industry the rural areas and facilitate the growth of non-oil exports.

In Nigeria the definition of small and medium enterprises also varies from time to time and according to institutions for instance, the Central Bank of Nigeria’s (CBN) monetary policy circular No: 27 of 1988 define small and medium enterprises in (exchange general commerce) as enterprises in which total investment (including land and working capital) did not exceed N500,000 and or the annual turn-over did not exceed N12 million small and medium enterprises is one of the modern strategies under develop countries are employing to break into the “league” of developed countries fasua (2006) categorized business that fall under small scale as follows firewood, supply plantain production restaurant services small scale poultry raising, operating a nursery for children home laundry services and host of others. Business grouped under medium scale according to fasusa are soap production, commercial poultry profession appractes (law, accountancy, education) food and beverage production among others.

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

Unfortunately, all these formal credit scheme have not been able to adequately redress the fundamental problems which have constrained small scale enterprises access to credit. The low credit rating of this class of enterprises is attributable largely to their weak capital base high mortality rate, low productivity and shortage of managerial skills. Indeed, the problems of weak capital base and poor access to finance appear to have developed into some vicious circle, leading to slow growth stagnation and even rapid demise of the small scale enterprises. The impact of all existing credit scheme interms of providing for meaningful and sustained development among the small scale enterprises had medium enterprises to serve the expected role of catalyst for rapid industrial development there is need for a more innovative strategy for improved access to development finance for the small and medium enterprises that would address their inability to provide collateral securities for loans formal credit institutions.



       Nnewi is the second largest city in Anambra State in south eastern Nigeria. Nnewi as a metropolitan city encompasses two local government areas Nnewi North and Nnewi South. Nnewi North is commonly referred to as Nnewi Central and Comprises four autonomous quarters, Otolo, Uruagu, Umudiro and Nnewi-Ichi. Nnewi North also include Ichi an autonomous neighbouring town.

As of 2006, Nnewi has an estimated population of 391,227 according to the Nigerian Census. The City Spans over, 1,076.9 square miles (2,789 km²) in Anambra State. Nnewi metropolitan area and its satellite town is a home to nearly 2.5 million residents. As of figures as the largest Inland town of all other in the Eastern State.



       Small and medium enterprises are mostly managed by owners and relations. The financing in most cases in normally provided by the owners. The owners fail to realize the importance of external source of capital in order affect expansion in the business. In most cases, by the owner member of the family and friends in most cases. In another development small and medium enterprises experience difficulties in raising equity capital from the finance houses or individuals.

Even when the finance house agrees to provide equity capital, the conditions are always dreadful. All the result to inadequate capital available to the sector and thus lead to poor financing, this leads to poor financing. This is the have of most collage industries in Nigeria. About 80% of small and medium enterprises are stifled because of this problem of poor financing and other problems associated with it (Chukwuemeka, 2006). The problems that emanated from poor financing include:

  1. Lack of competent management which is the consequence of inability of owners to employ the services of experts.
  2. Use of obsolete equipment and methods of production because of owner’s inability to access new technology.
  3. Excessive competition which resulted from sales which is a consequence of poor finance to cope with increased competitors in the industry. In view of the above, the researcher decided to investigate poor financing to the organization.



       The specific purposes of the study are: –

  1. To determine factors influencing small and medium enterprise in Nigeria.
  2. To determining the extent finance house strict conditions have affected the development of small and medium enterprise in Nigeria.
  3. To assess the extent poor financing has affected small and medium business operations in Nigeria.
  4. This study will help small and medium enterprises to access and appraise their role in solving the problems of unemployment in Nigeria.
  5. It will equally serve as a guideline to researchers who may wish to decide with this study in the future.
  6. It will also help small and medium enterprise to make sufficient preparation in their request for the credit assistance.
  7. It will guide the entrepreneurs in making credit demands that are compliance with government monetary policy.
  8. The last but not the least it will help the entrepreneurs to displayed competence in preparing justification for their project. It is rear to see most of them coming up with cash projections, projected balance sheets.


  1. What extent does the Nnewi North L.G.A affect the operation of small and medium enterprise?
  2. What are the factors responsible for phenomenal growth of small and medium enterprise in Nnewi North?
  3. What are the feelings of the customers on small and medium enterprise in Nnewi North?
  4. What are the problems of setting up small and medium enterprise?
  5. What are the problems of managing small and medium enterprise in study area?
  6. What are the future prospects of small and medium enterprise?



The study focuses on the problems and prospects of small and medium enterprises in Nigeria using Nnewi North as a case study.

The study intends specifically to investigate the problems and prospects of small and medium enterprises in Nigeria the strategies adopted by them to survive.



MANAGEMENT: Is the act of getting people together to accomplish desired goals and objectives using available resources efficiently and effectively, management comprises, planning organizing, staffing, leading or directing and controlling.

ORGANIZATION: Is a group of one or more people or entities or effort for the purpose of accomplishing a goal.

RESOURCING: Encompasses the development and manipulation of human resources, financial resources technological resources and natural resources.

EXPORT: This term export is derived from the conceptual meaning as to ship the goods and services out of the port of a country.

The seller of such goods and services is referred to as an “exporter” who is based in the country of export whereas the overseas based buyer is referred to as an “importer”. IN international trade “exports” refers to selling goods and services produced in the home country to other markets.

ECONOMIC GROWTH: It means designed to give a project in the science of products distribution and consumption of goods condition of a country as to material prosperity.

SMALL SCALE INDUSTRY: Any industry with capital not exceeding N750,000 including capital but exchanging cost of land.

SOLE PROPRIETORSHIP: Is a business owned and conducted by one person presumably assisted by one or more persons for intakes wife and children.


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