CHAPTER ONE
1.1 INTRODUCTION
This research attempt to analyze the impact of small and medium enterprises as an industrial development strategy in Nigeria, using table water enterprises as a case study.
Small and medium scale enterprises (MSMEs) have been widely acknowledged as the spring board for sustainable economic development. In particular developing countries including Nigeria, have since 1970s shown increased interest in the promotion of small and medium scale enterprises for three main reasons, the failure of the past industrial policies to generate efficient self-sustaining reliance approach to development and recognition that dynamic and growing MSMEs can contribute substantially to a wide range of developmental objectives.
These objectives include efficient use of resources, employment creation, mobilization of domestic savings for investment, encouragement, expansion and development of indigenous entrepreneurship and technology as well as income distribution etc.
Experience over the years as shown that small and medium scale enterprises are fundamental to the development of many nation and is regarded as one of the most important process of attaining self- reliance, economic independence, the provision of goods and services, employment, income distribution and many other factors for the overall improvement of the welfare of the populace.
A small scale industry can be defined by the criteria of project cost, capital, cost, turn-over by the employee etc. The Nigerian Federal and State Ministry of Industry And Commerce have adopted the criterion of value of installed fixed capital to determine what a small scale industry is. In this respect, the value have varied from N 60,000.00 in 1972, N 159,000.00 in 1975, N 250,000.00 in 1979, N 500,000.00 in 1986, to a fixed investment of not more than N 2,000,000.00( Two million Naira) in 1992. This figure is exclusive of building and subject to government determination and land prevailing objective of public policy.
Small scale industries in Nigeria can be categorized into urban and rural enterprises, in a more formal way; they can be called organized and unorganized industries. The organized industries have paid employees with a registered office while the unorganized industries (small scale) are mainly made up artisans who work in open space, operating in temporary wooden workshop or structure. The unorganized small scale industries rely mostly on apprentices or family members and mostly employ low rate or not salary paid workers. However, generally in Nigeria, the major activities involved in the small scale industrial sector include; soap and detergent, fabrics, textile and leather, local blacksmith, tinsmith, ceramic, clothing and tailoring, timber and winning, brick and cement, food processing, wood furniture, beverages, bakeries, electronic repairs, phone call centers, chemical based product and mechanics, rental service and hairdressing.
The development of small scale industries is an essential element in the growth strategy of most economics and hold particular significance to Nigeria. Small scale industries not only contribute significantly to improve living standard, they also bring about substantial local capital formation and achieve high level of productivity and capability from the planning stand point. Small scale industries are increasingly recognized as the principal means for achieving equitable and sustainable industrial diversification and dispersal. In Nigeria, small scale industries account for well over half of the total share of employment, sales and value added.
Therefore, it has be agreed by both developed and developing countries in the world that small scale industries are significant instrument for generating economic growth, capable of promoting not only stable industrial structure but also a satisfactory balance partial distribution of industries.
With over 150 million people in Nigeria, productive farmland, rich varieties of mineral deposits, Nigeria should be a haven for small scale industries. The human and natural resources base is a significant feature that gives the country a specific status in the continent. However, just like other countries, Nigeria is witnessing a rapid population growth and this contrast with the less than average rate of development in communication, technological and social infrastructure. These problems constitute hindrance to the development of small scale industries which is a very important sector that will enhance the contribution of the private sector and provide the critical building block for industrialization and sustainable economic development.
Furthermore, with the dismantling of trade and other barriers, the world has been transferred into a global village. Consequently, the small industries in Nigeria are struggling to survive under intense and competitive environment, both domestic and international. In view of this, there is an urgent need to provide the required enabling environment for the development of small scale industries, so that they could adequately play the role expected of them in economic transformation. Such role include the mobilization of domestic savings for investment, appreciable contribution to gross domestic product, increase investment, increase harnessing of local raw materials, employment generation, significant contribution to poverty reduction effort through sustainable livelihood and enhancement in personal income, technological development and export diversification. This can be made possible through responsive industrial policy and government overall economic development strategies that will ensure the collaboration of all development partners and the effective coordination and utilization of economic resources.
1.2 STATEMENT OF THE RESEACH PROBLEM
Small scale industries are most common form of business in Nigeria and this is very significant to the economic development of Nigeria. The aim of any economy (either industrialized or non-industrialized) depends largely on how well organized the small scale industries are. Looking at the standard and practice of small scale industries in Nigeria, taking table water factories in Edo state as a case study, they (small scale industries) seem to be stagnant, less adventurous than that of the developed countries. This study is projected towards providing answers to some of the question such as:
- Are small scale industries necessary and important tools for economic growth and development?
- To what extend has small scale industries help in enhancing self- reliance, productivity and employment generation?
- What are the factors negating the promotion of small scale businesses in Nigeria?
1.3 OBJECTIVES OF THE STUDY
The main objective of the study is to examine the impact of small scale enterprises on the development of Edo state with reference to Edo state table water enterprises. It tends to find out the following:
- To investigate the factor responsible for the failure of small scale enterprises in Nigeria.
- To find the problems associated with small scale enterprises in Nigeria.
- To suggest a way out and technical difficulties normally encountered by small scale industries.
- To enlighten or make prospective investors aware that there is a lot of assistance in form of soft loan and advice to any prospective and potential business man or woman who want to establish a small business
1.4 SCOPE OF THE STUDY
The scope cover all aspect of small scale enterprises, the role of small scale industries in facilitating economic development of the country, the peculiar problems small scale industries face the most, being management problem and access to finance and various role of government to ensure improvement in their performance.
However, for the purpose of this research work, Edo state table water industry is used as a base for the survey.
1.5 SIGNIFICANCE OF THE STUDY
The role of small scale enterprises in the economy cannot be over emphasized. It is the life blood of the economy of developing countries like Nigeria. There are more than a million of unemployed people in Nigeria, the public sector (government) alone cannot absorb these unemployed people or solve the problem of unemployment.
In views of this, this research is thus, necessary because it can be used as a means of enhancing and promoting individual participation in small scale enterprise or business in Nigeria through providing useful information about the nature of small scale industries. It may also serve as reference guide for those who want to venture into small scale business and thus be self-employed if the enabling environment is provided.
This research will also serve as a reference guide for those who want to undertake further studies on small scale industries.
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