SMALL SCALE ENTERPRISES AND SOCIO-ECONOMIC DEVELOPMENT IN NIGERIA
SMALL SCALE ENTERPRISES AND SOCIO-ECONOMIC DEVELOPMENT IN NIGERIA
1.1 BACKGROUND OF THE STUDY
Small scale firms are the foundation of the national economy (Onuaha, 1998: 1). The Nigerian economy has been in a state of near transformation, both economically and politically. Obi (1998:4) progresses from primitive to modern, from a mixed economy to a market-driven economy.
Small scale enterprises and entrepreneurs are known to have taken an active role in all of these stages, while the government plays the actual regulating and facilitating laws.
Many studies have shown that the expansion of the small scale sector has a significant contribution to optimal rural industrialization in terms of human and material resources, as well as a significant multiplier effect on the economy via backward and forward linkages (Attah and Chuta 1984).
The issue of encouraging entrepreneurship and small-scale enterprise in our country's development has been a persistent one.
The concept has engaged our government, planners and administrators in several fields, past and present governments have launched on plans that would assure a stable Nigeria and her national economy since 1999.
Similarly, Okonkwo (1986), a previous minister of budget and planning, stated that he would want to see thousands of small scale companies and businesses around the country employing five, 10, or twenty workers.
The government implemented initiatives such as the Apex Loan Scheme (ALS), the structural Adjustment Programme (SAP), the National Directorate for Employment (NDE), and others. Mrs. Modupe Adelege, Directorate General, had this to stay in a forward to the national strategy on micro, small, and medium enterprises:
The role of micro, small, and medium-sized companies (MSMES) in job creation, economic empowerment, poverty reduction, and even development distribution has long been recognised. The key problem has been determining how to accomplish this within the framework of a strong policy platform. 1988 (Ekpenyong).
This goes on to demonstrate the emphasis that both the previous and current governments have placed on developing the factor. Small scale firms and their operators play critical roles in the development process and form the fabric of national economies all over the world.
They are critical to the development of indigenous products, machinery, technology, and entrepreneurial capacity at every stage of economic advancement, from feudalism to the market-led economy.
Small scale enterprises are known to have taken centre stage in job creation and development, with the government acting as a facilitator and regulator in terms of number and geographical spread.
According to Osaze (2005), small scale businesses in Nigeria represented an important employment sector. It is estimated that it employs more than 45% of Nigeria's workforce.
Small businesses provide productive outlets for enterprising and interdependent individuals. According to him, this will continue to rise as technology advances and more young people pursue their own entrepreneurial endeavours.
Obanla (1987), the federal Government of Nigeria, realising the tremendous contribution of small scale businesses, has encouraged the establishment and operation of such businesses through direct financial assistance via the National Directorate of Employment (NDE),
government regulation on industry, its fiscal policy, and funding of Development Banks (NIDB) and the Nigerian Bank for Commerce and Industry (NBCI), among others.
The evolution of SMEs and entrepreneurship can be traced back many centuries, beginning with the early period to the middle ages, 17th, 18th, 19th, and 20th centuries. For a long time, business was viewed negatively, beginning with Napoleon's disparaging remarks about business, in which he castigated England as a nation of shopkeepers.
Even a century ago, commerce was frequently seen as an illustrious elite career (Koontz et al 1980:30-32).
1.2 STATEMENT OF THE PROBLEM
Early political theorists were slow to turn their attention to the problem of administration, despite the fact that no organisation (including business organisations) can function effectively or efficiently without good administration.
For many years, there was a widespread belief among managers and administrators in the private and public sectors, as well as other organisations, that management or the study of business is not susceptible to theory, that management is entirely an art, and not to any extent a science.
Small scale enterprises have major issues and prospects all over the world; similar problems and prospects face people (businessmen) in Uyo city, and these challenges remain enormous.
However, a lack of managerial competence in the field of finance is a severe insurmountable setback to small scale business. Most small-scale business operators in Uyo at large are simply uninformed of what is happening to their resources, usually as a result of bad bookkeeping or a shaky accounting system.
Accounting, as defined by Olasore (1987), is “the set of rules and methods by which financial and economic data are collected, processed, and summarised into reports that can be used in making decisions.”
One of the fundamental issues confronting small businesses is a deficient accounting system. This issue typically results in a firm's failure to create accurate data to reflect the true position of the business.
Production issues stymie the performance of small-scale businesses, but careful planning by management should allow the firm to acquire a five-year reputation for quality, allowing it to create demand for its products.
Small businesses fail due to insufficient marketing strategies; owners lack these strategies because they are unable to select the suitable combination of marketing and define the target market and specific groups of clients.
The efficiency with which things may be created and sold is affected by new technical breakthroughs. Some socio-cultural elements, like as attitude, values, and customs, have an impact on small scale company in Uyo city.
However, in most third-world countries, including Nigeria, the failure rate of SMEs remains quite high. This study project aims to concentrate on small-scale firms and socioeconomic development in Nigeria.
1.3 OBJECTIVES OF THE STUDY
The effectiveness of small-scale businesses is hampered by a lack of financial management skills.
Small-scale business efficiency suffers from a lack of planning.
Small businesses suffer from a lack of marketing strategy.
Small-scale business success is hampered by sociocultural deficiencies.
1.4 RESEARCH QUESTIONS
(i) Does a lack of financial management abilities have an impact on the effectiveness of small businesses?
(ii) How does a lack of planning affect the efficiency of small-scale businesses?
What are some marketing methods that may be used to help small businesses?
What are the shortcomings of socio-cultural aspects that stymie small-scale firm success?
1.5 RESEARCH SUGGESTIONS
The efficacy of Small Scale companies is hampered by a lack of financial management abilities.
Small-scale businesses suffer from a lack of planning.
Small businesses suffer from a lack of marketing plan.
The impact of socio-cultural deficiencies on the success of small-scale businesses.
1.6 SIGNIFICANCE OF THE STUDY
Despite the evident need of effective and good management in all business activities, many small enterprises continue to use ineffective management approaches and procedures.
This research aims to expose and confront entrepreneurial failure in order to advise economic leaders and operators on what they need do to keep the dream of the 2020 economic tiger alive.
The study will also expose the economic disadvantages of SMEs in Uyo metropolitan, as well as the necessity and techniques of implementing an efficient management system and approaches.
This study will make valuable contributions, suggestions, and findings that will be of encouragement to intending investors, small business managers, owners, and indigenous industrialists, exposing them to the economic and socio-cultural realities of the society.
Furthermore, it will be of significant interest to government economic planners during resource allocation and distribution, as well as students and businesses interested in conducting additional research in the area of small company firms.
1.7 SCOPE AND LIMITATIONS OF THE STUDY
The study was undertaken solely to assess small-scale firms and Nigeria's socioeconomic progress. The scope is limited to the Uyo Local Government Area.
During the course of this study, the researcher experienced certain difficulties. This showed as a scarcity of literature on the subject of the inquiry, as well as a shortage of time and funds.
1.8 DEFINITON OF TERMS
(i) A small business is defined as one that is owned and conducted independently.
(ii) Small-scale businesses: These are typically privately held corporations, partnerships, or sole proprietorships. Small-scale businesses are typically not dominating in their sector of operation.
(iii) Development: A long-term process in which a high level of self-reliance economic growth in a society is connected with significant reductions in poverty, unemployment, inequality, and external dependence.
(iv) Entrepreneurship: This is the process of creating a business from the ground up, starting with an idea and growing it into a profitable enterprise.