The Role of Small and Medium Enterprises in the Nigerian economy
Chapter
One
Introduction
1.1. Background
of the study
For
the past decades, small business enterprises in Nigeria were characterized as
essentially backward and cog in the wheel of the overall development of the
Nigeria economy. As a result of this, there has been a prevalent feeling that
such businesses could be assisted only for social reasons, not as a promising
opportunity for national development. Obviously, too little attention has been
paid to the benefits to be derived from helping small enterprises of modernize
and grow. This attitude arose partly amongst both the citizens and government
and mainly from the very nature of the small business which made it difficult
for its impact to be felt in the economy. The latent contributions which small
business can make are now attracting recognition. This awareness is manifest in
the ever increasing number of Nigerians who daily strive to put up their
personal ideas and abilities to effective use [by starting small business]
ventures. Evidence around the world indicate that small scale enterprise
provide an effective means of stimulating indigenous entrepreneurship,
enhancing greater employment opportunities per unit of capital invested and
aiding the development of technology. Through their wide dispersal, they
provide an effective means of mitigating rural-urban migration and resource
utilization. Furthermore, by producing intermediate products for use I n large scale
enterprises, small businesses contribute to the strengthening of industrial
linkages. Accordingly, due to the recognition of the roles of small business,
the Nigerian government has since 1970 initiated programmes for the assistance
of small businesses, especially, in the areas of finance, extension and
advisory services including, training and provision of infrastructures. All
these are designed to enhance the development of small businesses. Successive
governments in Nigeria have for the past three decades shown great interest in
the financing of small businesses by establishing specialized banks and other
credit agencies/schemes to provide customized funding. In spite of all the
contributions and the attention given to it by the government, the small
business enterprise is still confronted with problems peculiar to what many may
refer to as the ‘Nigerian factor’. One of such problems is the lack of funds,
“It takes money to do business”. From the time a business idea is conceived of
[the promotional state] until after it has ceased to operate, there are
financial implications in every activity at every point in time associated with
the businesses. It is therefore not surprising that the issue of financing is
of major concern to small business organization. Despite that, the role of SMEs
in Nigeria cannot be underestimated. It is noteworthy that most of the small
businesses in Nigeria are sole proprietorship and partnerships.
1.2.
Statement of the problem
Nigeria
is currently witnessing an alarming rate of unemployment rate is growing tin
geometric progression. The economy is also increasingly finding it difficult to
cope as Nigerian economy is waning. A lot of experts have called for the
creation of an enabling environment for small –scale enterprise to thrive. They
cited Asian “Tigers” such as Malaysia, China, Sought Korea, Indonesia,
Singapore and Thailand where both the government and individuals knowing the
importance of small scale industrial development join forces together in
fostering effective and sustainable small scale enterprises in their countries.
Evidence also abound that in the above mentioned places, a lot is being done to
empower the growth of this sub sector of the economy. The role small scale
industries in the development of indigenous technology can not therefore be
over emphasized.
The Role of Small and Medium Enterprises in the Nigerian economy
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