THE CONTRIBUTION OF SMALL AND MEDIUM SCALE BUSINESS IN THE ECONOMIC DEVELOPMENT OF AKWA IBOM STATE
CHAPTER ONE
GENERAL INTRODUCTION
1.0 INTRODUCTION
Interest in the development of small and medium sized enterprises and their contribution in the development process continue to be in the forefront of policy debate in developing countries. The advantages claimed for small and medium scale business are various, including: the encouragement of entrepreneurship; the greater livelihood that small scale business will utilize labour intensive technologies and thus has an immediate impact on employment generation; they can usually be established rapidly and put into operation to produce quick returns. Small scale business development can encourage the process of both inter-intra-regional decentralization; and they may well become a countervailing force against the economic power of larger enterprises. More generally, the development of small scale business is seen as accelerating the achievements of wider economic and socio-economic objectives, including poverty alleviation.
1.1 BACKGROUND OF THE STUDY
This research is set out to examine the contribution of small and medium scale businesses in the economic objective of Akwa Ibom State. As far as the research has elaborate the development of small scale promotion which is identified as approach in development. The creation of economically viable enterprises which can stand on their own feet without perpetual subsidy and can make a positive contribution to the growth of real income and therefore to better living levels. This approach emphasis the importance of efficiency in new small scale enterprise. Small producers must be encouraged to adopt new method, move into new lines of production and in the long-run, wherever feasible, they should be encouraged to become medium or even large scale producers.
The presidential initiative on cassava production and export has increased the awareness amongst Nigerians of the industrial crop, popularly referred to as the ‘new black gold’. Started in July 2004, the initiatives seeks to generate $5 billion in export revenue by the year 2007. Fortunately, Nigeria, according to the food and Agricultural Organisation. FAO, in its 2008 report, is currently the largest producer of cassava in the world at 34 millions tons yearly but with a poor yield of an average of 10 tons per hectare over an estimated cultivated land size of three million hectares. Nigeria is closely followed by Brazil and Thailand, which have a capacity to produce 24 millions tons and 20 millions tons and a yield of 13.6tons per hectare and 19.4 tons per hectare respectively.
1.2 STATEMENT OF THE PROBLEM
In evaluating the activities, services, contribution and importance of small and medium scale business in particular, it appears in most cases that inspite of its economic importance on this sector, the level of its acceptance is always noticeable and really showing. In the light of the above, it is mind bothering as to whether the state is ignorant of this philosophy or not paying attention to the major contributions of small and medium scale business to the entire community.
Hence, this study is set to study the various ways that small and medium scale business contributes positively to economy of Akwa Ibom State with particular focus on Ibedmore Resource Nigeria Limited.
1.3 OBJECTIVES OF THE STUDY
The main objective of this study is to examine the contribution of small and medium scale business in Akwa Ibom State community development. Also to identify and consequently analyze the most effective and efficient way through which small scale enterprises could be financed and promoted, thereby taking into consideration various conditions such as economic,, political, social, psychological etc under which small scale enterprises are encouraged to operate with particular reference to the cassava processing industry in Nigeria. In so doing, the researcher intends giving an in-depth information and analysis on the various strategies through which small-scale enterprises can be developed and encouraged.
In view of the above, the researcher intends to find out the following:
- The role played by government towards promotion and development of small-scale enterprises.
- To identify the economic potential of small-scale enterprises in the Nigerian industries.
- To highlight the benefit to the government and the general populace.
- To identify the constraints confronting the development of small-scale enterprises in industries in Nigeria.
- To find suitable strategies that will improve the development, growth and survival of small-scale enterprises in the industry.
1.4 RESEARCH QUESTIONS
The following research questions were formulated with a view to providing answers to then in:
- What is the trend of the financial support given to small and medium scale enterprise in Nigeria.
- How do small scale entrepreneurs raise capital?
- What impact do small and medium scale enterprises makes to Nigeria’s economic growth?
- What contribution has the financial system made to the growth of small scale business in Nigeria?
1.5 RESEARCH HYPOTHESIS
In order to achieve the objectives of this study, hypothesis were formulated in both null (Ho) and alternative form (HI)
- H0: There is no trend of financial support given to small and medium scale business in Nigeria.
HI: There are trends of financial support given to small and medium scale businesses in Nigeria.
- H0: There is no means for small and medium scale business to raise their capital.
HI: There are a lot of means for small and medium scale businesses to raise their capital.
- H0: Small and medium scale business do not make any impact on the economy
HI: Small and medium scale businesses has impacted Nigerian economy.
1.6 SIGNIFICANCE OF THE STUDY
Small and medium scale enterprises in Nigeria rely solely on savings, not only to grow but also to innovate. Firms often need real services support and formal finance assistance, failing which under-investment in long term capabilities (training and R &D) may result, (Oyelaran – Oyeyinka, 2003).
Besides finance, the critical elements (including: knowledge, skills and experience of staffs; capacity and quantity of internal facilities; information and knowledge of market; infrastructure and the inventive system at the micro and macro levels) that are lacking within technology support institutions themselves. These undermine the effectiveness of their support to small scale business.
This study is significant because it would help to evaluate the operations of a vital segment of the industrial sector small and medium scale industries, which have been identified as having a very high potential in promoting economic growth and development. The evaluation shall be done with special focus on the small and medium operators in the cassava processing industry in Nigeria thereby adding to the existing literature in the subject matter.
1.7 LIMITATION OF THE STUDY
The following are the researcher’s limitations of carrying out this study:
- Poor attribute on the part of respondents. Our respondents were either showing lurk-worm attitude in responding to our questionnaire or did not respond at all. Therefore the researchers had to make several contacts and calls to enable him retrieve some of the questionnaires distributed.
- Inability to carryout two or more cases studies from respondents in other small or medium scale enterprises forms to compare, if the practice is the same with what is obtainable in Ibedmore Resource Nigeria Limited.
- The study of this nature requires sufficient time and financial resources to carry to out successfully. For instance the time frame within which to complete this assignment was not enough given other course work that put pressure on the researcher limited time. Also, the learn financial resources further sets a limitation to this study.
1.8 SCOPE OF STUDY
The study is limited to Ibedmore Resources Nigeria Limited of Akwa Ibom State in Uyo and is based on the contribution of small scale business and medium scale business with their economic contribution towards the state development.
1.9 DEFINITION OF TERMS
Innovation: This is the introduction of new things, ideas or ways of doing or carrying some basic steps to business process.
Entrepreneur: An entrepreneur is a person who personally decided to go into a business (small / medium scale) for the aim of maximizing profit. He also make his decision and hear the losses he face.
Economy: This has to do with the relationship between the production, trade and the supply of money and its circulation in a particular country or region.
Capital: This is a large amount of money that is invested or is used to start a business. It may also be the wealth or property that is owned by a business.
Central Bank of Nigeria (CBN): This is the bank that stands at the apex of the banking system in Nigeria.
Industry: This is an activity which involves people that takes part in production of goods from raw materials providing services especially in factories.
Investment: This refers to the act of investigation money into something (specifically business) or purchasing a thing that is worth buying because it may be useful in future. It may be useful in future. It is also an act of giving time or effort to a particular task in order to make it successful.
Development: The gradual growth of a nation so that it becomes stronger financially, socially, economically, etc.
Manufacture: This is the process were industries make goods in large qualities using machine (mostly raw materials).
Finance: it is the role of money not only as a medium for producing other forms of value but also common denomination for expressing all value.
Financial Standard: This refers to the situation whereby there is a stability, well approved, and balancing in an organisation, institution and most especially banks interms of reserve requirement, assets and capital base.
Industrial Sector: the part of an area of activity, especially of a country’s economy that concentrates on their industrial management.
