THE ROLE OF SMALL AND MEDIUM ENTERPRISES IN BOOSTING FOREIGN INVESTMENT IN LAGOS STATE (A CASE STUDY OF SELECT SMES IN ETI OSA LGA)

THE ROLE OF SMALL AND MEDIUM ENTERPRISES IN BOOSTING FOREIGN INVESTMENT IN LAGOS STATE (A CASE STUDY OF SELECT SMEs IN ETI OSA LGA)

CHAPTER ONE

                                             INTRODUCTION

1.1              Background to the Study

The growth of Foreign Direct Investment (FDI) in the Least Developed Countries including African countries has been extremely rapid in recent decades, mostly in countries which have a bigger market size and natural resources. Lagos is undoubtedly the commercial centre of Nigeria with many companies now moving their bases to Lagos particularly to Eti Osa Local Government Area because of the availability of Land and a very conducive environment. However, Micro, Small and Medium Enterprises have a central place in the economic development of any nation. Micro, Small and Medium Enterprises perform an important function in the development of an economy and this cannot be over emphasized. Micro, Small and Medium Enterprises serve as training arena for local skills and entrepreneurs, and could become channels for mobilizing local savings, ensuring a more equitable distribution of income and reducing the migration of manpower from the rural to urban areas. The reduction of rural-urban migration is desirable and where the MSMEs are given the required support, this will lead to development of the rural areas in the long-run.

According to (Cook & Nixson 2000), interest in the role of small and medium-scale enterprises (SMEs) in the development process continues to be in the forefront of policy debates in developing countries. In view of the relevance of SME’s, in 2006 the government of Taiwan launched a $61 million branding initiative, which aimed to propel the economy from being production-based to knowledge-based (Lin 1998; Onuorah 2009; SAN 2006). According to the report in English language version of the online edition of Electronic Engineering Times-Asia print magazine, formerly Asian Sources Electronics Engineer (EE Times Asia) in August 2006, the so-called “Branding Taiwan Plan” is a seven-year program designed to help promising small-to-medium enterprises (SMEs) in developing their own brand, according to the Taiwanese government. This was started with the view of SMEs capacity to advance the economy most importantly in the medium term. Small businesses employ 72,000,000 people (Schaper 2002). More than 90 per cent of the industries in Indonesia, Philippines, Thailand, Hong Kong, Japan, Korea, India and Sri Lanka are small enterprises (Cook & Nixson 2000).

Small and Medium Enterprises plays a vital role in shaping economic and social performance and prospects of countries around the world, especially those of developing countries. No country has grown without trade. However, the contribution of trade to development depends a great deal on the context in which it works and the objectives it serves. Also, many other developing countries, particularly the less developed countries, have embarked on unilateral trade liberalization in recent years, with very limited results at best in terms of increased growth and development.

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THE ROLE OF SMALL AND MEDIUM ENTERPRISES IN BOOSTING FOREIGN INVESTMENT IN LAGOS STATE (A CASE STUDY OF SELECT SMEs IN ETI OSA LGA)