THE ROLE OF SMALL SCALE ENTERPRISE IN THE SOCIAL-ECONOMIC DEVELOPMENT OF THE RURAL AREAS
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
Small scale enterprise has potential for promoting the economy in a developing country like Nigeria. Thus, in the second development plan (1964-1974), both all the state and local government in Nigeria were to actually support and promote the development of the small scale enterprises. Osoba (1985:4), cited that in 1946 marked the first ever plan had as one of the objectives and development in crafts and industries, this promotion and development of village crafts and industries and the industrial development of the products in Nigeria. In anticipation of the ‘’industrial development of the product of Nigeria and the ensuring marketing problem for the small scale enterprise products, the department of commerce and industry was established.
The first national development plan (1962-1968), provided Nigeria the first opportunity to transform the policy from on national economic development in which the key role of industrial sector and its development would have received the appropriate focus. The federal government attempted in this period to provide an institutional, mainly financial, support for the small scale enterprises through the establishment of the federal loans board; because of the widely held belief that lack of capital (i.e. money) with which to establish new industries or operate old ones as a major constraints to the rapid growth of small scale enterprises in the pre 1960 decades the federal loans board failed to develop the small scale industries target because loan was granted on most cases on political rather than commercial consideration.
In the third (3rd) development plan (1975-1980), the government stated the main objective for the development of small scale enterprises as the creation of employment opportunities mobilization of local resources, mitigation of rural-urban migration and even distribution of industrial enterprises in different part of the local government area through the state and local government small scale industries credit scheme (SSICS). There is no unique or universally accepted meaning or definition of small scale business. The definition varies from one country to another depending on their level of development. This definition equally varies from industry to industry. Varying views point of bodies that have to do with small business also influence the definition.
According to the small scale business act 1963, (America) provides that a small business concern is ‘’one which is in dependently owned and operated not dominant in its field of operation’’. The act also authorized the small scale business administration in marking a more detailed definition to use such criteria as number of employees and sales volume. Retailing and services $1 million or less annual sales. Manufacturing 250 or fewer employees whole saling-$5 million or less annual sales. The bank in its guiding of 1985/90 say that for any firm t be known as small scales industry that such firms should have capital assets which do not less N750,000 including working capital but excluding the cost of the land.
The industrial research unit of the university of Ife (now Obafemi Awolowo University) defined small scales industry as ‘’one whose total assets in capital equipment, plant and working capital are less than N250,000 and employing fewer than 50 full time workers. The 3rd national development plan 1975-1980 defines small scale business as manufacturing establishment employing less than 10 people or whose investment in machinery and employment do not exceed N600,000. In Nigeria, the Federal Ministry of Commerce and Industry has defined small business to mean such business employing 1-50 persons and with total cost of investment not exceeding N750,000 in capital input of not more than N300,000 in machinery and equipment. According to the Federal Ministry of Commerce and Industries, guidance to Nigeria bank for the commerce and industries NISC in (1981/82) for he purpose of revolving loan scheme for the small scale enterprises such enterprises are required as those costing not more than N500,000.00 including the cost of the land but excluding working capital.
1.2 STATEMENT OF THE PROBLEMS
Nigeria possess a weak indigenous technological base and that weakness rendered in its relation with other technologically advanced countries of the world, very few of the entrepreneurship had any formal education or either have not been to school at all or dropped out after primary school level. Most of them have no knowledge of assessing marketing condition and formulate company’s policies. A greater percentage of the industries are also entrepreneur with a fee percent in partnership, co-operative and registered companies the failure to achieve meaningful technological development through adaptation has been attributed to a large numbers of factors: failure of relevant institutions within which technologies could be received and adopted i.e. lack of technological culture. Low technology predominated to concentrates on the manufactured consumption of goods such as food beverages and tobacco etc.
Furthermore, the colonial educational policy and the gradual process of grooming the elite in western values created a dependent psyche that nourished the perverse consumption pattern that is present within us. They were mainly or wholly owned subsidiaries to multi-national sector. Investment opportunities in Nigeria have been lopsided with more foreign participation in pursuing economic developments there is the problem of synchronizing in fact, small scales enterprises concerned has suffered a great deal.
1.3 PURPOSE OF THE STUDY
Generally, the study attempts to investigate the role of small scale enterprises in the socio-economic development of the rural areas in Mupa Muro local government area of Kogi State.
Specifically, this study is indented to: Find out the problems being encountered in the development of small scale enterprises in the local government area Identify the contributions of the small scale enterprises to the local government area and to the Nigeria economy. Reviewing the effects of government polices/ programmers and other activities of government to the private sector with policies aimed at alleviating the problem. The realization by government due to the poor state of the economy in the recent years has cumulated in substantial rendition in foreign exchange earning to review their development strategy. This has brought the importance of small scale enterprises into focus of the economy.
1.4 SIGNIFICANCE OF THE STUDY
The study is intended to look at the significance. Today, while there has been a steady growth in large scale business organization, the small trade of the small scale business has not been eliminated, small fields, they perform certain significance, which cannot adequately performed by the big firms in the following areas. Where there is a small market a village is not likely to contain as many markets as a city. Hence, it is small peasant farmers that can either cater most probably for this small market and not the large firm, where direct services are required. A small scale enterprises will be very suitable increase where direct services are needed, for instance, teachers and doctors.
High costs of production continue to increase as production expands therefore small scale business is the most economic unit of production in such fields. Where the purpose is done in bit, it is the small village retailer that can call sugar cubes and cigarettes in sticks rather than in pockets. The retail work cannot by done by the big firms. Small scale enterprises help in the greater use of domestic raw materials. More so, small scales enterprises help to promote the youth entrepreneurship in the local government area. Small scale enterprises help to have a potential for generating employment on a significant scale.
1.5 SCOPE AND LIMITATIONS OF THE STUDY
The framework of this research project is centred upon the role of small scale enterprises in the socio-economic development of the rural areas of Mopa Muro local government are of Kogi State. The study is limited to Mopa local government are where the data derived and analyzed. The study is also limited to the period between 1991 and 2014. The study is constrained by the resources available to the investigator in terms of time and finance. Road linking some town and villages are not motorable.
1.6 RESEARCH QUESTIONS
For the purpose of this research work, the following questionnaires are being raised:
What are the problem of small scale enterprises in the socio-economic development of the rural area in Mopa local government area, Kogi State
What are the prospect of small scale enterprises in the socio-economic development of the rural area in Mopa local government, Kogi State
What measures to be adopted for the effective development of small scale enterprises in Mopa Muro Local Government area, Kogi State
1.7 DEFINITION OF TERMS
The definition of key words will help to elucidate the subject matter of this research work.
INDUSTRY: Is where goods are produced for man’s use and satisfaction.
ENTREPRENEURSHIP: As an entrepreneur and organizer, an entrepreneur is an initiator of economic activity in a free enterprise system.
PRICE: Is the means whereby it obtains a few return for his labour, replenishes and measure its wealth and purchasing power for supplying products or services.
ORGANIZATION: Is the coming together of individuals and groups in order to achieve certain goals and objectives by mean of differentiated functions what are intended t be rationing co-ordinates and directed through time on continuous basis under leadership ad authority.
PROCESSION: A situation where there is economical downturn
RECOVERY: A situation where economic activities are showing green light
PROMOTION: is to advance on idea or to push forward something tangible is such a way as to gain acceptance and approval for it.
HIRE PURCHASE: Is a system whereby money paid for good and means of production installment with the view of ultimate purchase.
SOCIAL RESPONSIBILITY: As the basic obligation or debt of an organization to ensure that its activities, decision, shareholder, employees and government that constituted what is known as society in order to ensure its continuity and survival.
PRIVATIZATION: Is most commonly defined as the transfer of government owned industries to the private sector implying of assets on transfer lies with private shareholders.
ENTERPRISE: Is a body or agency or organization established by satisfactory law, edit to render essential social services to the public.
PRIVATIZATION: Is most commonly defined as the transfer to government owned industries to the private sector implying of assets on transfer lies with private shareholders.
1.8 ORGANIZATION OF THE STUDY
This project intended to look at the role of small scale enterprises in the social economic development of the rural areas. In the quest to make this project work more efficient and easy for comprehension, this project will be divided into five chapters. Chapter one is intended to cover the introduction which introduces us to the fundamental problems of the role of small scale enterprises, the significance for the study, scope and limitations of the research work. Chapter two will focus especially on relevant literature reviewed as it relates to the role of small scale enterprises in respect to rural development. Chapter three will centre in the research methodology, this will light the various sources of data collection and population. Chapter four will focus on the presentation and analysis of data obtained in the bid to know the role of small scale enterprise in the development of rural areas.
