EVALUATION OF SMALL AND MEDIUM SCALE INDUSTRY AS A DRIVER FOR ECONOMIC DEVELOPMENT
1 .1 BACKGROUND OF THE STUDY
Reality has shown that the best potential for long-term growth, job creation, savings and investment, and general economic development is provided by industrial development in any country. Like any other developing country with a low per capita GDP, Nigeria views industrialization and structural change as essential to the pursuit of growth. Creating and implementing policies and strategies for a more efficient, competitive, and varied industrial sector is one of Nigeria’s most important development challenges. When one considers the nation’s endowment as noted by Olatoke’s, this is extremely noteworthy (2015)
People have an interesting perception that small and medium-sized businesses are less important than huge organizations, which frequently make news in our media. But a closer look reveals that the development of our society also depends critically on small and medium-sized businesses. While the foundation of our economic system rests on companies like oil and steel, etc., most of today’s business giants had humble beginnings, and it should be clear that small and medium-sized enterprises cannot compete directly with big business. However, small scale industries make up the muscle that makes this possible. Studies have indicated that the small company owner is most successful when he fills a demand that his larger rivals are unable to fill or are not currently filling, according to Onochie (2019). Nigeria’s small enterprises are vibrant because they provide something better and unique.
Businesses whose total costs, excluding land, do not exceed 200 million naira are considered small and medium enterprises (SMEs), according to the National Council of Industries (N200,000,000.00). The topic of SMEs has received a lot of attention globally. Additionally, it has been the focus of several lectures and seminars both locally and internationally. Similar to this, governments at different levels (local, state, and federal) have prioritized small and medium-sized businesses in one way or another. While some governments focused on creating policies to support and empower SMEs’ growth, development, and performance, others focused on helping SMEs grow through lenient lending regulations and other fiscal incentives. The World Bank, the United Nations Industrial Development Organization (UNIDO), the International Finance Corporation (IFC), the United Kingdom Department For International Development (DFID), the European Investment Bank (EIB), and other international organizations are among those that have not only invested heavily in developing-country SMEs because they are interested in making them strong and thriving but also because they are interested in doing so (World Bank 2018).
Locally, the Fate Foundation, the Support and Training Entrepreneurship Programme (STEP), the Nigerian Investment Promotion Commission (NIPC), the Association of Nigerian Development Finance Institutions (ANDFI), and specific Development Finance Institutions (DFIs) have been promoting the growth of SMEs in Nigeria through advocacy and capacity-building initiatives, as well as continuing to lobby for better support structures. The fact that SMEs generate employment and money is the basis for all of the support and attention paid to them. Sanusi (2003) provided a justification for the introduction of SMES, stating that “with a concerted effort and renewed commitment from all stakeholders, this scheme will surely succeed and realize its intended objective of revamping the SMEs as engines of growth in the economy and a veritable tool for the development of indigenous technology, rapid industrialization, generation of employment for our teeming youths, and the pivot for sustainable economic growth.” In practically every nation or state, small and medium-sized businesses (SMEs) are honored. It is accurate to refer to SMEs as “the engine of growth” and “catalysts for socioeconomic change of any country” because of their significant contributions to the growth and evolution of various economies.
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Ihekwoaba (2017) asserted that SMEs are an effective means of attaining national economic goals including job creation and poverty reduction at a low investment cost, as well as the advancement of entrepreneurial abilities and indigenous technologies. Other inherent advantages of thriving SMEs include access to infrastructure facilities made possible by their presence in the area, the stimulation of economic activity, such as suppliers of various goods and distributive trades for goods produced or required by the SMEs, as a result of rural-urban migration, and the improvement of the standard of living of the SMEs’ employees and their dependents, as well as those who are directly or indirectly associated with the SMEs.
1.2 STATEMENT OF PROBLEM
Small and medium-sized businesses (SMEs) in Nigeria have not done well, and as a result, they have not contributed as significantly to the country’s economic growth and development as was anticipated. The government, people, operators, practitioners, and organized business sector groups have all expressed great worry over the situation, as critiqued by Nnamani (2020). Through financial allocations, policies, and announcements, governments at the federal, state, and even municipal levels have shown interest in and awareness of the crucial significance of the SME sub-sector of the economy, and have established measures to invigorate it. In a similar vein, Imonitie (2021) said that there have also been financial incentives, grants, support, and assistance from bilateral and international organizations as well as specialized institutions, all of which have been intended to increase the vibrancy of the SME sub-sector. It has been a big cause of concern for everyone that the core sub-sector has fallen short of expectations, just as it has been important for everyone to support the welfare of SMEs. The situation is more troubling and worrying when contrasted to what other emerging and industrialized countries have done with their SMEs. The degree of poverty, hunger, unemployment, economic well-being (quality of living) of a country’s inhabitants, and the vitality of that nation’s SMEs have been shown to be strongly correlated. One of the surefire methods for Nigeria to successfully reach the Millennium Declaration Goals for 2030 would be to actively seek the growth of its SMEs (MDGS 2020).
In identifying the shortcomings of SMEs, Akugbe (2021) noted that issues with SMEs, which are not insurmountable, include: a lack of entrepreneurial skills, poor management practices, limited access to money and capital markets, low equity participation from promoters due to their level of poverty and a low return on investment, insufficient equity capital, poor infrastructural facilities, a high rate of enterprise mortality, a shortage of skilled workers, and a lack of access to financing. Without a doubt, SMEs confront a great deal of problems and challenges, but it’s fascinating to notice that certain SMEs are able to go over them. This inspires optimism and should convince them that there is a solution. Numerous SME advocates must be ignorant of some survival tactics. Upon this premise, the study seeks to present evaluation of small and medium scale industry as a driver for economic development.
1.3 PURPOSE OF THE STUDY
The broad objective of this research is focused on an evaluation of small and medium scale industry as a driver for economic developmen. Other specific objectives includes:
In order to achieve this, the followings are the purpose of this study:
- To examine the importance of SMEs in Nigeria economy.
- To identify the majorchallenges militating against the sustainability of
- To determine the role of government in assisting the SMEs in Nigeria.
- To suggesteffective approach for solving the challenges of SMEs in Nigeria
1.4 RESEARCH QUESTIONS
The followings are the research questions:
- What are the importance of SMEs in Nigeria economy?
- What arethe major challenges militating against the sustainability of SMEs?
- What arethe role of government in assisting the SMEs in Nigeria?
- What other effective approaches will ameliorate theconstraints faced by SMEs?
1.5 SIGNIFICANCE OF THE STUDY
All and Sundry have been seriously agitated as to what to do in order to reduce the crippling poverty, high level of ignorance and the embarrassing high level unemployment rate in Nigeria. Given the vital and salutary role and contributions which SMEs play in other developed and developing economics.
This research is significance to potential, prospective and existing SMEs. The study will be an eye opener to them (owners of businesses) to know how to manage, its business, how to source for fund, principles and practice to employ in maximizing its profits and cost reduction. The individuals, who are not employed, will also gain from this study, in the sense that they can easily source for funds and establish business enterprises instead of searching for white collar jobs.Empirically, the study will contribute to the general body of knowledge and serve as a reference to scholars and study who wishes to conduct further studies in related field.
1.6 THE SCOPE OF THE STUDY
The scope of this study borders on an evaluation of small and medium scale industry as a driver for economic development The study will however be limited to selected small and medium scale businesses Oshogbo Local government area in Osun State.
1.7 LIMITATION OF THE STUDY
Like in every human endeavour, the researchers encountered slight constraints while carrying out the study. The significant constraint was the scanty literature on the subject owing that it is a new discourse thus the researcher incurred more financial expenses and much time was required in sourcing for the relevant materials, literature, or information and in the process of data collection, which is why the researcher resorted to a limited choice of sample size covering only selected small and medium scale businesses in Oshogbo Local government area in Osun State. Thus findings of this study cannot be used for generalization for small and medium scale businesses in other States within Nigeria. Additionally, the researcher will simultaneously engage in this study with other academic work will impede maximum devotion to the research. Howbeit, despite the constraint encountered during the research, all factors were downplayed in other to give the best and make the research successful