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EASING AS A MAJOR FINANCING DEVICE FOR SMALL SCALE INDUSTRIES IN ENUGU URBAN

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  • Pages:58
  • Format:Microsoft Word
(Accounting Project Topics & Materials)
INTRODUCTION
It is unquestionably true that the development of a nation’s industrial sector hinder greatly on the development of small-scale enterprises operating in that economy. This is because small-scale enterprises are significantly yielding the fruits of developing particularly employment, indigenous technological development, utilization of local resources and lower cost provision of inputs and services for large enterprises. 
Small scale industries are important not only because they account directly for significant proportion of investment, output and employment in a nation but also even more significantly because they provide vital links in the chain in the economy as a whole, motivating, energizing, and connecting various sectors and sub sectors for greater overall output of employment and productivity.     
Small-scale industries have an even grater potential for stimulating and sustaining technological progress and self reliance through production based adaptation innovation and through programmed link ages with the advance industrial and market sectors.  The indispensability of small-scale enterprises in a country’s industrial growth.

Plan is a theme that runs through most writings and discussions on small-scale enterprises.
Yet, in Nigeria, small-scale enterprises suffer from a large potential. These constraints include inadequate finance, shortage of raw materials, marketing problems, inadequate infrastructural facilities, inappropriate technology and production, labour and inadequate management experiences etc. 
This researcher, however believe that their greater problem is inadequate capital to establish on a proper basis and modernize or maintain their enterprises through periods of temporary adversity. Virtually, all the other problems emanate from inadequate finance. Almost 8 out of energy 10 small businesses are believed to have shortage of capital as their major problems.     
              
With the introduction of the structural adjustment programme in 1986, the problems of inadequate capital was escalated such that small scale enterprise could hardly finance their fixed capital needs like plant and machineries which are mostly imported. This was because of the fluctuating exchange rate system under SAP, which devalued Naira by more than 60% later in 1987, a market determined interest rate structure was introduced and this raised the cost of credit. Besides, banks consider small scale enterprise as highly risky and hence shy away from providing their financing needs, in spite of the Central Banks required annual credit minimum that must be allocated to them. Other financing, avenues such as owners capital retained earnings and direct government assistance are virtually ineffective. In the light of the above circumstances the question that naturally comes up is: 
How can Hapel Nigeria limited adequately finance their fixed capital needs under the structural adjustment programme? 
Leasing appears to be a viable financing alternative. Thus, this study will attempt to provide the rationale for leasing as a major financing device for small- scale enterprise. 

LITERATURE REVIEW 
A lot o controversy has been generated over the definition of small-scale enterprise mainly because of the absence of uniform set of international criteria designed for that purposes. According to Ezike (1989), “in Nigeria, many institutions adopted definition that suit their different purposes. The ministry of industries adopted a definition, which relates to the value of fixed capital. It varied from N60,000 in 1972 to N500,000 in 2000. It has once more changed in 1989 to embrace those with total investment of between N100,000 including working capital but exclusive of land. The Central Bank, however defines a small-scale enterprise differently from commercial bank loans and merchant bank loans, in terms of turnover. For commercial bank loans, small scale enterprise refers to one with annual turnover not exceeding N500,000 and for merchant bank loans, small scale enterprise means an enterprise with limit of capital investment of N2 million excluding cost of land or minimum turnover of N5 million. In Enugu state, the fund for small scale industries defines a small scale industry as a manufacturing, processing or service industry with a capital investment of up to one hundred and fifty thousand (N150,000) including machinery and equipment alone, excluding working capital and cost of land. Some organizations adopt definition based on the level of employment. 

Criticizing the above mentioned criteria for definition, Phillips (1987) suggested that “a dynamic and culturally relevant definition of small scale enterprise should focus not only as of now on the level of employment initial investment and turnover but should also emphasis capital or output ratio, capital/labour ratio, degree of utilization of appropriate technology and location in either urban or rural areas. 
For the purpose of this study both the Central Bank fund and the fund by small scale industries are adopted. 
EASING AS A MAJOR FINANCING DEVICE FOR SMALL SCALE INDUSTRIES IN ENUGU URBAN

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Details

Type Project
Department Accounting
Project ID ACC2369
Price ₦3,000 ($9)
No of Pages 58 Pages
Format Microsoft Word

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    Details

    Type Project
    Department Accounting
    Project ID ACC2369
    Price ₦3,000 ($9)
    No of Pages 58 Pages
    Format Microsoft Word

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