ROLE OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE NIGERIAN ECONOMY

(Accounting)
ROLE OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE NIGERIAN ECONOMY

(A CASE STUDY OF ANZY SHOES NIGERIA LIMITED ABA ABIA STATE)

PROPOSAL

This project topic titled “The Role of small and medium scale enterprises in the Nigerian Economy” with a case study of Anzy shoes Nig Ltd Aba is consist of (5) five chapters:

Chapter one: Introduction

Chapter two: Literature review

Chapter three: Research design and methodology

Chapter four: Data presentation and analysis

Chapter five: Conclusion and Recommendation.

The research notices that there are significant roles played by small and medium scale enterprises to Nigerian economy and decided to find out these roles.

Prior to the late 19th century, cottage industries mostly small and medium scale enterprises controlled the economy. Findings by economists over the years show that small and medium scale enterprises play much more important roles in economic growth and development.

i.                    The researcher is intending to find out the various problems confronting small and medium scale enterprises to Nigerian and recommended solutions to such problems.

ii.                  To find out government roles toward promoting small and medium scale enterprise in   Nigeria.

iii.                To find out roles played by the small and medium scale enterprises in the economic development.

The researcher is intending to use two methods of sourcing data for the research work which include the primary and secondary sources. Primary sources include interviews; observation and use of questionnaire while the secondary sources include the use of textbooks, journals, newspaper etc.

It is intended that those who will benefit from this study includes those intending to go into business ownership and management, graduated and undergraduates from different fields of study like marketing, Accountancy, business administration and management etc. This study will equally be beneficial to business consultants and advisers. Banks and financial institutions will equally find this work necessary in their various areas of work.

Conclusively, the scope of this research work may be limited due to some factors, which will be disclosed after the research work.

ABSTRACT

There is no doubt that Nigeria as a nation, since attaining independence to 1960 has tried out various economic policies in a bid to achieve meaningful economic development. Most of these policies, one must say, are centrally planned and government dominated. The resultant impact of this excessive government domination of the economy left much to be desired leading to massive divestment in the 1990’s by the government. This is done under the economic policy of “privatization and commercialization”.

This shift emphasis thus created a challenge of building capable, dynamic and resourceful entrepreneurs to take the baton of economic revitalization from government. These entrepreneurs incidentally have to fulfill this onerous task through the establishment pf business that could mainly be classified as small and medium scale in nature. It is pertinent to add here that the aforementioned task is a difficult one for obvious reasons. For one, the dwindling state of the economy has made it difficult for people to save and thereby little capital accumulation for investment. Further our private sector is long undeveloped making experienced entrepreneur and small business managers scarce.

There is a growing consensus among policy makers, academia, industrialist and economic planners, that the development of local entrepreneur and encouragement of the establishment of small and medium scale business is the only penance to our economic planners. The conclusion came as a result of over three decades of positioning government as the sole provider of all that makes life worth living, basic infrastructures, public utilities, good roads and services. Etc.

It was discovered that the return for the huge investments made into it are gross inefficiency massive unemployment, dwindling foreign exchange earnings, epileptic supply of utilities etc. The foregoing led to the adoption of structural adjustment programme (SAP) and subsequent deregulation exercise. The later shifted it from government to private entrepreneurs who are expected to establish small and medium scale business as a more efficient substitute to providing the needed catalyst towards our economic engineering.

TABLE OF CONTENT

CHAPTER ONE

1.1              Introduction   

1.2              Purpose of the study              

1.3              Research questions                 

1.4              Statement of hypothesis        

1.5              Significance of the study       

1.6              Scope of the study                 

1.7              Limitation of the study          

1.8              Definition of terms                

CHAPTER TWO

2.1              Literature review                    

2.2              Historical review of small and medium scale enterprises in Nigeria (SME)                                      

2.3              Critical definition of small and medium scale enterprises (SME).

2.4              General characteristics of small and medium scale enterprises.

2.5              Role and importance of SMEs

2.6              Problems of SMEs     

2.7              References                 

CHAPTER THREE

3.1              Research design and methodology                

3.2              Location of data                                            

3.3              Population                                                      

3.4              Instrument of data collection                         

3.5              Validation of instruments                              

3.6              Reliability of instrument                                

3.7              Treatment of data                                          

CHAPTER FOUR

4.1              Data presentation and Analysis

CHAPTER FIVE

5.1              Findings, conclusion and Recommendation

5.2              Summaries of finding                                    

5.3              Conclusion                 

5.4              Recommendations     

Bibliography              

CHAPTER ONE

1.1       INTRODUCTION

The Government both federal and state is now placing much emphasis on the promotion of small and medium scale enterprises (SMEs) with the view to improve the economy. To the view, the government has a policy of providing special support and protection to these enterprises. This is because these enterprises will produce some of the goods that the country has until now imported, thus conserving our dwindling foreign exchange earning. It is also hoped that these enterprises would help not only to generated employment opportunities for our young school leavers and university graduates but also export some of their products and earn some foreign exchange for the country.

Over the years, there has been an unsolved issue of a proper definition of small and medium scale enterprises. This lack of encompassing definition emanated from the criteria employed to characterized small and medium scale enterprises; However the main criteria used to classify small and medium scale enterprises include initial capital outlay, ownership structure, management style, profit level, market structure, number of employees, total assets size, type of industry, relative position of the industry etc. The center for management development gave the definition of small and medium scale enterprises (SMEs) to the policy proposal submitted to the federal government to June 1982 as a manufacturing or service enterprises involved in a factory or production type of operations, employing up to fifty full time workers. Investment in plant and machinery but excluding land and building shall not exceed five-hundred thousand naira (N500,000.00) plant and machinery is utilized in its operation. According to Drucker P.F. 1974, maintains that there is only one criteria, which with a fair degree of reliability, indicate whether a business is small, fair sized, medium or big. He says that a small business requires almost one man who is not engaged in any other functional work required. The man at the top knows who the few people are in the organization in which responsibility for key results rest without having to consult his records or associates.

The committee for Economic Development (C.E.D) of the United States has given a valuable list of characteristics of small and medium scale enterprises as follows:

i.                    Managers are also owners

ii.                  Areas of operation are mainly local

iii.                Owners raise the capital

iv.                Its size is relatively small when compare with large enterprises.

Above all, the objectives of every SME should be to provide a direct service; distributing goods and services or more basically, the satisfaction associated with them. Another objective of any SME is also to make profit. Profit is the reward for accepting business risk and for performing the economic service. Others are social and growth.

1.2       PURPOSE OF THE STUDY

Lots are the purposes for carrying out this study. These are as follows:-

i.                    To know the fundamental factors which restrict Anzy shoes Ltd Aba from rendering a sound and complete services.

ii.                  To make recommendations on what can be done to improve its performance or its productivity.

iii.                To ascertain the environmental development of Anzy shoes  Nigeria Limited Aba.

iv.                To understand what small and medium scale enterprises are all about.

v.                  To examine the contributions of small and medium enterprises (SME) to the Nigerian Economy.

vi.                To know the features and characteristics of small and medium scale enterprises.

vii.              To examine the governmental aid and control towards SME.

viii.            To know the legal legislation guiding all small and medium scale enterprises.

ix.                To educate people of its relevance to the economy.

1.3       RESEARCH QUESTIONS

i.                    What is small and Medium scale enterprises.

ii.                  What are the likely factors militating against them.

iii.                What are the current legislations guiding SMEs.

iv.                How can SMEs positively or negatively affect the economy.

v.                  What long and short – term plans do government have towards improving SMEs.

vi.                What are the likely economic environments for which SMEs can survive?

vii.              To what extent has government incentives toward SMEs influence the economic development.

viii.            What are the things that can cause the failure in small and medium scale enterprises.

ix.                What are the factors necessary for proper management of small and medium scale enterprise.

x.                  Is there any difference between small and medium scale enterprises.

1.4       STATEMENT OF HYPOTHESIS

i.                    Small and medium scale enterprises leads to Economic development.

ii.                  Small and medium scale enterprise creates job opportunities.

iii.                Small and medium scale enterprises at high concentration bring about a heap cost of goods and services.

iv.                The location of small and medium scale enterprises leads to efficient usage of raw materials which would have been waste.

v.                  High concentration of small and medium scale enterprises in a place improves the people’s standard of living.

1.5       SIGNIFICANCE OF STUDY

In the course of this study, the researcher going to look into the various importance or usefulness of small and medium scale enterprises to the  Nigerian economy especially in Aba Abia State.

Under this significance of study, we have to understand that the project in conjunction with other industries will attract or aid the infrastructural development of the rural areas and thereby attract other amenities to the areas. This research is also of tremendous significance especially when one realizes the contribution of small and medium scale enterprises to the socio – economic development of  Nigeria and Aba in particular.

Below are the few listed significance:-

i.                    It will  enable young school leavers to embark on any enterprise of their choice when a paid job cannot be obtained.

ii.                  It will enable researchers to discover and make good use of the potentials in the rural areas.

iii.                The availability of small and medium scale enterprises in rural areas will definitely reduce unemployment.

iv.                It will lead to the full knowledge of the processes of establishing and managing small and medium scale enterprises in a manner that it will be beneficial to the state and the nation at large.

v.                  It will be of great benefit to financiers, bankers, marketers, advertisers, managers etc to have more experience in their field of study.

Conclusively, small and medium scale enterprises has been noticed in some years back to be good in the use of local raw material for their production unlike those of large scale enterprises which depend mostly on imported raw material. Small and medium scale enterprises serve as a training ground for local entrepreneurship, as many of them would develop into large enterprise.

1.6       SCOPE OF STUDY

The scope of the research work is limited to Anzy shoes Nigeria limited Aba in Abia state. Though it covers the developmental strategies to the national economy of  Nigeria.

This research work also covers the history and origin or small and medium scale enterprise. Examples and its operations. Constraints and management practices employed by the industry.

DEFINITION OF TERMS

ASSET

An asset is anything owned by a person, company that has money value and that which may be sold to pay debts. It can be defined as the capital of company les its liabilities. (Asset = capital – liabilities) Asset could be in tangible form or in intangible form. It could equally be in liquid or fixed.

BUSINESS

This is a contractual relationship between two persons, companies or two parties of which it is for the purpose of buying and selling.

CAPITAL

Capital can be in money form or otherwise. It is that initial wealth, property or money that may be used for the production of more wealth, money with which a business is started.

COMMERCIALIZATION

This is the transfer of business ownership in hands of government for commercial purposes. Most of the ventures in the hands of government are not for profit making but government can decide to use the venture to make little profit.

PROFIT

Profit they say is the reward for taking a risk. To go into business is to go into risk; for one to succeed from the business is to the primary reason for going into business ownership and operation.

INFRASTRUCTUTAL DEVELOPMENT

Things like good roads, electricity, pipe-borne water, market etc assist business development. for any business establishment to tries well in any area, there must be a developed infrastructures.

INDUSTRIALIZATION

Industrialization is the concentration of industries in a given area.

INVESTMENT

This is the planting of one’s wealth into a lasting project which will be yielding its revenue as the period goes by.

 

ENTERPRENEUR

An entrepreneur is one who establishes his own business, bears the risk himself and takes his profit alone. He gives order on what should be done in his business and what should not be done.

PRIVATIZATION

When the government has decided to sell some venture in other care to the private hands, we say that the business is privatized .

 

SOCIO – ECONOMIC DEVELOPMENT

This can be seen as the improvement or growth in the economic aspect of living.

 

ORGANZATION

An organization which could be seen as a business set-up. It could be private organization or public organization.

 

WEALTH

Create or valuable acquisition which could be in money form or in other tangible form.

 

TECHNICAL INNOVATION

This is a new way of presenting an existing product in such a way to attract the consumers interest.

MONETARY POLICY

This is a government measure which deal with the discretionary control of money supply by the monetary authority with a view to achieving the stated economic objective.

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