solving unemployment problem through the establishment of small scale industries (ssis)

CHAPTER ONE

1.0 INTRODUCTION

1.1 BACKGROUND OF THE STUDY

The small scale industries (SSIs) form the bedrock of the economic

growth in every nation. No country achieves a viable economic growth

and development without the establishment of small scale business firms.

They have always been in the forefront of development strategies.

Nigeria’s quest for development must be hinged on industrialization. This

is because of the great role industries play in terms of production

activities, employment generation and the overall improvement in the

quality of life.

Small scale industries are seen as veritable instruments for the industrial

development of a nation. Industrial development involves the

development of a technical arrangement that moves an economy from

traditional method of production to a more complex system of mass

manufacture of variety of goods and services involving technology and

management techniques (Anyanwu, C. M. 2001).

Industrialization propels growth and quickens the achievement of

structural transformation and diversification of economies. It enables a

1

country to utilize fully its factor endowments and depend less on the

external sector for its, growth and sustenance.

Beyene (2002) avers that SSIs have been important economic catalysts in

the industrialized countries. The industry provides employment and

earning opportunities, which contribute to economic growth and increase

in the standard of living of the populace. Davis et al (1996) views small

scale industries as the engine of development strategies in the promotion

of economic growth and development. The Nigerian industrial promotion

council, NIPC, confirms this by stating that “the Advent of small and

medium scale enterprises in Nigeria was necessitated by the need to

stimulate the establishment and growth of industries in order to launch the

country’s industrial development. Small scale industries perform vital

roles in economic development of any nation. They are the bedrock upon

which industrial development could be achieved. This is because SSIs

promote stable industrial base and ensure a balanced distribution of

industrial development of any nation.

Anyanwu (2001) sees the failure of part industrial policies, which were

anchored on the establishment of large industries, the flexibility,

adaptability and regenerative tendencies as SSIs to propel economic

development and the fact that growing and dynamic small businesses

2

elsewhere have grown into large ones and have contributed substantially

to national development objectives as the reasons for adopting small scale

industries as a strategy for industrial development. Great Britain and

Japan, owe their early industrial and economic expansion to their broad

based small business establishment (Ojo A T, 2006).

The establishment of large industries involves heavy outlays and is

essentially capital intensive, which does very little in solving

unemployment problems. It also requires that manufacturing industries be

designed and set up by foreign producers who also supply most of the raw

materials and machinery spare parts needed for an uninterrupted

production of industrial output. Consequently, foreign exchange

requirements by local producers become critical and the inability to

produce such foreign exchange can lead to \severe disruption in the

production activities. Thus, it behooves developing countries to devote

vigorous energy to the development of local manufacturing industries. To

obtain economic self reliance and sufficiency, Nigeria needs to pursue

small scale industries as a strategy for growth and development. Given the

paramount role of SSIs to the growth and development of the country, it

becomes imperative to assess their contribution to the development of

Imo State, the “Eastern heart land”.

3

1.2 STATEMENT OF THE PROBLEM

The problem of unemployment in Nigeria has become a dilapidating and

problematic issue in Nigeria. The problem does not only affect the life of

the people but facilitate the downfall of the economy. The problem of this

study also involves the shortcoming and inability of the government to

create employment through the generation and supporting of small-scale

industries. These problems have justified the fact that the small scale

industries sub sector is now characterized by low productivity and high

rate of business failure. The sector bears most of the brunt of the existing

gap in the Nigeria management system. Despite the vital role of small

scale industries play in economic development, their impact is not

adequately assessed. An adequate assessment of their contribution to the

economy would be a yardstick to ease their procurement of finance.

This project seeks to determine the contribution of small scale industries

to employment creation in Imo State specifically and, by extension, to

Nigeria. It also determines how small scale industries have enhanced the

revenue base of the state through the income generated from taxes paid by

them and assesses the extent to which SSIs) have contributed to the

development of the state.

4

1.3 OBJECTIVE OF THE STUDY

The main objective of this study is to assess the contribution of small

scale industries to the development of Imo State. Within this framework,

the study seeks specifically to determine the extent to which small scale

industries have provided job opportunities on state to identify the various

ways small scale industries generated needed development in the state and

to uncover the fundamental problems that confront small scale industries

in their effort to develop the state.

1.4 RESEARCH QUESTION

In the course of the research, the following research questions were

answered, thus;

1. Can small scale industries solve the problem of unemployment in

Imo State?

2. Should the Nigerian populace especially the youth be encouraged to

develop and sustain entrepreneurial spirit?

3. Can small scale industries contribute to economic development of

Nigeria?

4. Does a relationship exist between unemployment problem and

economic growth and development?

5. Can small scale industry reduce the risk of unemployment?

5

6. Has the employment provision resulting from the establishment of

small scale actually affect the standard of living of the people?

1.5 RESEARCH HYPOTHESIS.

A hypothesis is a proposition that is stated in testable form and prediction

of particular relationship between two or more variables. In the course of

this research effort, the hypotheses stated below were tested. Thus

Hypothesis I

H0: There is no significant relationship between small-scale industries

and the resolution of unemployment problem in Imo State

H1: There is significant relationship between small-scale industries and

the resolution of unemployment problem in Imo State.

1.6 SIGNIFICANCE OF THE STUDY

Owing to the problems that unemployment has caused to the life of the

people and the nation, this study will be of great importance, in the sense

that it:

1. Enlighten the masses to harness their creative nature by establishing

small scale industries in order to get themselves employed.

6

2. Will be an eye opener to the government to recognize their failures

in contributing their own quota in the aspect of improving and

encouraging small – scale industries within the nation.

3. Will unveil the effect of unemployment to the Nigeria economic,

pinpointing the fact that the issue of unemployment in Nigeria have

coursed more harm than good.

4. it also provide possible solution to the problem of unemployment

and the creation of small

5. It will act as a reference work for future researchers who in one way

or the other will be propelled to investigate into the concept of

small scale industries and its relation to employment generation.

1.7 SCOPE OF THE STUDY

Using small scale industries to solve the problem of unemployment in

Imo State was the jurisdiction of this study with a major focus on Aboh

Mbaise local government of Imo State. Other areas of focus by the study

are critical examination of the role of small scale industries on national

economic development of Nigeria. Problems of small scale industries in

Imo state, history of small scale industries in Imo State among others.

7

1.8 LIMITATION OF THE STUDY

There were a lot of constraints in the gathering of information for this

research work: the major constraints are as follows:

Time:

In respect to the theoretical and practical work, the time allowed for this

project was limited

Finance:

Due to problem of financing, and high transport rate, I could not meet up

with all the intended interviews and research ventures as I intended to.

1.9 DEFINITION OF TERMS

Small –Scale Industry: Richard Flora Gustafson, demand media

(2012) defined small-scale business or industry as a business that

employs a small number of workers and does not have a high

volume of sales. In pre-colonial Nigeria, according to Ejiofor P. it is

a relative turn, because what is regarded as small scale industry by a

person means large scale business to another.

Unemployment: this is defined by Bureau of Labour statistics

(BLS) as people who do not have a job, have actively looked for

work in the past four weeks, and are currently available for work.

8

Also people who were temporarily laid off and waiting to be called

back to that job are included in the unemployment.

Industrialization: This is the social and economic change that

transforms a human group from an agrarian society into an

industrial one

9

CHAPTER TWO

2.0 LITERATURE REVIEW

2.1 REVIEW OF THE RELATED LITERATURE

Poverty, unemployment and high crime rate in Nigeria have been of great

concern to the various governments (federal, state and local) as well as the

civil society. The decreasing human development indicators a well as low

level of productivity in all sectors of the economy represent disturbing

indices and also contribute to the dismal performance of Nigerian small-

scale industries.

The attainment of millennium Development goals (MDGs) to a large

extent is contingent on how the various tiers of government vigorously

pursue the development of SSIs sub-sector. The MDGs e.g like halving

the proportion of people living in extreme poverty, reducing maternal and

infant mortality and increasing level of literacy by 2015 may become a

mirage without a virle SSI sub-sector. According to Fagge (2004), both

the world – bank and the international Labour organization observed the

role and trend of unemployment in Nigeria. Unemployment gap is

widened by the industrial collapse and poor performance of agricultural

sector over the years.

10

Development experts have identified corruption and neglect of the

strategic role of small and medium enterprises as some factors responsible

for underdevelopment. Given the vital contribution which SSIs play in

developed and developing economies and considering the on going

reforms by the government of Nigeria, which are primarily aimed at

creating wealth, reducing poverty, generating employment, re-orientating

values, and stimulating real economic growth, it becomes compelling for

the SSI sub-sector to be revitalized toward playing its expected roles. The

SSI remains a veritable vehicle for the tr4ansofrmation of Nigerian

economy and solving the problem of unemployment. For the governments

to realize the lofty objectives of the development programmes, the SSI

sub-sector has to be thoroughly revamped and focused. This is one of the

ways that the government can be sure of realizing the objectives of the

well-intended economic reforms and move the economy forward for the

benefits of all stakeholders, particularly the impoverished masses.

The economic growth and prosperity of Nigeria lies in the dynamism and

growth of small to medium and large scale enterprises.

The small business industry requires a deep reflection and repositioning in

order to confront the challenges facing the Nigerian economy both

internally and externally.

11

Internally, the continued instability in the value of the Naira, the high

level of inflation, the liquidity squeeze, the high interest rates, the high

level of unemployment, the falling standard of living and the general state

of economic depreciation are a source of concern. These challenges in the

domestic economy relate to the requirements of survival, particularly in

short-term, which could only be meet mainly through the instrumentality

of small and medium scale enterprises, given their general acknowledged

low capital and labour ratio and greater susceptibility to indigenous

technology. Externally, the momentous and fundamental economic and

political changes in the international environment call for a potentials of

the Nigerian economy, since the international economy is no longer

divided along ideological lines, but between the rich and poor countries,

between the technological backward and the advanced, between countries

of the North and those of the south, it is only pertinent for developing

countries like Nigeria and state like Imo State. This Nigeria must be ready

to increase her exports of manufactured goods to the Europe and the

North. This should reflect intensive use of locally available businesses.

This is where small scale industries became particularly relevant and

critical. The advent of SSIs in Nigeria was necessitated by the need to

stimulate the establishment and growth of industries in order to launch the

12

country’s industrial development. SSIs play critical roles as the main

engine of growth and in major factor in promoting private sector

development and partnership. SSIs are indeed the bases that provide the

necessary impetus for the transformation of most industrialized

economies.

Hence, the rapid growth of SSLs is of crucial importance.

The small scale industry is a relative heterogeneous concept. What is

small in an industrial country like the United states may not be considered

small in an African country like Burkina Faso. What is small in the

manufacturing sector may not be small in the retail trade sector. SSIs have

been defined differently from one country to another based on differences

in the levels of economic development.

Oyelaran – Oyerinka et al (2007) posits that it is possible to define SSIs

using many different indicators and parameters. Turnham, D (1997) said

that financiers might be inclined to use the value of fixed assets or

turnover as parameters when defining SSIs. On the other hand, labour

officers are more likely to take into consideration the level of employment

that would be recorded through the operation of SSLs, while traders and

salesmen are virtually concerned with the sales volume, profit margin etc.

This, in essence, shows that no common yardstick is internationally

13

accepted for measuring the size of enterprises. There is no globally

accepted definition of SSI since each country tends to give its own

meaning in accordance with the prevailing economic conditions in the

country.

The National council of industries defined small scale industry as an

industry with total capital employed (total investment of more than N1,

500,000 including working capital but excluding cost of land, but not

more than N50.000, 00 and a labour size of not more than 100 workers.

CLASSIFICATION OF BUSINESS ENTERPRISES BY CAPITAL EMPLOYED AND

LABOUR SIZE EMPLOYED

Enterprise assets

range

Small scale Medium scale Large scale

Total investment

Value(N) of

working capital

land excluding

land asset

N1.m to N1.5m N50m to N100m N100,000m

Labour force

size

2-220 50-100 100 x above

14

Small business firms have contributed immensely and in diverse ways to

the growth of the nation’s economy. The contribution, as Nnanna (2003)

observed, include innovation and flexibility, Employment creation,

promotion of Even development and reduction of income disparities,

output expansion, production of intermediate goods, increase in revenue

of intermediate goods, increase in revenue base of government,

transformation of indigenous technology, utilization of local resources,

contribution to consumer interest, keeping larger firms competitive,

maintaining close relationship with consumers and community, providing

a comprehensive learning experience, developing risk takers and

contributing to the balance of payment.

The contributions to economic growth of the nation notwithstanding, SSIs

have common problems in all countries and perhaps the most basic

problem is the lack of adequate capital and credit facilities for sustaining

their growth and development. Credit, no doubt, is a critical input for

industries in general but more so, in the case of SSIs, which have a weak

capital base. Other difficulties SSIs encounter as noted by Turnham D

(1997), Shinder, L (2007) and Beyene (2002) are lack of institutional

credit, poor management, High rate of business failure, low productivity

structural problem, poor accounting standard, shortage of skilled labour,

15

indiscipline, Aversion to disclosure of information, Restricted Access to

institutional credit, illiteracy, Excessive overhead and operating costs, non

conductive regulatory and operational environment, inadequate fiscal

incentive framework, difficulties in disposing of SSIs finished goods,

inadequate access to new equipment and production technology and

deteriorating macroeconomic environment.

2.2 THE ROLE OF SMALL-SCALE INDUSTRIES IN THE

ECONOMIC DEVLEOPMENT OF NIG

In the world of Onugu (2005), small business enterprise or industry

constitutes a vital engine in economic growth and development in Nigeria,

small-scale industries are the principal catalysts of entrepreneurship. One

is not mistaken to say that the present and future economic advancement

of Nigeria lies in the dynamism, and growth of small business enterprises.

The numerous contributions made to the economic development of

Nigeria by small-scale industries are often overlooked or under-estimated

by economic planners, governments, technocrats and entrepreneurs.

Small scale –business plays vital roles in the economic development of

Nigeria and this is why the Nigerian government continual support and

16

encouragement of people wishing to set up small scale business, most

often small scale industries make more efficient use of inputs like raw

materials capital and labour than the big industries.

With the establishment of small scale industries we can easily reduce the

rate of unemployment or even eradicate it in Nigeria, more especially in

Imo State, thereby creating employment opportunities to the unemployed.

It has been statistically employ observed that small scale industries create

employment for the teaming population in Nigeria. Research has shown

that about 79% of the entire labours are employed by medium and small

scale industries or businesses.

2.3 HISTORY OF SMALL SCALE INDUSTRIES

As the United States took the big jump from agriculture – dominated

society to an industrial society, self-employment statistics also changes

dramatically. By 1900, about 80 percent of the work force was self

employed. While about 20 percent worked for other firms. As the year

2000 approaches, the opposite is essentially true. 20 percent of workers

work for other and businesses.

One might conclude from this that there are fewer small firms in the

country, but that is not true. In fact, small industries are as popular as

17

ever. The decrease in self employment came from a decline in the number

of independent farmers, which was largely offset by an increase in large

firm employment.

2.4 NEGLECT OF SMALL SCALE INDUSTRIES

Attempts by developed developing countries to eradicate poverty and

unemployment initially focuses on the development of large enterprises

based on the traditional economy of scale. This theory is predicted on the

assumption that ‘big is better’ while ‘small is bad’. Small enterprises were

seen as outdated and synonymous with technological and economically

backwardness. Ironically almost all the business that were initially small

eventually became large business enterprises. Most of the multinational

corporations like Philips international of Netherlands, Sonny of Japan etc,

stated as family business ventures. In Nigeria, there are indigenous

enterprises such as Adebowale Electrical and JOAS Electrical industry

limited that started as small outfits, importing finished. The same thing is

applicable to enterprises like Dangote Group of companies and Dantata

Group of companies to mention just a few that commences operation as

prime movers of trade and imports before they diversified into

manufacturing business.

18

2.5 LIFE CYCLE OF SMALL SCALE INDUSTRIES

In general, the ideal life cycle of small and medium enterprises as

positioned by Fegge (1999) can be divided into four phases viz: start up,

accelerated growth, stable growth and maturity.

The start up:- usually lasts for a period of one of three years during

which the founder supervises the whole business activities that may be

carried out by family members, friends or small number of employees.

The phase of accelerated growth:- Usually lasts three to four years.

During this period, the founder or a management expert handles

management. At this point, a corporate organization is developed thereby

leading to separation of ownership from management.

The stable Growth: This phase typically has duration of two to five

years. During this period, management expertise and the corporate

organization are divided into numerous departments and inflow of stable

long-term venture capital form corporate investors begins to appear.

19

Finally, the phase of maturity:- This may start after several years of

beginning in the business adopts the same type of management as stable

growth phase but major difference being that sources of funding may

become more diverse.

2.6 EMPLOYMENT GENERATION THROUGH SMALL

SCALE DAIRY MARKETING AND PROCESSING

The role of employment in poverty reduction programmes in developing

countries has received considerable attention worldwide, in development

strategies and policies. Many new employment opportunities in many

developing countries are created in the informal sector whose rate of

growth may be higher than that of the formal sector. For example, in

Kenya, according to a recent economic survey (Gok, 2001) the informal

sector has been growing at over 10 percent in the last decade and its share

of total employment, excluding employment in small-scale farming

activities estimated at 70 percent in 2000. in contrast, the number of wage

employees in the formal sector has remained static.

Despite continued rural to urban immigration, a large proportion of the

population in many developing countries still lives rural areas and are

20

mainly poor with over 30 percent overall classified as poor (UNDP, 2001)

Kenya, Bangladesh and Ghana are typical cases. The rural population in

the three countries accounts for over two-thirds of the population and the

rural labour force is growing at about 3 percent annually in each country.

Employment opportunities in rural areas may have to rely on

strengthening the ability of non-farm agricultural activities to absorb the

labour. Diversification into non-farm activities constitutes on average

about 45 percent of rural incomes in developing countries and the “push

and pull” factors driving this diversification are bound to persist (Corlson

and Karloon, 2000). Push factors include changes in technology in

agriculture that require less labour, creating labour surpluses and reducing

agricultural labour opportunities, and pull factors include job creating in

urban areas from industry that raise wages and employment opportunities

there.

The case studies described here shed some light on the nature and

quantity of employment created through small-scale diary marketing and

processing, most of which occur in the informal sector.

2.7 CONCEPTUAL FRAMEWORK FOR EMPLOYMENT

GENERATION

21

The use and value of employment in targeting poverty is neither new nor

is it restricted to any one region. Historically, the poor employment Act of

1871 in great Britain represented a major milestone in the development of

economic policy to reduce poverty through employment and development

Fagge, T. A. 2004). That Act and similar public interventions in later

years in various countries have been largely based on the recognition that

small firms are important generators of employment (Corlson and

Karloon, 2000). Fagge (2004) in interpreting the job generating role of the

small enterprises, emphasizes the extreme skewness and volatility of the

individual small business growth patterns, and the low quality and

sustainability of the many jobs created by the mass micro-enterprises. He

observed that a relatively few firms exhibiting rapid and sustained

growers account for the bulk of sustained job generation in small firms.

This is especially so for the developing world where economic reforms

are recent and hurried, and availability and access to market information

is not uniform and assured.

The main goal behind enterprises is to generate income for the

entrepreneurs and their families. In the case of marketing enterprises, that

requires that goods have to be sourced, transported, transformed, and

marketed. The physical assets involved need to be acquired, serviced and

22

repaired. All these activities require human labour fully or in part,

depending on the level of business sophistication and technology

employed. Human labour has a price, whether it is family labour (referred

to as self-employment) or non-family labour (wage employment). The

remuneration received by family members is critical to a household’s

ability to access basic needs, improve livelihoods and Great assets.

A DIAGRAM FOR THE CONCEPTUAL FRAMEWORK FOR

EMPLOYMENT GENERATION

2.8 PROBLEMS OF SMALL SCALE INDUSTRIES IN

DEVELOPING COUNTRIES

23

Entrepreneurial culture

Resources (Capital, labour etc)

Small-Scale Manufacturing and marketing enterprises

Income

Improved livelihood and reduced poverty

Employment

The economic development of a country primarily depends upon the

establishment of industries, which require sufficient amount of capital. In

a country like India, where capital is scarce and unemployment is wide

spread, growth of small scale industries is vital in order to achieve

balanced economic growth. Development of small scale industries plays

an important role in overall economic development of a country like India

where millions of people are unemployed or underemployed.

Poverty and unemployment are two burning problems of the country

today. This sector solves these two problems by proving employment,

with lower investments. Despite of favourable policies of government

towards encouragement and promotion of small scale industries,

unfortunately, figures show that the condition of small scale industries are

not up to the mark. In this junction an earnest attempt has been made to

analyze the development of small scale industries during five years plans

in India as a whole and in Andhra Pradesh in particular.

OTHER PROBLEMS ASSOCIATED WITH SMALL SCALE

INDUSTRIES.

24

Baadom (2004) asserted that the following problems militate against the

effective operation of small scale industries in Nigeria

1. Poor implementation of policies:- There have been many good

policies in the past by the government to improve, but weak

implementation has made it impossible to realize the goal

2. Lack of continuity:- most small scale establishments are sole

proprietorship and such establishment often ceases to function as

soon as the owner loses interest or dies. This raises the risk of

financing such business.

3. Poor capital outlay:- Inadequate capital out-lay has often affected

small scale business adversely. Financiers often regard the sector

has high risk area and therefore feel skeptical about committing

their fund of it.

4. Poor management expertise:- management has always been a

problem in this sector as most small scale businesses do not have

the required management expertise to carry them through once the

business start growing . The situation gets compounded as training

is not usually accorded priority in such establishments.

5. Inadequate information base:- small scale business enterprises are

usually characterized by poor record keeping and that usually starve

25

of necessary information required for planning and management

purposes. This usually affects the realization of the sector.

6. lack of raw materials:- In some small scale business enterprises,

raw material are sourced externally, hence the rate of such

enterprises to foreign exchange behavior. The fluctuation of foreign

exchange may therefore make it difficult to plan and that may

precipitate some stock that may destabilize the setup.

7. Poor Accounting system:- The accounting system of most small

scale business enterprises lack standard and does not make room for

the assessment of their performance. They create opportunity for

mismanagement, which consequently may lead to enterprise failure.

8. Unstable policy environment:- Government policy instability has

not been helpful to small scale businesses. That has been

destabilizing and has indeed sent many SSIs to early fold ups.

2.9 EMPIRICAL STUDIES ON THE IMPORTANCE OF

SMALL SCALE INDUSTRIES ON EMPLOYMENT

GENERATION

26

The argument on the role of small scale industries in Ameliorating the

menaces of unemployment in national economy has been in the front

burner for years and this has geared many scholars on the subject to

conduct researches that could beam light on the issue. It is in the same

spirit that reviewing past research studies on subject becomes imperative.

Considering a study conducted by Lawal, (2010) which was basically a

survey of small scale industries in local government in Imo State and the

purpose was to assess the strategic role of participating SSIs in economic

development. Data for this study was generated form both primary and

secondary sources through the use of self administered questionnaires and

structured interview. Content analysis of record particularly financial

record of some participating SSIs were undertaken to obtain the

secondary data. For this particular study, a total population of 50 was used

among which random sampling techniques was employed to select 150

SSIs upon which the research instruments were administered. The result

of the analysis conducted sequel to the study shows the international SSIs

contributed more than domestic SSIs in all dimension of strategic

importance. In other words, SSIs with international presence are stronger

and perform better than those with out international presence therefore

27

making the former to be more of strategic importance to development

than the latter.

In a similar study carried out by Fagge (2002) in which key success factor

in SSIs were researched since success is a measure of effectiveness of the

sector and the impact of the sector on the overall development of

participating firm and by extension national economy at large. In that

study, the researcher adopted a cross sectional survey of small and

medium enterprises in Lagos. The primary data were gathered through a

self and ministered questionnaire and complemented with content analysis

of some published reports on small scale industries. A sample of 200

entrepreneurs selected across different industries was selected for the

study. The choice of industries and selection of samples were based on

accidental sampling method. Participating respondents were operators of

small scale enterprises who volunteered to respond to our questionnaire.

The sampling method was adopted due to lack of comprehensive

information on the population of small enterprises operating in Lagos.

The main instrument used was a self administered questionnaire divided

into two main sections. Section A contained questions on success factors.

Respondents were provided with following options: critically important

28

coded 5 points, very important coded if points, important coded 3 points,

somewhat important coded 2 points and least import and coded.

Section B of the questionnaire requested for the background information

of the entrepreneurs and the organization to empirically answer the

research questions, descriptive statistics such as mean, mode median and

standard deviation were employed in analyzing the responses of

participating respondents. Out of the 2000 firms and entrepreneurs that

participated useable and complete data were obtained from 195. the

finding of this study reveals that considerable percentage of Nigerian

working population (that id 20 – 49 years) is increasing seeking for self-

employment. This age group constitutes responsible men who have

attended higher institutions. The survey of these entrepreneurs also

indicate that technology proper planning, financial survival of Nigerian

small scale industries.

In the contemporary business technology is a vital factor that must be

reckoned with. Lack of technology will result from absence of research

and inability to adopt modern techniques, there by resulting into low

productivity. Hence, there is no gainsaying in the fact technology is one

of the challenges in the growth of Nigerian small scale industries.

29

The significance of finance in small scale industries development is well

established and generally accepted, successive governments over the

years have implemented various financing arrangement at the micro level

to assist small scale entrepreneurs. Nigerian is blessed with vast natural,

human and material resources, which implies that she has great potential

for emergence of a vibrant industrial sector, particularly in small scale

industries.

The role of small scale industries in the technological and industrial

development of any nation justifies the need for greater attention to this

sector. The foundation of growth in developed countries of the world is

usually attributed to the contribution of the small scale industries.

In Nigeria, the successive administrations have adopted various policy

measures aimed at stimulating, sustaining and supporting

entrepreneurship, development in small scale enterprises. The success of

these measures will be dependent on the presence of some key factors

such as technology, financial control, proper planning and productivity of

labour force. All these factors attest to the fact that creation of enabling

environment and effective management will assist in the growth and

development of small scale industries.

30

Relating the study conducted by Lawal (2010) to the one conducted by

Ojo A. T. (2006) it therefore follows that for SSIs irrespective of the

nature of their business ideology, key success factors such as proper

planning, good financial control, technology, sustainable improved

employee productivity are germane to success of the organization whether

such SSIs are with international presence of only domesticated in Nigeria.

31

CHAPTER THREE

3.0 RESEARCH METHODOLOGY

3.1 INTRODUCTION

This chapter shows the methods and the step by step procedures which the

researcher used in carrying out its research. It also describe the ways in

which data are obtained, which shall require information to satisfy the

research purpose. These therefore include the research design, method of

data collection, population of study, sample techniques etc.

3.2 RESEARCH DESIGN

The researcher employed various methods and procedures in order to

achieve the objective of the research work. The researcher obtained

information from both primary and secondary sources, but majorly

through primary data which include observation, oral interview and

administration of questionnaire to the required population.

The data collected through the questionnaires will be put in tables

analyzed and interpretation given to each analysis made.

3.3 METHOD OF DATA COLLECTION

For the purpose of this research, two main source of data were used which

where helpful in collections, analyzing and interpretation of data with a

32

view of explaining the solution of the problem of unemployment of small

scale industries.

a. Primary sources of data

b. Secondary sources of data.

a. Questionnaires: The questionnaire was structured in a

multiple answer options which offered the respondent with

alternatives to choose from. The respondents were given time

to study and complete the questionnaires after which the

researcher collected them back.

b. Personal interview: The researcher also interviewed

personnels who gave out relevant information that was not

contained in the questionnaire.

Secondary source: Data was drawn from textbooks, newspapers,

magazines, journals and lecture notes.

3.4 POPULATION OF STUDY

The population of study for this research work will be both owners of

small and medium scale enterprises consisting of both manufacturing and

service business. A total of 50 populations were drawn for purpose of this

research work. The SSIs selected for this study were printing business,

food ventures, restaurants, business centres, Hair dressing Salons, fashion

33

and designing ventures etc with employment ranging from 2-10 employee

which are spread across Imo State.

3.3 SAMPLE AND SAMPLING TECHNIQUE

Since it is practically impossible to study all the unemployed youth and

small scale industries and service enterprises in Imo State, the researcher

adopted a random sampling technique to select sample adopted for the

study. At the end of the sampling a total number of 50 samples were

selected for the study

Sample size of this work was calculated from the population to obtain the

optimum sample to be used in the research work.

n = N

1 + N(e)2

Where: n = desire sample size

N = Population of the study

e = 5%

1 = constant

57__

1 +57 (0.05)2

= ___57__

1 +57(0.0025)

34

= ___57___

1 +0.1425

= 57

1.1425

= 49.9

= 50

3.6 METHOD OF DATA ANALYSIS

To derive useful meaning from the data generated, the following

statistical techniques procedures were used.

i. Simple percentage: This was used in analysis of each of the

questions in the questionnaire and was presented in tabular form

ii. Chi-Square: This was adopted in testing the hypothesis

formulated. The chi-square formular is stated below.

The chi-square is given as

X2 = ∑ (oi-E) 2

E

Where

X2 = chi-square

∑ = Summation

O = Observed frequency

35

E = Expected frequency

Level of significance 5%

iii. All the statistical test and analysis were carried out at the

conventional 5% level of significance.

DECISION RULE

If the calculated value is less than the critical value, accept H0 and reject

H1

If the calculated value is greater than the critical value, accept Hi and

reject Ho

36

CHAPTER FOUR

4.0 DATA PRESENTATION AND ANALYSIS

4.1 INTRODUCTION

In order to continue with the research there is need to examine the data

collected after the data have been collected from different sources, they

were arranged on the basis of the questions to test the hypotheses. The

data were presented in simple table and in percentages as indicated by the

responses for proper interpretation.

4.2 DATA PRESENTATION

Question 1: Do you agree that accelerated economic growth and

development is a “conditio sine qua non” (condition that you can do

without) for improving the quality of life?

Table 2:

Option No of responses Percentage (%)

Strongly Agreed 35 70%

Agree 14 28%

Strongly disagree - -

Disagree 1 2%

Total 50 100%

Source: Questionnaire 2014

37

Judging from the analysis in the above table, it is clear that accelerated

economic growth and development is a “conditio sine qua non”

(condition that you can do without) for improving the quality of life. This

fact is justified on the ground that 35 respondents representing 60% of the

total responses strongly agreed to this fact while 14 respondents

representing 28% of the total responses agreed to it. But 1 respondent

representing 2% of the total responses does objected to it.

Question 2: Do you agree that small and medium scale enterprises

contribute to global economic growth and development?

Table 3:



Agree 16 32%

Strongly disagree 2 4%

Disagree 2 4%

Total 50 100%


It is clearly indicated that small and medium scale enterprises contribute

to global economic growth and development. This fact is justified on the

38

ground that 30 respondents representing 60% of the total responses

strongly agreed to this fact while 16 respondents representing 32% of the

total responses agreed but 2 and 2 respondents representing 4% and 4%

respectively objected to this fact.

Question 3: The establishment of small scale industries in Aboh-mbaise

LGA will bring about innovation and invention?

Table 4:



Agree 8 16%


Disagree 2 4%

Total 50 100%


The table above indicated that, the establishment of small scale industries

in Aboh-mbaise LGA will bring about innovation and invention. This fact

was accept by 40 respondents representing 80% of the total responses

who strongly agreed while 8 respondents representing 16% agreed to it

but the remaining two respondents representing 4% of the total responses

objected to this fact.

39

Question 4: Unemployment does not affect the economic growth of

Nigeria? Do you agree to this assertion?

Table 5:


Agreed 10 20%

Disagreed 40 80%

Total 50 100%

Source: questionnaires 2014

40 respondents representing 80% of the total responses disagreed with the

notion that “unemployment does not affect the economic growth of

Nigeria while 10 respondents representing 20% of the total responses


Question 5: The establishment of small-scale business will help to solve

unemployment problem. Do you agree to this assertion?

Table 6:


Agreed 47 94%

Disagreed 3 6%

Total 50 100%


40

From the above, small-scale business will help to solve unemployment

problem. This fact is justified on the ground 47 respondents representing

94% of the total responses attesting to it while 3 respondents representing

6% of the total respondents disagreed with it.

Question 6: Youths should be encouraged to develop and nurture

entrepreneurial spirit.

Table 7:



Agree 8 16%


Disagree 2 4%

Total 50 100%


In the above table, the concept that youths should be encouraged to

develop and nurture entrepreneurial spirit was strongly agreed by 40

respondents representing 80% of the total responses while 8 respondents

representing 16% of the total responses agreed to it but 2 respondents

representing 4% of the total responses disagreed to the concept.

41

Question 7: Small-scale industries serve as a guide to the introduction of

large scale business.

Table 8



Agree 5 10%


Disagree 5 10%

Total 50 100%


The table above shows that 35 respondents representing 70% of the total

responses strongly agreed to the fact that small-scale industries serve as a

guide to the introduction of large scale business, 5 respondents

representing 10% of the total responses agreed also but 5 and 5

respondents representing 10% and 10% respectively of the total responses


42

Question 8: The youths can enhance sustainable development of the

Nigeria economy through SMEs.



Agree - -


Disagree 2 4%

Total 50 100%


In the above table, 45 respondents representing 90% of the total responses

strongly believed that youths can enhance sustainable development of the

Nigeria economy through SMEs while 3 and 2 respondents representing

6% and 4% respectively objected to it.

4.3 DISTRIBUTION AND RETURN OF QUESTIONNAIRE

In all, fifty questionnaires where distributed and all of them were

retrieved. Thus the following table indicates the distribution of

questionnaire

43

Table 1:

Option No distributed No. returned Total

Male 30 30 60%

Female 20 20 40

Total 50 50 100%

All the questionnaires distributed where collected.

4.4 TESTING OF HYPOTHESIS

In this chapter, the researcher will be testing the stated hypothesis to

determine whether to accept or reject the null hypothesis. However, the

responses will be used in testing the hypothesis with chi-square

distribution.

Restatement Of Hypothesis

H0: There is no significant relationship between small-scale industries

and the resolution of unemployment problem in Imo State

H1: There is significant relationship between small-scale industries and

the resolution of unemployment problem in Imo State

44

The chi-square is given as

X2 = ∑(Oi-Ei) 2

Ei

Where

X2 = chi-square

∑ = Summation

Oi = Observed frequency

Ei = Expected frequency

Level of significance 5%

Responses from table 5 and 6

Question number 4 and 5

Agreed Disagreed Total

10 40 50

47 3 50

57 43 50

Expected frequency = Ei

Ei1 = 50 x 57 =28.5

100

Ei2 = 50 x 43 = 21.5

100

45

E21 = 50 x 57 = 28.5

100

E21 = 50 x 43 = 21.5

100

To draw the table chi-square

Oi Ei Oi-Ei (Oi-Ei)2 (O –Ei) 2

Ei

10 28.5 -18.5 342.25 12.009

40 21.5 18.5 342.25 15.919

47 28.5 18.5 342.25 12.009

3 21.5 -18.5 342.25 15.919

Total 55.856

Survey data 2012

= x255.856

Test statistic

X2 = 55.856

Critical value

α = 5%

100% - α = 100% - 5%

100% - α = 95%

46

α = 95

100

α = 0.95%

α /X2 = (r-1)(c-1)

X2 = 0.95 (R -1) (C-1)

X2 = 0.95(2-1) (2-1)

X2 = 0.95(1x1)

X2 = 0.95 x 1

X2 = 3.841

DECISION RULE

From the data analysis calculated

Test statistics = X2 = 55.856

Critical value = X2 = 3.841

Therefore, since the test statistic ie calculated as X2 = 55.856 is greater

than critical value or 3.841, we reject H0 and accept Hi and conclude that

there is significant relationship between small-scale industries and the

resolution of unemployment problem in Imo State

47

CHAPTER FIVE

5.0 SUMMARY OF FINDINGS, CONCLUSION AND

RECOMMENDATION

5.1 SUMMARY OF FINDINGS

The problem of unemployment and its impact on economic development

of Nigeria is what propelled the research to investigate on solving

unemployment problem through the establishment of small scale

industries. In analyzing the collected data, the followings findings were

observed. Thus;

i. Accelerated economic growth and development is a

“conditio sine qua non” (condition that you can do

without) for improving the quality of life

ii. Small and medium scale enterprises contribute to global

economic growth and development

iii. The establishment of small scale industries in Aboh-

mbaise LGA will bring about innovation and invention

iv. Unemployment does affect the economic growth of

Nigeria

v. The establishment of small-scale business will help to

solve unemployment problem

48

vi. Youths should be encouraged to develop and nurture

entrepreneurial spirit

vii. Small-scale industries serve as a guide to the introduction

of large scale business

viii. The youths can enhance sustainable development of the

Nigeria economy through SMEs

5.2 CONCLUSION

Conclusively, it has become clear the role of small scale industries in

employment generation can not be over emphasized. It not only solves the

problem of unemployment but assists in revamping the economic growth

and development by contributing in poverty alleviation. So many scholars

have deliberated on the issue of unemployment and discovered that

entrepreneurial activities should be encouraged among the youths so as to

enable them to be self employed since the government cannot

accommodate them all as a result of the population in Nigeria.

The government, through their policies should enact laws that will

encourage the small scale enterprise in the country. This they can achieve

49

by making the level of taxation more favourable for the entrepreneurs and

to provide the necessary infrastructural facilities within the nation.

5.3 RECOMMENDATION

Owning to the necessity and importance of small scale industries in the

generation of employment of improvement of the economy, the following

recommendations are recommended. Thus:

The different tertiary institutions in Nigeria should endevour to lay

more emphasis on the concept of Entrepreneurship development

among the students. This will enable them to equip themselves so

as not to be stranded after graduation.

The government should provide favourable ground through their

policy that will promote the growth of small scale industries within

the country as this will great more room for employments and help

in the revamping of the economic development and growth

The financial institutions such as banks should be able to give loans

to entrepreneurs with lower interest rate so as to encourage them in

carrying out their entrepreneurial activities.

50

REFERENCES

Lawal, A. A. and Bello, M. A. (2010). “Strategic Importance of

Nigerian Small and Medium

Lawal, A. A.,; Kio, J. S.; Sulaimon A. and Adebayo O. (1998).

“Entrepreneurship in small Limited.

Nna, O. (2001). “Importance of small and medium enterprise investment

scheme”. Workshop Nigeria Limited

Owualah, S.I (1999a) “Tackling Youth Unemployment through

Entrepreneurship International small Business journal. Vol. 17. No.

3 April-June. 49 – 59

Fagge, T. A. (2004) “Grassroots approach to poverty alleviation in

Nigeria”. Nigeria goals (MDG)’ Journal of Business and Social

studies. 1, 1, 20-35. Government publication press

Onugu, B. A. (2005) “Small and Medium Enterprises in Nigeria:

problems and Prospects.

Anyanwu C. M. (2001) “Financing and promoting Small scale industries:

Concepts issues and problems. The Nigerian journal of Economic

research.

Beyene, A. (2002) ‘Enhancing competitiveness of productivity of small

and medium enterprises business enterprises”. Lagos, Labson

51

Resource Limited, business Strategy: 6. 67 75. Cluster in Nigeria”.

Ibadan Mosuro press. Company comparative analysis of India and

other economics” New York Oxford University press

Corlson, B. and Karloon C. (2000) “Entreprenuership in Small and

Medium sized Enterprises and Macro Economy”. Cambridge

University Press.

Davis S. J; john, H and Scoh, S (1996) “Small Business and Job Creation:

Dissenting the myth

Ojo A. T (2006). “Using small and medium enterprises to achieve

millennium development goal

Oyelaran – Oyeyinka, B; Adelaja M and Abiolo, B (2007) “Small and

Medium Enterprises period of 1980 – 1987” Nigerian financial

review. 65-67

Shinder, L. (2007) “Enterprenuership in Zimbawe’s informal Sector”

OECD Devleopment Center: Special Section, 57-61

Turnham, D. (1997) “Employment Creation and Development

Strategies”. OECD Development Center. Special Section, 47 – 56

52

APPENDIX I

School of Business Management technology

Dept. of business Administration and

Management

Imo State Polytechnics

Umuagwo Ohaji

22/10/2012

Dear Sir/Madam,

I UZOZIE FAITH .U. with registration number 2012/HND/BAM/53457

is a final year student of the above named school carrying out a research

on the topic “Solving unemployment problem through the establishment

of small scale industries (SSIs). This is in partial fulfillment of the

requirement for the partial fulfillment of the requirement for the award of

Higher national Diploma (HND) certificate.

I appeal to you to help answer the questions contained in the

questionnaire which is aimed at collecting first hand information for

academic work. All information supplied here will be handled with

utmost confidentiality.

Thanks for your corporation

Yours faithfully

UZOZIE FAITH .U.

53

APPENDIX II

Questionnaire

Instruction: Please tick (√) in the appropriate box

Section A

(Bio Data of Respondents)

1. Sex

a. Male

b. female

2. Age Limit

a. Below 25 years

b. 25-35 Years

c. 36 – 45 years

d. Above 45 years

3. Educational Background

a. WAEC/NECO

b. ND/NCE

c. HND/BSC

e. Professional

4. Years in Service

a. Less than five years

54

b. 5-10 years

c. 11-15 years

d. 16 – 20 years

e. Above 20 years

55

SECTION B

1. Do you agree that accelerated economic growth and development is a

“conditio sine qua non” (condition that you can do without) for improving

the quality of life?

a. Strongly Agreed

b. Agree

c. Strongly disagree

d. Disagree

2. Do you agree that small and medium scale enterprises contribute to

global economic growth and development?

a. Strongly Agreed

b. Agree


d. Disagree

3. The establishment of small scale industries in Aboh-mbaise LGA will

bring about innovation and invention?

a. Strongly Agreed

b. Agree


d. Disagree

56

4. Unemployment does not affect the economic growth of Nigeria? Do

you agree to this assertion?

a. Strongly Agreed

b. Agree


d. Disagree

5. The establishment of small-scale business will help to solve

unemployment problem. Do you agree to this assertion?

a. Strongly Agreed

b. Agree


d. Disagree

6. Youths should be encouraged to develop and nurture entrepreneurial

spirit.

a. Strongly Agreed

b. Agree


d. Disagree

57

7. Small-scale industries serve as a guide to the introduction of large scale

business.

a. Strongly Agreed

b. Agree


d. Disagree

8. The youths can enhance sustainable development of the Nigeria

economy through SMEs.

a. Strongly Agreed

b. Agree


d. Disagree

58

solving unemployment problem through the establishment of small scale industries (ssis)

Documents