THE ROLE OF SMALL AND MEDIUM ENTERPRISES

IN THE NIGERIAN ECONOMY.

BY

UMEH UZOCHUHWU FRANCIS

PG/ MBA/ 06/ 46320

DEPARTMENT OF MANAGEMENT

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

JANUARY 2009

TITLE PAGE

THE ROLE OF SMALL AND MEDIUM ENTERPRISES

IN THE NIGERIAN ECONOMY.

BY

UMEH UZOCHUHWU FRANCIS

PG/ MBA/ 06/ 46320

SUBMITTED TO THE DEPARTMENT OF MANAGEMENT

FOR THE FULFILLMENT OF THE AWARD OF MASTERS

OF BUSINESS ADMINISTRATION [MBA]

FACULTY OF BUSINESS ADMINISTRATION

UNIVERSITY OF NIGERIA

ENUGU CAMPUS

JANUARY 2009

CERIFICATION

I, UMEH UZOCHUKWU FRANCIS. a Postgraduate student in

the Department of Management , Faculty of Business Administration

with registration Number PG/MBA/06/46320 has satisfactorily

completed the requirements for the award of the degree of Masters in

Business Administration [MBA].

The work embodied in this report is original and has not been

submitted in part or in full for any other degree or award in this

University or any other University.

…………………………………….. UMEH, UZOCHUKWU FRANCIS

PG/MBA/06/46320

…………………………. …………………………. C. O. CHUKWU C. O. CHUKWU PROJECT SUPERVISOR HEAD OF DEPARTMENT

DEDICATION

This work is dedicated to God Almighty, the giver of wisdom

and the source of my strength and knowledge.

ACKNOWLEDGEMENT The ups and downs associated with writing a research project

like this are usually reduced by proper guidance and counseling by

supervisors who are assigned to students during their course of

study.

I therefore wish to acknowledge the immeasurable help from

my supervisor MR. C.O. CHUKWU, whose tutelage, though

sometime unpleasant to me, invariably paid off with good result. With

hindsight, I make bold to say that his supervision exposed me to

proper ways of conducting a research work.

I wish also to acknowledge the help of my parents Mr. & Mrs.

Umeh and my brothers and sisters who always encouraged me to

complete this work.

I also remember with appreciation the role played by me friends

Obinna Ezeh, Obiora Chime, Chukwudi, Ngozi and others for their

friendliness, care and useful assistance throughout this programme.

May Almighty bless and multiple your efforts.

Finally, I am indebted to Almighty God who granted e journey

mercies from Onitsah to Enugu during the time I was running this

programme.

ABSTRACT

This research work was designed to determine the role of small

and medium enterprise in the development of Nigeria economy.

Some selected enterprises were used as a case study and

questionnaires were administered in order to extract information on

this project. The objectives of the study includes to identify the roles

of small and medium enterprises in the development of the Nigeria

economy and to evaluate the problems the encountered in the

establishment of small businesses. Some literature were reviewed in

relation to the topic with the themes and sub themes of the study.

However, in research methodology, the researcher used some

instruments for data collection. These instrument s emanated from

both the primary and secondary source of data. The data collected

were analyzed, grouped into frequency, computed and arranged in

tables for easy references. The statistics tools for analysis are the

simple percentage and chi-square technique. These techniques were

appropriately applied at 5% level of significance. The result of the

study shows that small and medium enterprise plays a vital role in the

development of Nigerian economy despite the various problems the

encounter in the establishment of small businesses. Some

recommendation were also made based on the results of the findings.

TABLE OF CONTENTS

Title page

Certification

Dedication

Acknowledgement

Abstract

Table of Contents

CHAPTER ONE: INTRODUCTION

1.1. Background of the Study

1.2. Statement of the Problem

1.3. Objective of the Study

1.4. Significance of the Study

1.5. Scope and Limitation

1.6. Research Question

1.7. Definition of Terms

CHAPTER TWO: LITERATURE REVIEW

2.1. Meaning and Concept of Small Business Enterprise

2.2. Basic Characteristics of Small Scale Enterprise

2.3. Types of Small business

2.4. Sources of Fund to Small Businesses

2.5. Government Influence on Small business Enterprises

2.6. The Role of Small Scale Business

2.7. Problems of Establishing Small Business Enterprise in Nigeria

CHAPTER THREE: RESEARCH METHODOLGOY AND DESIGN

3.1. Research Design

3.2. Sample Size Used

3.3. Instrument for Data Collection

3.4. Population of the Study

3.5. Validity and Reliability of Instrument

3.6. Method of Data Analysis

CHAPTER FOUR: PRESENTATION OF DATA

4.1. Data Presentation and Analysis

4.2. Testing of Hypothesis

CHAPTER FIVE: SUMMARY OF FINDINGS, RECOMMENDATION

AND CONCLUSION

5.1. Summary of Findings

5.2. Recommendations

5.3. Conclusions

Bibliography

Appendix A

Appendix B

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

For the past decades, small business enterprises in Nigeria

were characterized as essentially backward and cog in the wheel of

the overall development of the Nigeria economy. As a result of this,

there has been a prevalent feeling that such businesses could be

assisted only for social reasons, not as a promising opportunity for

national development. Obviously, too little attention has been paid to

the benefits to be derived from helping small enterprises of

modernize and grow. This attitude arose partly amongst both the

citizens and government and mainly from the very nature of the small

business which made it difficult for its impact to be felt in the

economy.

The latent contributions which small business can make are

now attracting recognition. This awareness is manifest in the ever-

increasing number of Nigerians who daily strive to put up their

personal ideas and abilities to effective use [by starting small

business] ventures. Evidence around the world indicate that small

scale enterprise provide an effective means of stimulating indigenous

entrepreneurship, enhancing greater employment opportunities per

unit of capital invested and aiding the development of technology.

Through their wide dispersal, they provide an effective means of

mitigating rural-urban migration and resource utilization.

Furthermore, by producing intermediate products for use I n large

scale enterprises, small businesses contribute to the strengthening of

industrial linkages.

Accordingly, due to the recognition of the roles of small

business, the Nigerian government has since 1970 initiated

programmes for the assistance of small businesses, especially, in the

areas of finance, extension and advisory services including, training

and provision of infrastructures. All these are designed to enhance

the development of small businesses. Successive governments in

Nigeria have for the past three decades shown great interest in the

financing of small businesses by establishing specialized banks and

other credit agencies/schemes to provide customized funding.

In spite of all the contributions and the attention given to it by

the government, the small business enterprise is still confronted with

problems peculiar to what many may refer to as the ‘Nigerian factor’.

One of such problems is the lack of funds, “It takes money to do

business”. From the time a business idea is conceived of [the

promotional state] until after it has ceased to operate, there are

financial implications in every activity at every point in time associated

with the businesses. It is therefore not surprising that the issue of

financing is of major concern to small business organization. Despite

that, the role of SMEs in Nigeria cannot be underestimated.

It is noteworthy that most of the small businesses in Nigeria are

sole proprietorship and partnerships.

1.2. STATEMENT OF THE PROBLEM

Nigeria is currently witnessing an alarming rate of un-

employment rate is growing tin geometric progression. The economy

is also increasingly finding it difficult to cope as Nigerian economy is

waning. A lot of experts have called for the creation of an enabling

environment for small –scale enterprise to thrive. They cited Asian

“Tigers” such as Malaysia, China, Sought Korea, Indonesia,

Singapore and Thailand where both the government and individuals

knowing the importance of small scale industrial development join

forces together in fostering effective and sustainable small scale

enterprises in their countries. Evidence also abound that in the

above mentioned places, a lot is being done to empower the growth

of this sub sector of the economy. The role small scale industries in

the development of indigenous technology can not therefore be over

emphasized.

1. 3. OBJECTIVES OF THE STUDY

This study seeks to identify the role of the small scale

enterprise in the overall development of the nation’s industrial sector.

It also aims at finding ways of making small scale enterp5rises

more effective in order to enhance to economic development of the

nation’s indigenous technology.

Moreover, in this study, attempt will be made to achieve the

following:

[a] To assess the importance of the identified roles of small scale

enterprises in the development of Nigerian Economy.

[b] To determine whether or not the Nigerian small scale

enterprises make use of all the credit facilities available to them

and the reasons for the stand they take in relation with their

initial capital.

[c] To consider the nature and level of financial assistance desired

by them and compares it with the already available forms of

assistance desired by them and compares it with the already

available forms of assistance.

[d] To evaluate the problems encountered I utilization of the

available opportunities and or facilities as regards fixed assets

like land and locations.

[e] To suggest ways by which these problems could be tackled in

order to improve the financial condition of the small scale

businesses and boost their source of their raw materials

generation.

[f] To ascertain whether or not government policies have been

favourable to the establishment of small scale enterprises

especially as it concerns power supply.

[g] To assess the level of consumers’ preference to imported

goods and determine the rate at which it affects the

establishment and activities of small scale enterprises in

Nigeria.

1.3. SIGNIFICANCE OF THE STUDY

The study is thus important because of its potentiality in the

development of the small business sector which has been

characterized as the “man carrier of development and the engine of

social and economic growth” in Nigeria. The study will also help in

identifying why people don’t go into small –scale enterprise despite its

numerous advantages. It will also find our problems encountered

while running the business. The study will help government identify

areas requiring attention, thus stimulating government into proper

directing of loans and incentives to improve upon existing ventures. It

will also provide useful guide for prospective entrepreneur that wish

to choose self-employment as a career. And finally, it will serve as

secondary data for subsequent studies by a prospective researcher.

1.4. SCOPE AND LIMITATION

A good number of factors made the study difficult. Notably, is

the time factor. The time available for the study was so short that the

study was done almost in rush. Due to the limited time too, the

researcher based his study only on selected small business

enterprises within Nigeria. Another problem was combing course

work, office work, research work and financial constraints to carryout

a full and unbiased study.

1.5. RESEARCH QUESTION

[1] What are the roles of small scale enterprises in the

development of Nigerian economy?

[2] Has lack of land and good location been a problem in the

establishment of small scale enterprise in Nigeria?

[3] Does epileptic power supply in Nigeria hinders establishment of

small business enterprises?

[4] Has unavailability of raw materials been a problem in

establishment of small scale enterprises?

[5] Has government policies been unfavourable to establishment of

small scale enterprise in Nigeria?

[6] Does the consumer’s preference to imported goods adversely

affect the establishment of small scale enterprise in Nigeria?

[7] Has establishment of small scale enterprise been hindered by

unviable market?

[8] What are the average source of the initial capital of studied

small business ventures?

[9] How successfully are their applications for bank loans and what

is its percentage?

[10] What are the sources of your raw materials?

[11] Does lack of machines and equipment as difficulty in acquiring

them impedes the establishment of small scale enterprise.

[12] Does psychological factors such as lack of confidence lack of

creativity, fear of failure etc been a problem in establishment of

small scale enterprise in Nigeria?

[13] Does socio – cultural factors such as housewife syndrome, civil

servant mentality, females not seen as good entrepreneurs

been a problem in establishment of small scale enterprise in

Nigeria?

1.6. DEFINITION OF TERMS

Small Scale Enterprise: - The definition of small scale

enterprise varies with people and countries such that it is better

defined based on the characteristics. In the Nigerian context, small

scale enterprise is any processing, serving or manufacturing industry

with an investment in machinery and equipment above N500,000

[Waboi, 1987].

According to the centre for management development in a policy

proposal to Federal Government in 1982, A small scale enterprise is

a manufacturing, processing or service enterprise involved in a

factory or production type operation employing up to 50 full time

employees, investment in plant machinery are utilized in its operation.

Management: - According to Akpala [1990. pg 3] Management

is the process of combing and utilizing an organization input [men,

materials and money] by planning, organizing, directing and

controlling for the purpose of producing output [goods and services].

Entrepreneur: - According to Hagen, an entrepreneur is an

individual who conceives the idea of business, design the

organization of the firm, accumulates capital, recruits labour,

establishes relations with supplies, customers and the government

and converts the conception into a functioning organization business.

Opportunity: An opportunity is a potential gainful situation

that must be recognized and exploited, an opportunity has the

qualities of being attractive, durable and timely. It is anchored in

product or services which creates or adds value for its buyers or end

users.

Development: This entails growth of the business, increases

in goods and services and t he improvement of lives of the citizen.

REFERENCES

Akpata, B. (1990): The Role Entrepreneurship in Business.

Ezeh, J. (1997): The Role of Small Scale Business in Nigeria

Economy.

Hagen, M. (1989): Problems of Small and Medium Scale

Enterprises.

Waboi, A. (1987): The Impact of Small and Medium Scale Business

in an Economy.

CHAPTER TWO LITERATURE REVIEW

2.1. MEANING AND CONCEPT OF SMALL BUSINESS

ENTERPRISE

In many respects, the meaning and concept of small

businesses cannot be completely isolated from the operational

environment. Thus the perception and definition is highly dependent

on the particular economy that provides the environment of operation.

In Nigeria, there seems to be no clear cut definition or scope for

determining small business enterprise. However varied definition and

scope were made by some agencies as follows:

[a] The national directorate of employment defined it as being able

to accommodate project with capital investment as loan as

N5,000 and employing as few as three persons.

[b] The Central Bank of Nigeria in its monetary policy guidelines

1980 defined small scale business as an enterprise whose

annual turnover rangers between N25,000 and N50,000, also

the Federal Ministry of Industries before the Structural

Adjustment Programme [SAP] and Foreign Exchange Market,

defined small scale business as any manufacturing, processing

or service industry with capital investment of not more than

N150,000 in plant and machinery.

[c] The Nigeria Bank for Commerce and Industry also defines the

small scale enterprise as firms’ or companies with assets

[including working capital but excluding land] not exceeding

N750,000 and paid employment of up to 50 persons an such an

establishment be wholly owned by Nigerians.

Measuring the appropriateness of some of these definition,

Nwakobi [1985] criticized most of the definition describing them as

merely “institutional” Nwabobi holds the views that the definitions do

not pain a health picture of the growth of small scale business

enterprise, considering the difficulties involved in capital formation

and other discrimination of attitudes of the banks towards the owners

of small scale business enterprise. In July, 2001, the national council

on industries at the 13th meeting in Markurdi, Benue State, reviewed

and adopted the following classification of industrial enterprises and

came up with the definition that “A small scale industry is an industry

with total capital employed of over N1.5 million but not more than N50

million including working capital but excluding cost of land and of a

labour size of 11 -100 workers.

However, comparatively, most develop countries seems to

have agreed on a maximum unit of 500 employees as a small firm

[Feldman 1989]. However, a review of the performance induct of

small scale business can be best anchored on the United Nations

industrial development organization definition of small scale business

as “an economic venture” that is characterized by the following:

Ownership and management being vested in the same

Individual

Capital being made available by an owner on whom the policy

Decisions rest

Having a coalised operational area

A situation of a venture controlling a small share of the market

Their by constituting a little quota in the large sized market

The owner participating very actively in all decision making

Processes on a day to day operation basis with a high degree

Of rigid control.

Reflecting the characteristics, small scale business enterprises

have emerged, especially in the developing world, with roles of

employment generation, encouragement of rural development,

assisting substantially in lifting gross domestic product, developing

entrepreneurship and proving avenue for self employment.

2.2 BASIC CHARACTERISTICS OF SMALL SCALE

ENTERPRISE

The overall business scene and activities in Nigeria appear to

be dominated by small businesses which are established by

individual, groups, companies and cooperatives.

Most business start off as small but with proper planning and

management, then expand and grow. However, it will be risky to

assume that small enterprises are exactly like big ones after all the

difference is size. But it is necessary to differentiate the small

business from the large ones and to associate those characteristic

with problems inherent in small business.

In summary, characteristics as identified by several writers

among who Broom and Longnecker (1972), MUSSELMAN AND

Huglice (1973) and yewande (1991) are presented here. It must not

however be taken that these characteristics are all embracing or that

all must be present in the same magnitude in a business for such a

business to qualify as a “small scale business”.

[1] Management is not independent- generally; the managers are

also the owners. This means that the manager/ owner can run

the business as he pleases. Discipline as the control factor in

this case may sometimes be missing. This lack of proper

managerial discipline leads to business failures.

[2] The size of the small business firm within industry is usually

small. Thus they are not dominant in their individual field or

operation.

[3] Capital requirement is small and therefore within reach of the

indigenous entrepreneurs.

[4] Majorities of the modern small business units are labour

intensive and are able to achieve high productivity. These units

are concentrated in areas of low technology.

[5] Capital is supplied and ownership is held by a small group or an

individual. The initial capital usually equity holdings is supplied

by the owner or co- owners of the business. Often for working

capital, they depend on trade credit or credit finance or both.

[6] The area of operation is mainly local employees / workers and

owners all like in one home community. Most small scale firms

even those identified as modern utilizing plants and machinery

are run along family line. However, markets served by them are

not always local, modern small firm’s serves market across

ethnic cultural and even nations or state boundaries.

[7] On other all – embracing characteristic of small scale business

in Nigeria is the apparent lack of attention to managerial

functions of planning, organizing, directing coordinating and

controlling.

In Nigeria, the entrepreneur usually sets out to achieve high

return on investment. The workers generally are not adequately

remunerated or sufficiently motivate.

2.3 TYPES OF SMALL BUSINESS

No doubt, the future of economic prosperity of Nigeria lies in the

structuring and eventual growth of medium and small scale

enterprises. This situation has been confirmed by the Nigeria institute

of social and Economic Research (NISER), THE National Association

of small scale Industry (NASSI), and the German based Frederick

Elbert Foundation. It is the existence of this kind of scenario that had

given impetus to the growth of some small scale industries like the

ones that constitute the objects of the study. Their very existence also

confirms Oshagbenius (1985) categorizing of small scale industries

as those which include, weaving, carpentry, pottery, ceramics,

farming, fishing, piggery animal husbandry, poultry, wood and metal

works, brick and block making and a host of others, operating under

registered names and depending largely on local raw materials.

2.4 SOURCE OF FUND TO SMALL BUSINESSES SOURCES OF

INITIAL CAPITAL

Traditionally, and with regards to sources, two types of capital

are recognized, equity and borrowed.

Baumback is the view that the distinction between equity and

debt capital in a small business is blurred. In any case, one thing is

clear; equity financing denotes ownership while debt financing implies

an obligation to repay the principal amount plus interest. In providing

initial capital, a small business enterprise has a good normal source

open to it. These include funds invested by the owner as well as

funds made available by creditors. Credit takes the from of bank

loans, trade credit, union loans from individuals, friends and relative

and credit union loans. It is noteworthy that these and other sources

of funds are made use of both at the beginning stage and in the

subsequent day-to-day financing of business operations. Those more

closely related with the growth of the business will be discussed later

under “sources of development capital”

[a] Personal saving: To a beginning firm, personal savings of the

founder constitute a primary source of equity capital. Many writers are

in support of this view. Broom says it is not only difficult but also quite

hazardous to borrow venture capital. He is of the opinion that two

third of initial should be form the owner.

Dr. Nordi advices that the starting small business should not

only be from borrowed funds if his personal resources are

inadequate. Baumback goes further to explain why initial capital

should necessary come form those who have created the business.

He said that there is general hatred for risk taking among human

beings. The general public thus is usually hesitating about investing

in an unknown venture. Such recommended ownership equity is

designed mainly to provide a margin of safely for the new

entrepreneur.

[b] Commercial Banks – commercial banks are a primary source

for debt capital. Although they tend to limit their learning to working

capital needs of going concerns, some initial capital dose some from

this source. The commercial bank has considerably changed from

just supplying capital for an interest income to a more acceptable

socio- economic role. It has development”. Mr. Tina confirmed this

when he said that have increased the amounts given out for loans

the 20 percent (proportion of deposits government requires that

should be set aside for small business loans are also given. One of

those is the installment loans which may not exceed certain amount.

Such a loan is repayable monthly or quarterly as prearranged but the

maximum maturity period is one year. Over draft for up to a period of

two years is also given. In spite of the new interest in small

businesses, their problem with the banks has not changed. Their

greatest problem is to meet the requirement of the banks. The bank

considers the mode and time of of repayment of the principal amount

plus the interest. Many small business many not be in a position to

start paying interest not to talk of the principal as and when due.

[c] Trade Credit- Credit – extended by suppliers’ plays an

important role especially to the beginning business. Trade credit

tends to be widely used source of short tends funds to the small firm.

This according to Baumback often provides a major point of the small

business man’s working capital needs especially in the retail fields.

The amount of credit available to a particular firm depends upon the

type of business and the supplier’s confidence in the new firm. They

extend credit more freely than the bankers. Competitions for sales

volume force them to reach out for new small and financially weak

customers by offering delayed payment. Even when such customer

faulted in the credit terms, the suppliers often hesitate to react for fear

that they might loose a promising customer.

[d] Friends and Relatives - very often, funds from friends and

relatives are used to supplement initial owner equity capital. This

usually character as poor business practice and in many cases based

on erroneous assumptions may at times be necessary. This is with

cognizance of the fact that many and family owned. It should be

noted that family and business relationships are well as funds should

not be mixed, if most desirable result are be obtained. Loans from

friends and relatives tend to create a highly personal relationship

such relationship may conflict with independence and business. The

time for the repayment of the loan may not be defined. Interest

payment may be deferred too. But the problem in these associates

may feel it a duty to offer advice and even insist that certain decisions

be taken. These decisions may not be in harmony with the objectives

of the proprietor. However, this problem can be easily avoided. A

business loan should be taken as a business transaction and not a

favour. In such case, the inexperienced associate’s advice can be

easily rejected. Terms of the loan should be clearly defined and loans

could be getting from lending institutions instead of from friends and

relatives.

[e] Credit Unions – S. F. Arniel defined a credit union as “a group

of people bound by some intangible bond of association, perhaps the

bond of the same employer, the same religion, the same politics, the

same profession, trade, hobby or the same type of misfortune,” credit

unions are cooperative that encourage saving and lending on

attractive terms. They also provide financial advice to members. The

prime purpose of a credit union is to teach thrift. People save with the

credit union for various reasons. These may include absence of

banking house.

The liberal lending polices of credit unions also attract

membership. Credit unions obtain most of their funds from savings of

members. Many small businessmen usually obtain loans which are

eventually used up in business. Credit unions thus constitute an

important source of funds for small business especially it the rural

areas.

[f] Other Sources of Funds – in addition to the already

discussed sources of funds for initial capital, a good number of small

businessmen still make use of some local sources. Such include

borrowings “isusu” (a group of persons who agree to make

contributions regularly). Members take turns to benefit from these

contributions. Some of the funds got from the “isusu” are used for

small business operation.

2.4.1 SOURCES OF WORKING AND EXPANSION CAPITAL

For the business to survive and grow after successful

launching, the continuous need for funds must be met the following

sources are used largely for procuring initial capital namely, personal

saving, commercial banks, trade credits, unions, and friends and

relatives.

These sources may continue to provide funds for the going

concern operations. Some of them could be eliminated. Brooms and

Longnecker suggest this should be done by liquidating loans as those

from friends and relatives personal savings too may become less

important through funds could continue to come form there.

(a) Retained Earnings - retained earning provide a natural type of

expansion for many small enterprises. As profit are realized, they are

ploughed back into the business by foregoing dividends, for firms that

use only retained earnings, the rate of expansion is limited by the

amount of profit generated by the business. These funds are often

insufficient to meet the heavy capital needs of a rapid expanding firm.

The firm, thus still has to look for other avenues for funds.

(b) Sales of Capital Stock – the firms are usually faced with

severe competition. In this situation, it may have to expand or die. To

expand it need working capital, most of which must be inevitably be

borrowed. The small firm has a disadvantage in that it has to pay

interest charges on the debt capital both in good and bad times. Sale

of capital stock to outsiders eliminates these disadvantages.

In general small firms have an inferior complex when

considering themselves as candidate for public financing. Robert A.

Weaver Jr. has tried to explain why small firms avoid public financing.

Among his reason are:

[1] That the small firms do not have a clear picture of the

advantages.

[2] They do not know how to go about it.

[3] They feat dilution of ownership

[4] They believe they are too small for such a Venture Broom and

Longenecker are of Waver’s view that the small firms are reluctant to

sell stock because they fear dilution of ownership. They go on to say

that the owner may be wise or unwise to avoid outside equity

prospects of the business. If other sources of funds are inadequate,

the owner may decide to go to the public for financing if he feels that

the will be better off by owning part of a largest business than by

owning all of a small business. In any case, sale of stock is usually

difficult for small firm. What makes for this is the fact that firm is now

widely known and has no market for its securities. The firm also is

expected to make a showing in at least one of the following:

[a] Utility should gave a satisfactory record of earning

[b] Good management

[c] Strong growth possibilities – IN many cases, the small firms are

not able to major up in public financing.

2.5. GOVERNMENT INFLUENCE ON SMALL BUSINESS

ENTERPRISES

Government tax policies generally make it difficult for the small

businesses to exit. In fact, government fiscal policies and the way

they are designed are a major cause of discontent among small

businessmen. Tax problems of small concerns have not arisen

because the tax measures were directed at small business as such.

The central point is that the system weights disproportionately on

them by virtue of their sizes and character. Most businessmen fail to

understand this and nurse the feeling that government does not want

them to survive.

This is wrong as the growth of small business organizations has

become the concern of many governments. In Nigeria, the

government’s effort to promote small business was materialized in

national development plans. With the aid of international

organizations, a normal of assistance centers to meet the technical

and financial needs of small and medium sized enterprises were

created. To further show government interest emphasis is land on

more effective use of the bodies responsible for the promotion and

guidance of small, and medium sized enterprises. These bodies

include:

The national directorate of employment

Small industries corporation

National economic reconstruction fund

Nigeria industrial development bank

The Nigerian Agricultural & cooperative Bank.

For such assistance to be given, the importance of the project

has to be critically confidence the socio-economic point of view.

Obviously, there is evidence that with proper guidance, most

small scale industries that do not depend solely on personal income

have been known to have found it relatively easier to deal with these

prescribed government agencies than with the conventional profit

oriented commercial and financial institutions. But it has also been

revealed that most of the small scale entrepreneurs have not made

use of these facilities because they are not equipped to deal with the

bureaucracies associated with procuring loans. This attitude of the

small scale entrepreneurs has the tendency of effect the efficiency of

some of these lofty. Government policies designed specifically for

the growth of small scale business.

2.6. THE ROLE OF SMALL SCALE BUSINESS IN THE

DEVELOPMENT OF NIGERIA ECONOMY

Hardly, can any major industry succeed in isolation of the

services and contributions of small business enterprise. The relative

strength of their importance and role vary from one industry to

another. Infact the importance of small scale business in any

economy cannot be over estimated. Firstly, continuous growth in the

economy of any nation depends to a large extent on the start ups of

small businesses. Even on a recessionary economy, small scale

enterprises are a legitimate and viable component in any strategy for

reconstructing the economy. Furthermore, it is emphasized that the

small scale enterprises make the possibility of the equitable

distribution of national income more realistic of providing employment

opportunities on a large scale. By creating more employment the help

I mobilizing capital and human resources that would otherwise be left

idle.

Some small businesses no doubt, provide certain distinct

services that in most cases may not be matched success of large

businesses. Implicitly, if the small businesses would by and large find

themselves over saddled with a myriad of activities that they would

only be able to manage minimally. The role of small scale

businesses in the development of Nigeria economy has made it very

possible for firms to depend less on imported goods or materials. T

hey often rather depend on locally made machines and local raw

materials as inputs. One can buttress this point further by the fact

that non dependence of small businesses on imported raw materials

as inputs leads to a reduction in the demand of foreign raw materials

thereby saving the foreign exchange earnings of the nation. Worthy

of mention also is the advantage of solving payment problems as a

result of less dependence on imported inputs. This has an attendant

blessing of creating an interest in the promotion or home made

products. In this way small business ventures generate revenues

and strengthen the Nigeria economy.

Small industries have a shorter gestation period and as a result,

yield quicker returns on investment. They facilitate balanced

industrial development in that only such small scale ventures can

easily be established in many rural areas. In this regard, that present

a potent means of reducing rural urban migration and its

consequential urban congestion, unemployment and other social

vices. Small businesses also serve as a training school for

indigenous entrepreneurs and provide the opportunity for acquisition

of skills for a large number of workers. They facilitate a speedy

development of Nigeria economy.

2.7. PROBLEMS OF ESTABLIHING SMALL BUSINESS

ENTERPRISE IN NIGERIA

Small scale enterprises owning to their peculiar nature are beset with

myriad of special problems which directly or militate against their

survival and growth. A lack of indigenous entrepreneurial initiative for

industrial development is a characteristic of most development

countries. Limited resource of capital and skilled labour, a lack of

technological and managerial knowledge and limited markets are

important handicaps to the acceleration of industrial development in

Nigeria. In large industrial establishments, some f these handicaps

are alleviated by foreign assistance collaboration.

Unfortunately, the small scale industries do not enjoy such

benefits and as such dependent almost entirely on indigenous

entrepreneurs. Some of the problems facing small scale industries

come from the owners while some come from unpredictable

environmental force which are external to the business and they

include government units competition etc. Some other problems can

be identified in different functional areas such as manufacturing

marketing, financial and labour. But generally, the following problem

have been identified by the researched as the major factor militating

against the establishment of small scale enterprises in Nigeria.

[a] Lack of Start-up Capital - The early stage financing is

usually is usually the most difficult and costly to obtain. There two

types of financing at this stage. Seed capital and start up capital.

Seed capital is relatively small amount of fund needed to prove

concept and fiancé feasibility study. It is the most difficult to obtain

because the venture capitalist is usually not interested at this level of

funding. While start-up capital is involved in determines if commercial

sales are feasible. It is also very difficult to obtain. No good business

ideas can ever surface without fund.

[b] Lack of Land and Good Locations: - before any small scale

industry is established, this is the need to acquire land on which the

factory site or the warehouse will be built. In urban areas, land is not

usually available and when available, it will be very expensive beyond

the reach of the small scale entrepreneur. In the rural area where

land is bound to be available at the reduced cost, other necessary

infrastructures will be lacking. Good location of our businesses is

very important for the easy survival of the enterprise but it is very

difficult to get and where available, the cost will not be affordable for

any small business operator.

[c] Poor Government Policies - Nigeria government has not

been able to help entrepreneurs in establishment process of small

scale business. Instead, one obnoxious policy or the other was used

in making things difficult for young entrepreneurs. Government is

only interested in revenue generation without noticing how is has

hindered the establishment of more small business in Nigeria. Every

new business that is still struggling to survive is expected to pay

between N5,000 to N20,000 as business premises and a lot of other

permit. The business is also expected to pay almost the same

amount of the local government where it is situate. All these end up

pulling the business down.

[d] Insecurity of Lives and Properties – security problems are

one of the major problems of establishing small scale enterprise in

Nigeria. Even the large scale businesses that can afford to employ

the services of security personal are not free from t his social

menace. Any business that deals on highly valued products are not

safe. Consequently, many prospective investors opted to keep their

money in banks or use item and buy empty lands for re-sale in future

than to risk the money by establishing any business at all.

[e] Psychological Factors such as: Lack of Self Confidence,

Lack of Creativity and Fear of Failure

Another factor that has seriously militates against the

establishment of small scale enterprise in Nigeria is psychological

factors. Although it has never been seen as a problem, but it has

eaten deep on young entrepreneurs. Most people don’t believe in

themselves, they think they can’t do it. They are always waiting for

others to take the lead or nothing for them. They also lack the

foresight to think ahead of others, no creativity in them. Always afraid

that the business must fail like other ones that failed. They think they

cannot make a difference and therefore there is no point in trying to

establish once. They make the money but the fear of the unknown

will not allow them to invest.

REFERENCES

Nwakobi, E. (1985): Small Scale Enterprise and the Economy. Feldman, C. (1989): The Importance of Small and medium Scale Enterprises. Broom and Longnecker (1972): The Impact of Entrepreneurial Development in an Economy. Huglice and Musselman (1973): Small Scale Enterprises and the Economy. Oshagbenius, J. (1985): The Impact of Small and Medium Scale Enterprises in Nigerian Economy. Yewande, M. (1991): The Role of Government in the Development of Small and Medium Scale Enterprise in an Economy.

CHAPTER THREE

RESEARCH METHODOLOGY AND DESIGN

This perhaps is the crux of the study and the background

against which the findings and conclusions are based. This phase of

the research consists therefore of the methods and approaches of

collecting information and data for the research purpose.

3.1. RESEARCH DESIGN

This is the major framework of collection, measurement and

analysis of data. The data used in this research came from two

broad services.

[a] Secondary Sources: - these sources of data were utilized

mainly in the review of related literature. This information was

obtaining from textbooks magazine, journals, published research

work, seminars workshops papers, micrograph etc.

[b] Primary Sources: -these sources of information were raw

data obtained through questionnaires and interviews. The

questionnaires were structured because of the simple fact that

respondents feel more at home with questionnaires than with those

that require them to indicate their responses. The questions were

unambiguous and easy to answer with enough spaces provided for

open-ended questions.

3.2. SAMPLE SIZE USED

In order to obtain an external validity and to make the study of

the problems which otherwise could not be undertaken due to the

limitations of financial resources time and other academic and social

demands. A population size of 103 respondents was used to help

analyze data from the questionnaires. In determining the sample

size, Yamani formular was used with the assumption of a confidence

level of 95%. This is:

n = N 1 + N (e2)

Where n = Sample size

N = Population = 103

e = Standard error or allowable error = 0.05

n = 130 = 130 1+ 130 (0.05)2 1.2575 = 81.9 n = 82 respondents

3.3. INSTRUMENT FOR DATA COLLECTION

Data collection is very crucial in any research process.

Questionnaire as a research instrument was mainly used for

collection of primary data. Nevertheless, the researcher had some

privileges of oral interview with some entrepreneurs of the selected

small business and some financial institutions to get information in

connection with small business financing as well as some of the

employees. A range of data from book, journals and reports was also

used.

3.5. VALIDITY AND RELIABILITY OF INSTRUMENT

Validity as used here is the degree or extent to which an

instrument actually measures what is it intended to measure.

Therefore an instruments is valid to the extent it is tailored to

achieve research objectives. Thus the instrument used for this

research was validated in a manner that will enable the researcher

get information relevant to the purpose and objective of the study.

3.6. METHOD OF DATA ANALYSIS

In the analysis of data collected, statistical method simple

percentages and tables were used for descriptive purpose and to

answer the research questions as well as described responses while

chi-square method of analysis were employed for testing of

hypothesis facts available.

This enables the researcher to draw a relevant conclusion,

based on the empirical facts available.

REFERENCES

Harper Boyd, Raph Westfall and Stanlves (1997): Marketing Research Test and cases (Illionois Richard D. Irwin Inc). Nwobi, F. N. Statistics 1 (An Introductory Text) Bon Publishers 1998. Marrin, Shaw and Jack Wright (1977): Scale for Measurement of Attitudes (New – York: Mc-Graw Hill Book Company).

CHAPTER FOUR

DATA PRESENTATION AND ANALYSIS

This chapter deals with the presentation, description and

analysis of data collected from the sample studies. The results

represent the answers by the respondents to the questionnaires and

interviews. Data obtained from these are shown with the aids of

tables. Respondents are grouped in accordance with their reactions

to each of the questions and their percentages computed against

total sample size. It is also in this chapter that the hypothesis earlier

formulated in chapter one will be tested.

TABLE 4.1.1.

SEX OF RESPONDENTS

SEX NO OF RESPONDENTS

PERCENTAGES

Male 50 61.0%

Female 32 39%

Total 82 100%

The above table shoes that men are more involved on

business establishment and in top management level than women in

Nigeria. But even at that, the number of women that set up of work at

the top level of management in various enterprises is encouraging.

TABLE 4.1.2

AGES OF THE RESPONDENT

AGE NO OF RESPONDENTS PERCENTAGES

20- 29 10 12.2%

30- 39 25 30.5%

39-49 30 36.6%

50 and above 17 20.7%

Total 82 100%

Source: Research Survey Study

The age distribution of the respondents is an interesting one.

Only 10 of 12.2% of the respondents were between the ages of 20 -

29. Between 30 -39 had 25 respondents which represent 30.5% of

the total sample. The highest number of the respondents were

between the ages of 39-40 which has 36.6% while above 50 of age

has 20.7% respectively.

TABLE 4.1.3

EDUCATION QUALIFICATION

QUALIFICATION NO. OF RESPONDENTS PERCENTAGES

University degrees

or its equivalent

20 24.4%

National diploma 12 14.6%

WAEC/GCE 35 42.7%

Primary School

certificate

15 18.3%

Total 82 100%

Source: Research Survey Study

The above table shows that we have more of WAEC/GCE

holders in business ownership more than any other group. Our

educated elite in small business ownership and management is only

24.4% against 42.7% of WAEC/GCE holders. Apparently, they are

busy pursuing big jobs in multinationals that may never come by.

Another interesting point to note here is that even a primary school

graduate can establish and own a small scale enterprise. They

represent about 18.3% of the respondent above national diploma

holders which least with 14.6%. But it is also good because it shows

that people don’t like being half graduates before into business.

TABLE 4.1.4

ROLE OF SMALL SCALE ENTERPRISES IN THE DEVELOPMENT

OF INDIGENOUS TECHNOLOGY CAPABILITY

CLASSIFICATIONS NO. OF RESPONDENTS PERCENTAGES

Major 48 58.5%

Minor 34 41.5%

Total 82 100%

Source: Research Survey Study

The table above shows that 48 or 58.5% of the respondents

were of the opinion that small scale enterprises have a major role to

play in the development of indigenous technology while 41.5% of the

respondents were of the opinion that it has a minor role to play in the

development of indigenous technology capability.

TABLE 4.1.5

LAND AND GOOD LOCATION AND SMALL SCALE ESTABLISHED

IN NIGERIA

CLASSIFICATION NO. OF RESPONDENTS PERCENTAGES

Major 42 51.2%

Minor 34 41.5%

Not at all 6 7.3%

Total 82 100%

Source: Research Survey Study

The table above shows that 42 respondents which represents

51.2% were of the opinion that land and good location for offices is a

major problem in the establishment of small scale enterprise while

41.5% of the respondents see it as a minor problem. Interestingly,

only 7.3% of the respondents did not see it as a problem.

TABLE 4.1.6

SOURCE OF INITIAL CAPITAL

OPTION NO. OF RESPONDENTS PERCENTAGES

Personal saving 25 30.5%

Loans from banks 12 14.6%

Government 15 18.35

Friends and relatives 30 36.6%

Total 82 100%

Source: Research Survey Study

The above table shows the different sources of initial capital for

the small businesses studied. As indicated in the table, friends and

relatives is the highest source of initial capital with 36.6%, followed by

personal savings with 30.5% while government and loans from bank

has 18.3% and 14.6% respectively.

Table 4.1.7

SUCCESSFUL APPLICATION FOR BANK LOANS

RESULTS NO. OF RESPONDENTS PERCENTAGES

Successful 36 43.9%

Unsuccessful 46 56.1%

Total 82 100%

Source: Research Survey Study

The table above shows that 36 respondents representing

43.9% of the total sample agreed that applications for banks loans

are usually successful while 50.1% are of the opinion that they are

usually unsuccessful.

TABLE 4.1.8

GOVERNMENT POLICIES AND ITS FAVORABILITIES IN

ESTABLISHMENT OF SMALL SCALE ENTERPRISES.

OPTION NO. OF RESPONDENTS PERCENTAGES

Fair 39 47.6%

Unfair 43 52.4%

Total 82 100%

Source: Research Survey Study

The above table shows that 52.4% of the respondents were of

the opinion that government policies were unfair to the establishment

of small scale enterprise, while 47.6 were of the opinion that the

policies are fair to the establishment of small businesses.

TABLE 4.1.9

CONSUMERS’ PREFERENCE TO IMPORTED GOODS AND ITS

EFFECT ON SMALL SCALE ESTABLISHMENT.

CLASSIFICATIONS NO. OF RESPONDENTS PERCENTAGES

Major 30 36.6%

Minor 40 48.8%

Not at all 12 14.6%

Total 82 100%

Source: Research Survey Study

The table above that 36.6% of the respondents were of the

opinion that consumers’ preference to imported goods adversely

affect the establishment of small scale business, while 48.8% and

14.6% of the respondents were of the opinion that it has a minor and

no effects on the establishment of small scale businesses.

TABLE 4.1.10

SOURCES OF RAW MATERIALS

CLASSIFICATIONS NO. OF RESPONDENTS PERCENTAGES

Local sourcing 26 31.7%

Foreign sourcing 16 19.5%

Both local and foreign 40 48.8%

Total 82 100%

Source: Research Survey Study

The table shows that 48.8% of the respondents indicated that

the sources of their raw material are both foreign and local, 19.5%

uses foreign imported raw materials while 31.7% source their raw

materials locally.

TABLE 4.1.11

SMALL SCALE ENTERPRISE AND UNVIABLE MARKET

CLASSIFICATIONS NO. OF RESPONDENTS PERCENTAGES

Yes 48 58.5%

No 34 41.5%

Total 82 100%

Source: Research Survey Study

The above table shows that lack of viable market is a major

problem in the establishment of small scale enterprise of small scale

enterprises. About 58.5% of the respondents confirmed this, what this

implies is that there is no enough market to stimulate business

establishment. However, 41.5% were of the opinion that it is not so.

4.2 HYPOTHESIS TESTING

Ho: Small scale has no role in the development of indigenous

technology capability.

Hi: Small scale has a role in the development of indigenous

technology capability.

CLASSIFICATION YES NO PERCENTAGES

Manufacturing 12 15 27

Servicing 18 5 23

Trading 10 4 14

Mixed operation 8 10 18

Total 48 34 82

Source: Research Survey Study 2008 (question 4.1.4)

Using the chi-square method of analysis

X2 = (O – E) 2 E

Where O = Observed value

E = Expected value

= Summation

And the expected value = Row total × Column Total Grand total Using 0.05 level of significance

Degree of freedom = (C- 1) (R – 1)

Where R = no. of rows and C = no. of columns

Degree of freedom = (2 – 1) (4 -1)

= 1 × 3 = 3

DECISION RULE: Reject the null hypothesis i.e. Ho if the calculated

value is greater than the table value otherwise do not reject Ho.

0 7.8

To calculate the expected value

R1C1 = 48 x 27 = 15.8 82 R1C2 = 34x 27 = 11. 2 82 R2C2 = 48 x 23 = 13.5 82 R2C2 = 34 x 23 = 9.5 82 R3C1 = 48 x 14 = 5.8 82 R4C1 = 48 x 18 = 10.5 82

R1C1 = 34x 18 = 7.5 82

O E O – E (O – E)2 (O – E)2 E

12 15.8 -3.8 14.44 0.9 15 11.2 3.8 14.44 1.3 18 13.5 4.5 20.25 1.5 5 9.5 -4.5 20.25 2.1 10 8.2 1.8 3.24 0.4 4 5.8 -1.8 3.24 0.6 8 10.5 -2.5 6.25 0.6 10 7.5 2.5 6.25 0.8

X2

3, 0.05 = (O – E)2/ E

X23, 0.05 = 8.2

Since the calculated value is greater than the table value, we

reject the null hypothesis Ho and conclude that small scale business

has a vital role in the development of indigenous technology

capability in Nigeria.

4.2.1 Ho: Government policies have not been favourable to the

establishment of small scale enterprise in Nigeria.

Hi: Government policies have been favourable to the

establishment of small scale enterprise in Nigeria.

CLASSIFICATION YES NO TOTAL

Manufacturing 14 16 30

Servicing 5 10 15

Trading 8 10 18

Mixed operation 12 7 19

Total 39 43 82

Source: Research Survey Study 2008 (Question 4.1.8)

Using the chi-square method of analysis

X2 = (O – E) 2 E

Where O = Observed value

E = Expected value

= Summation

And the expected value = Row Total × Column Total Grand Total Using 0.05 level of significance

Degree of freedom = C- 1) (R – 1)

Where R = No. of Rows and C = No. of Columns

Degree of freedom = (2 – 1) (4 -1)

= 1 × 3 = 3

DECISION RULE:

Reject the null hypothesis (Ho) if the calculated value is greater

than the table value otherwise do not reject Ho.

0 7.8

To calculate the expected value

R1C1 = 39 x 30 = 14.3 82 R1C2 = 43 x 30 = 15.7 82 R2C2 = 39 x 15 = 7.1 82 R2C2 = 43 x 15 = 7.9 82 R3C1 = 39 x 18 = 8.6 82

R3C2 = 43 x 18 = 9.4 82 R4C1 = 39 x 19 = 9 82 R1C2 = 43 x 19 = 10 82

O E O – E (O – E)2 (O – E)2 E

14 14.3 -0.3 0.09 0.006 16 15.7 0.3 0.09 0.006 5 7.1 -2.1 4.41 0.62 10 7.9 2.1 4.41 0.56 8 8.6 -0.6 0.36 0.04 10 9.4 0.6 0.36 0.04 12 9 3 9 1 7 10 -3 9 0.9

X2

3, 0.05 = (O – E)2/ E

X23, 0.05 = 3.172

Since the calculated value is less than the table value, we

accept Ho and conclude that government policies have not been

favourable to the establishment of small scale enterprise in Nigeria.

CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION

AND RECOMMENDATION

This research work “The Role of Small Scale Enterprises in the

Development of Indigenous Technology Capability in Nigeria” was

conducted with the use of questionnaire to sample the opinion of

traders on what impact has small scale enterprises in the

development of indigenous technology capability in Nigeria.

5.1 SUMMARY OF FINDINGS

The preceding analysis has revealed that small scale business

has a vital role in the development of indigenous technology

capability in Nigeria and through their wide dispersal. They should

provide an effective means of mitigating rural urban migration and

resources utilization. And this also will contributes in strengthening

industrial linkages by producing intermediate products for use in large

enterprise in Nigeria. The researcher also finds and showed that

government tax policies have not been favourable in the

establishment of small scale enterprises in Nigeria. Government

should know how it will be amending some of these tax policies they

feel is affecting the establishment of small business in order to

encourage more people into venturing into it. Government should

also encourage the growth of small business by giving them the

necessary assistance as regards to fund raising and equally advice

them on how to utilize it effectively.

5.2 CONCLUSIONS

Hardly can any major industry succeed without the services of

small business enterprises. The relative strength of their importance

varies from one industry to another. The role of small scale

businesses in the development of indigenous technology capability in

Nigeria cannot be over-estimated. Firstly, the continuing growth in the

economy of any nation depends to a large extent on the start ups of

small businesses, which depends on locally fabricated machinery and

local raw material inputs. Secondly, it is a considerable solution to

balance of payment problems resulting from less dependence on

imported inputs and also serves as a training school for the

indigenous entrepreneurs and provides grounds for the acquisition of

skill for a large number of workers.

5.3. RECOMMENDATIONS

The researcher after discussed the findings and conclusions

recommended that the small scale business contributes in

strengthening industrial linkages by producing intermediate products

for use in large enterprise in Nigeria. The researcher also showed

that government tax policies have not been favourable in the

establishment of small scale enterprises in Nigeria for many years

now. So government should know how it will be amending some of

these tax policies they feel is affecting the establishment of small

business in order to encourage more people into venturing into it.

Government should also encourage the growth of small business by

giving them the necessary assistance as regards to fund raising and

equally advice them on how to utilize it effectively.

Also, small businesses should form mergers; by this their

capital would be placed in a better position when dealing with lending

institutions. Their tax burden will not be heavily felt again.

BIBLIOGRAPHY

Akpata, B. (1990): The Role of Entrepreneurship in Business.

Broom, and Longnecker (1972): The Impact of Entreprenuerial Development in an Economy.

Ezeh, J. (1997): The Role of Small scale Business in Nigeria

Economy. Feldman, C. (1989): The Importance of Small and Medium Scale

Enterprises. Harper Boyd, Ralph Westfall and Stanlves (1997): Marketing

Research Test and Cases (Illinois Richard D. Irwin Inc). Huglice, and Musselman (1973): Small scale Enterprises and the

Economy. Martin, Shaw and Jack Wright (1977): Scale for Measurement of

Attitude (New York: Mc Graw Hill book company). Nwakobi, E. (1985): Small scale Enterprise and the Economy.

Nwobi, F.N. Statistics 1 (An Introductory Text) Bon Publishers 1998.

Oshagbenius, J. (1985): The Impact of Small and Medium Scale Enterprises in Nigerian Economy.

Waboi, A. (1987): The Impact of Small and Medium Scale Business

in an Economy. Yewande, M. (1991): The Role of Government in the Development of

Small and Medium Scale Enterprise in an Economy.

APPENDIX A

INTRODUCTORY LETTER

Faculty of Business Administration University of Nigeria Enugu Campus Enugu. Dear respondent This questionnaire is designed by a post graduate student of

University of Nigeria, Enugu Campus. It is meant for collecting

statistical data for a study titled “The Role of Small Business in the

Development of Indigenous Technology Capability in Nigeria”. This is

in partial fulfillment for the award of MBA (Management) degree. You

are please required to tick where appropriate. Be assured that all

information supplied will be treated with utmost confidentiality.

Yours faithfully UMEH UZOCHUKWU .F.

PG/MBA/06/46320

APPENDIX B

QUESTIONNAIRE

[a] What are the roles of small scale enterprises in the

development of indigenous technology?

i. Major [ ]

ii. Minor [ ]

iii. Not at all [ ]

[b] Has lack of land and good location been a problem in the

establishment of small scale enterprise in Nigeria?

i. Yes [ ]

ii. No [ ]

[c] Does epileptic power supply in Nigeria hinders establishment of

small business enterprises?

i. Yes [ ]

ii. No [ ]

iii. Not at all [ ]

[d] Has unavailability of raw materials been a problem in

establishment of small scale enterprise?

i. Yes [ ]

ii. No [ ]

iii. Not at all [ ]

[e] Have government policies been unfavourable to establishment

of small scale enterprise in Nigeria?

i. Yes [ ]

ii. No [ ]

iii. Not at all [ ]

[f] Does the consumers’ preference to import goods adversely

affect the establishment of small scale enterprise in Nigeria?

i. Yes [ ]

ii. No [ ]

iii. Not at all [ ]

[g] Has establishment of small scale enterprise been hindered by

unviable market?

i. Yes [ ]

ii. No [ ]

iii. Not at all [ ]

[h] What are the average sources of your initial capital?

i. Personal saving [ ]

ii. Friends and relatives [ ]

iii. Loans from banks [ ]

iv. From government [ ]

[i] How successful are your applications for bank loans?

a. Successful [ ]

b. Unsuccessful [ ]

[j] What are the sources of your raw material?

i. Local [ ]

ii. Foreign [ ]

[k] Does lack of machines & equipment impede the establishment

of small scale enterprise?

i. Yes [ ]

ii. No [ ]

[l] Does psychological factors such as lack of confidence, lack of

creativity, fear of failure, been a problem in establishment of

small scale enterprise?

i. Yes [ ]

ii. No [ ]