THE ROLE OF FEDERAL GOVERNMENT IN THE PROMOTION OF SMALL AND MEDIUM SCALE ENTERPRISE IN NIGERIA

CHAPTER ONE

1. INTRODUCTION

Small and medium scale business constitute an important component of the Nigerian industrial sector. The importance of this sector cannot be over emphasized, especially in a typical developing country like ours where the level of youth unemployment is rising beyond control. Hence small and medium scale industries generate employment opportunities per unit of capital investment because they are generally more labour intensive which are more capital in nature. A large scale industry that cost N20million for instance, may employ a mere 70 (seventy) workers or less. Where as a small and medium scale industry that cost just N150,000 (one hundred and fifty thousand naira) may employ about 20-30 workers.

Small and medium scale business specialized in the production and marketing of various products and services ranging from food, beverages, drinks/sachet water, cosmetics, spare parts and many others.

Kilby (1969) acknowledge the diversity of terms of the degree of specialization and division of labour and the quantity of raw materials and output and the character of markets being served by small and medium scale businesses. As a result the bulk of Nigerian business falls within the small and medium scale business which account for over 80% of the number of enterprises in the country. (Ekunna 1992 Pg.160)

Several number of small and medium scale business are successful while other fail or are staggering for survival due to poor background management, lack of qualified manpower, poor capital base, lack of marketing research and appropriate technology and credit rating among banks and other lenders. These problems continue to militate against the establishment, survival and growth of small and medium scale business in Nigeria. Although successful government in Nigeria have been emphasizing on the importance of small and medium scale business and have established institutional support agencies to facilitate industrialization.

However, small and medium scale business still operate in uncertainty and are faced with serious obstacles, this raises the questions of whether  the federal government is actually up to the responsibility in the promotion of small and medium scale business in Nigeria.

1. 1. OBJECTIVE OF THE ESSAY

The main objectives of this study is to evaluate the impact of federal government in the promotion of small and medium scale business in Nigeria. This study will specially seek to achieve the following:

1. To evaluate the marketing challenges facing small and medium scale businesses.
2. To identify the sources of funds to the activities of the industry.
3. To find out the extent of government involvement in  promoting the activities of the business.
4. To bring to light the contribution of the industry to the development of national diploma in marketing.

Finally, it is myhope that the students of marketing and others in related discipline will find this study very informative and useful tool in their respective studies.

1. 1. SCOPE OF THE STUDY

As the title of this essay indicates, the study focuses its attention to federal government support to small and medium scale business enterprises in Nigeria, it causes various policy, guidelines, direct and indirect financial assistance and other programs and initiatives designed to promote this vital sector of the country.

1. 1. SIGNIFICANCE OF THE ESSAY

The significance of this study lies basically on its contribution to knowledge and its benefits to individual and organization. The current economic crises in Nigeria has deciminated the growth of infant industries and encourages the establishment of similar business venture in both small and large scale proportions.

Although successful governments have vowed to support individuals and group initiatives in the establishment of small and medium scale businesses.

The current state of most small and medium scale business in Nigeria is a far cry particularly when structural adjustment programme (SAP) was introduced, which brought about the problem of devaluation of the naira and the scarcity of foreign exchange of raw materials from abroad which has adversely affected production unit especially under a depressed economy.

This study is an attempt to evaluate the role of government in the promotion of small and medium scale business in Nigeria as a country.

1. 1. DEFINITION OF TERMS

The following terms and abbreviations used in the extended essay are defined below:

1. (SSICS) Small and medium scale Industries Credit Scheme

(SME)  Enterprises

(NIDB) Nigerian Industrial Development Bank

(NERFUND) National Economic Reconstruction Fund

(NDE) National Directorate of Employment

1. Small and medium scale enterprise: Apart from size, it is a type of business that is self initiated, largely self financial, closely self managed and is of relatively small in size when considered as part of the industry.
2. Management: Is the part of loaning organizing, directing and motivating others so as to enhance productivity with maximum utilization of available resources and achieving the organizational goals or objectives.

1. Resources: These are the primary inputs that needs to be put together into function before the proper management activities really take place. These activities include; men, materials , money and machines.

1. Enterprises: This is one of the fundamental principles of management that is concerned with the division of labour and assigning of responsibilities with authority for the well being of business unit.