CHAPTER ONE
INTRODUCTION
1.1
Background
to the Study
Small Scale enterprise has long
believed to be catalysts for economic growth and national development both in
developed and developing countries. In Nigeria where private sector is not well
developed Small Scale business assumed to play the role of employment
generation, facilitator of economic recovery and national development. The performance and effectiveness of Small Scale Enterprises
as an instrument of economic growth and
development in Nigeria has long been under scrutiny. This intense
scrutiny has been against the backdrop of the low performance and inefficiency
that characterized Small and Scale Enterprise particularly in assessing its
role on economic growth and development. Ojo (2013)
Despite government institutional and
policies support to enhancing the capacity of Small Scale Enterprises, Small Scale enterprise has fallen short of
expectations. This has generated serious concern and scientism on whether Small
Scale business can bring about economic growth and
national developments in Nigeria. The concern is even more disturbing when
comparing Small Scale enterprise in Nigeria with other countries
particularly where SSE has become harbinger of economic reconstruction and
transformation. (Ihua; 2009)
In
the case of Nigeria, Small Scale business enterprise have performed at very abysmal
level. This low performance has further exacerbated poverty, hunger
unemployment and low standard of living of
people in a country whose economics is ailing, Oni, (2012)
The current problems of hunger
poverty and unemployment have undermined the capacity of the economy and Small
and medium Scale Enterprises are seen
as mechanism for intervention to addressing these long term problem of the
economy, unfortunately, have not been able
to propel economic growth, Nworgu , (2013)
The development of Small – Scale industries is not only
an effective way of contributing to the economy and increase standard of
living, but also one of the principle means of achieving social and political
objectives by stemming the problem of rural-urban migration, increasing the income
of low income earners, all of which are of crucial importance to our societies,
CBN, (2012)
Consequently, both the federal and state government and
recently, local government have stepped off to promote the development of Small
Scale Enterprises through increase incentives
schemes, including enhanced budgeting allocation for technical assistance
programme. New leading scheme and credit
institution have also emerged at both the National and local level to boost the
flow of development finance to Small Scale enterprise, FGN, (2011)
In trying to promote Small Scale industry there is need to understand
that the entrepreneurs are face with the problem of managing the enterprise and
the extend of realization of it contribution to the economy depends on how they
are cogently identified and tackled, FGN, (2011)
The problem of managing the Small Scale Enterprises are caused by both external and
internal factors. The external factors
are government policies, lack of infrastructural facilities, raw materials,
banks unwillingness to give out loan etc internal factor are lack of managerial
skill, lack of planning, market, finance etc.
It is against this background that this study intend to
examine the
problem of managing Small Scale
enterprise in Ijebu Ode Local Government.
1.2 Statement
of Research Problems
Majority of the Small Scale Enterprises (SSE) in Nigeria are still at a
low level of development, especially in terms of number of jobs, wealth and
value creation. This is because 65% of the active populations, who are majorly
entrepreneurs, remain unserved by the formal financial institutions. The CBN in
2012 identified the unwillingness of conventional banks to support micro- Enterprises, paucity of loanable funds,
absence of support institutions in the sector, as well as weak institutional
and managerial capacity of existing microfinance institutions among other
reasons as the major reasons for the failure of past Small Scale Enterprises (SSE) initiatives in the country.
Despite the
potential importance of Small Scale Enterprises in any economy, poor management , lack of manpower training , low productivity , in
effective leadership styleand other managerial issues influnce the performance
of Small Scale enterprise , this is a pointer to the fact that there is a
problem. The indispensable role of Small Scale Enterprises (SSE) in Nigeria therefore makes
it imperative to study the extent to which solving the problems of managing Small
Scale enterprise can enhance Small business
survival.
1.3 Objectives of the Study
The aim of this study is to examine the
problem of managing Small Scale
enterprise in Ijebu Ode Local Government. (A case study of some selected Small Scale enterprise)
The specific objectives are to:
(i)
Examine the effects of poor management on Small Scale enterprise.
(ii)
Determine how the effects of poor management affect the growth and
development of Small Scale enterprise.
(iii) Investigate
the relationship between in training services and effective productivity.
(iv) Determine how type of leadership influnce the performance of Small Scale enterprise .
1.4 Research Questions
i.
What are the effects of
poor management on Small Scale
enterprise?
ii.
What are the effects of
poor management on growth and development of Small Scale enterprise?
iii.
What are the relationships between in training
services productivity?
iv.
How do leadership style influnce the performance of Small Scale enterprise?
1.5 Research Hypotheses
Ho1:
Poor management has no significant effect on growth of Small Scale enterprise.
Ho2:
Poor management has no
significant effect on the growth and development of Small Scale enterprise.
Ho3: In training
services has no significant effect on effective productivity in Small Scale enterprise.
Ho 4 : Type of
leadership does not influnce the performance of Small Scale enterprise
1.6 Significance of the Study
A
significant amount of empirical research has been carried out both within and
outside the country on problem of managing Small Scale enterprise ( Kotir and Obeg-odom, 2009; Ogunrinola and
Alege, 2007; Pronyk, Hargreaves and
Morduch, 2007; Matouv, 2006; Khandker, 2005;
Morduch and Haley, 2002). It has been observed from the literature, that
most research works treated management as a solution to the problem.
This
study therefore becomes significant in filling this observed gap by testing
empirically the impact problem of managing Small Scale business on Small enterprisegrowth/survival
and by examining the capability of Microfinance institutions in enhancing the
expansion capacity of Small businesses in Nigeria. The study also contributes
to the literature on microfinance and Small business survival.
The study is expected to assist Small Scale enterprise
in solving the problem of managing Small Scale enterprise. For owners and
managers of micro and small businesses, access to a study like this can aid
their understanding of current challenges and reveal the essential factors that
promote Small enterprise growth and survival and thus enable them to focus on
the relevant ones in an attempt to enhance their growth and performance.
1.7 Scope of the Study
The study provides
insight into problem of managing Small Scale enterprise in Ijebu Ode local
government area. Five selected Small Scale enterprise in Ijebu Ode were studied,
this include:
i.
Infinity Food Irewon
ii.
FA Feed Mill , Ibadan garage
iii.
Rabiu farm , Folagbade
iv.
Thoko Thaya Ventures , Folagbade
v.
Bisrod Furniture Ijarin
1.8 Limitation
of the Study
Some
limitation encountered in the course of this study include: time, financial
constraint, lack of materials, e t c. However efforts were made to prevent
these limitations from having any negative effects on this study.
1.9 Definition of Terms
·
Micro enterprise: Micro- enterprise is
the informally organized enterpriseactivity undertaken by entrepreneurs;
excluding crop production by convention, employing less than ten people and
having assets less than N5 million excluding land and building.
·
Small enterprise: Small enterprise is
any enterprise that employs between ten (10) to forty-nine (49) people and has
asset worth (excluding land and building) between N5 million and N50
million.
·
Medium enterprise: Medium enterprise is
any enterprise that employs between fifty (50) and one hundred and ninety–nine
(199) people and has assets worth (excluding land and building) between N50
million and N500 million (SMEDAN, 2007).
·
Microfinance Banks: Microfinance Banks
are licensed financial institutions meant to serve the un-served,
both economically active clients in the rural and peri-urban areas by providing diversified, affordable and
dependable financial services to the active poor, in a timely and competitive
manner, which would enable them to undertake and develop long-term, sustainable
entrepreneurial activities and mobilize savings for intermediation (CBN, 2005).
·
Microfinance Institutions: Microfinance
Institutions are organizations whose activities consist wholly or in
significant part, of the provision of financial services to micro
entrepreneurs.
·
Microfinance: Microfinance denotes the
provision of financial services adapted to the needs of low income people such
as micro-entrepreneurs, especially the provision of Small loans, acceptance of Small
savings deposits and simple payment services needed by micro-entrepreneurs and
other poor people (USAID, 2005).
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