GOVERNMENT REGULATIONS AND THEIR IMPACT ON THE GROWTH OF SMALL-SCALE INDUSTRIES IN NIGERIA

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ABSTRACT

The main objective of this were (1) to identify how government regulations help in the growth of small-scale industries in Nigeria; (2) To examine the impact the impact of the government regulations in the growth of the small-scale industries (3) To make recommendations on any lapses in government regulations for the growth of small-scale industries in the country and (4) To fill a research gap on the merit and demerit of government regulations in the growth of the small-scale industries in the country. To enable the research to make his findings, it was hypothesized that (1) the greater the number of small-scale industries in Nigeria, the greater their role in rural transformation (development); (2) The positive impact of government regulations of small-scale industries would be possible when the have access to loanable funds for Expansion, and (3) the greater the inadence of bureaucratic corruptive, the higher the failure of the small-scale industries’ access to loanable funds for development. In the methodology, the researcher utilized samples, used respondents from Plateau, Nasarawa, Abuja, Benue for our survey.  The chi-square was used for data analysis, while the popular questionnaire of Yes-No type were used to measure the response in the questionnaire.

The findings were that:

  1. Government regulations have both negative and positive impaction the growth of small-scale enterprises in Nigeria.
  2. Bribery and corruption practices by bankers and government officials negate the ideas of granting loans to the small-scale industries for development of our communities.
  3. Small-scale entrepreneurs should have access to investment capital in order to get Nigeria economy out of the woods.
  4. There should be an equity investment scheme that should require each bank in the country to set aside 10% of its profit before tax annually to make equity investment in small-scale industries.
  5. Banks should be involved in the running of small-scale industries to ensure judicious utilization of funds disbursed to small-scale industries.
  6. The peasants must be assisted through loan and expert advice in the need to invest in small-scale industries for rural development.
  7. The federal and state governments should provide infrastructure and social services in order to give some logistic support for the growth of small scale industries.
  8. Major companies that are beneficiaries of major contract in Nigeria should be encourage by government to give priority to SMEs with relevant competence when giving our sub-contract.
  9. Too operate a business in Nigeria as of now, you need to purchase your own power generator, sunk your own borehole for water and other necessary infrastructural facilities.  Government should improve the performance of these infrastructure to reduce the high cost of doing business and thus ensure the survival of SMEs.
  10. The number of government approving agencies should be streamlined while unstable exchange rates, high interest rates and un-cooperative attitude of government official should be addressed.

TABLE OF CONTENT

Title Page

Certification Page

Dedication

Acknowledgement

Abstract

Table of contents

List of Abbreviations

List of Tables

CHAPTER ONE: INTRODUCTION

1.1       Background of the study

1.2       Statement of the problem

1.3       Objectives of the Research

1.4       Research Hypothesis

1.5       Significance of the research

1.6       Limitations of the research

References

CHAPTER TWO: LITERATURE REVIEW

2.1       Legal Environment of Business in Nigeria

2.2       Political Environment in Nigeria and Business growth

2.3       Government regulatory Agencies and the Growth of Business

2.4       International Environment and the Growth of SSIs in Nigeria.

2.5       The classification of Business Enterprises in Nigeria and the SSIs.

2.6       Small-Scale Industry and Ambiguous concept.

2.7       Re-organization of Development Finance Institutions and the Funding of SSIs in Nigeria

2.8       Commercial Banks and Assistance to SSIs in Nigeria

2.9       Measures by Government to enhance the access of Micro, Small and Medium Enterprises to Institutional Credit.

2.10    Yar’Adua’s Administration and the funding of SMES in Nigeria

2.11    Problems of SME operators and Adequate Collateral Securities

2.12    Government and the Expansion of Incentives to SME

2.13    The UNPP Assistance in SME Development in Nigeria (Programme Achievements).

2.14    UNPP Assistance to Nigerian SMEs and their capacity Building

2.15    UNPP Assisted Proigramme in Nigeria and the SME’s operational, Financial, and Management Issues.

2.16    Impact of UNDP Assisted programmes in Nigeria on the SMES

2.17    Characteristics of small-scale Business in Nigeria

2.18    Problems of Small-Scale Business

2.19    Delegation of Authority in SSIs

2.20    The Role of SSIs in the Nigerian Economy

2.21    Nigeria’s Indigenization Policy and the Growth of SSIs in the country

2.22    Structural Adjustment Programme (SAP) and the growth of SSIs in Nigeria.

2.23    Privatization, Commercialization and their impact on the Growth of SSIs in Nigeria.

References

CHAPTER   THREE: RESEARCH METHODOLOGY

3.1       Scope of the study

3.2       The Target population

3.3       The sample size

3.4       Research Design

3.5       Sampling method

3.6       Techniques for Data Analysis

3.7       Operational Definition of Terms

            References

CHAPTER FOUR: DATA ANALYSIS

4.1       Government policy

4.2       Testing of Hypothesis

References

CHAPTER FIVE: CONCLUSION AND RECOMMENDATION

5.1       Conclusion

5.2       Recommendations

            References

Appendix 

LIST OF ABBREVIATION

BI                                Bank of Industries

CBN                            Central Bank of Nigeria

DFI                              Development Fund Institutions

FEAP                          Family Economic Advancement Programme

GATT                         General Agreements on Tariffs and Tr

GCCC                         Government Cash Counter-part Contribution

G7                               Group of Seven Most Economically Development Country

ILO                             International Labour Organisation

IMF                             International Monetary Fund

NACB             Nigeria Agricultural Credit Bank

NASSI                        National Association of Small Scale Industry

NBCI                          Nigeria Bank for Commerce and Industry

NCGS                         National Credit Guarantee Scheme

NERFUND                 National Economic Reconstruction Fund

NIDB                          Nigerian Industrial Development Bank

NGOS                         Non-governmental Organisations

NSE                            Nigeria Stock Exchange

NPDF                          Nigeria Project Development Facility

OPS                             Organized Private Sector

PSO                             Private Sector Organisation

SAP                             Structural Adjustment Programme

SSPP                           SAP Standard Policy Package

SEMS                         Stock Exchange Management Systems Sopt

SME                            Small and Medium Enterprises

SMEDFUND             Small and Medium Enterprise Development

SON                            Standard Organization of Nigeria

TG                               Trade Groups

UAC                           United African Company

UNDP                         United Nations Development Programme

USD                            United States Dollar           

CHAPTER ONE

INTRODUCTION

1.1       BACKGROUND OF THE STUDY

Nigeria is a mixed economy with a positive leaning towards a free-market economic system. The provisions of the Nigerian constitution (1999) summarize the objectives of this economic system, namely that:

  1. The state shall control the national economic in such a manner as the secure the maximum welfare, freedom and happiness of every citizen on the basis of social justice and equality of status and opportunity;
  2. The state shall manage the major sectors of the economy (defense, currency, banking, import, export, military, aviation, railways, active part in other resources, agriculture, industrial development, etc)
  3. The state shall, without prejudice to the right of any person to participate in areas within the major sector of the economy project the right of every citizen to engage in any economic activities outside the major sectors of the economy.
  4. The state shall direct policy towards ensuring:
  5. The promotion of a planned and balanced economic development;
  6. That the material resources of the community are harnessed and distributed as best as possible to serve the common good;
  7. That the economic system is not operated in such a manner as to permit the concentration of wealth or means of production and exchange in the hands of few individuals or of a group; and,
  8. That suitable and adequate shelter, suitable and adequate food, reasonable national minimum living wage, old age care and pensions, and unemployment and sick benefits are provided for all citizens.

It can be seen that the above national economic objective provide a marriage between the two principal economic systems- the market economy and the command economy. It provides checks and balances to ensure that the abuses and disadvantages of either system are minimized or completely eliminated. The question that remain however, is a statement of how for these laudable economic objectives have been achieve in Nigeria.

It can be stated categorically that the state, through legislation, has been in full control national economy and that individual citizens have been free to engage in private enterprises, but the combination have not been such that has granted maximum welfare, and happiness, for the majority of people nor has to provided suitable, and reasonable food, clothing or shelter for all citizens. There has been concentration of wealth and means of production in the hands of few individuals so that the majority of people are writing in the pangs of abject poverty, hunger, ignorance, disease and death (A.U Inegbenebor and Essosa Bob Osaze (199:13-14).

The reasons for this colossal failure in realizing the promises of the economic objectives are to be found more in the political than in the economic arena. Political instability military interregnum, tribal politics and selfishness of leaders, general misrule, among many other political ills, have combined to thwart the notable constitutional economic objectives. Governments have been run in such a way as to create massive economic inequalities and disaffection among the populace. The economy has witnessed excessive money supply as the government mint rolled out the fifty, hundred, two hundred and five hundred naira currency notes in the billions. Combined with the very high tastes of the few rich for foreign ensured a very how and continuously dwindling  naira value.

Nigerian business have been the worse for all these. An unstable political system has left the business scene highly assess have had to fold up or drastically reduce capacity utilization. Lacking of continuity and stability from all business sectors, economic growth has steadily been in the decline, especially when measured in real terms.

Another aspect of the setting of this research is the development of business (history) in Nigeria. Every human society develops some means of producing and distributing the goods and services that it needs. The history of business in Nigeria can be conveniently divided into pre-colonial, colonial and post colonial periods. In the pre-colonial era, several complex civilizations had developed in the forest zone of the west coast of Africa and the Sudan. The civilizations, especially Ghana, Songhai, Mali, Kanem-Bornu, Ife, Oyo and Benin kingdoms built their economic on conquest, agriculture, craft industries and trading between Sudan and North Africa, the trans-Saharan trade in gold, Ivory, Kolanuts, salt, cloths and slaves flourished for several centuries. Other trade routes also developed along major rivers such as the Chad Basin area, Senegal, Niger, and Volta Rivers as well the Niger-Delta (pr the oil Rivers protectorate).

Along the trade routes, major commercial centres such as Timbuktu quickly developed. Market squares became characteristics features of the major cities of the kingdoms. In these commercial centres, local merchants emerged as intermediaries between producers in the interior and buyers at the terminus of the trade routes. These merchants performed the typical functions of middlemen including control of the trade, Identification and selection, machinery sourcing conduct of market studies and preparation of feasibility studies.

Again, the central role which government ascribed to small-scale industrial activities in its strategy for economic restructuring and growth informed its decision to utilize United Nations Development Programme’s (UNDP) technical assistance to supplement key components of the national programme during the 4th country programme 1992-1996. UNDP support was targeted at the five component areas considered essential for an enterprise to perform effectively. It assisted in improving the regulatory framework for policy, planning and institutional development to ensure that the new private sector led growth strategy with the active participation of small-scale industries/industrialists is properly articulated and implemented government’s efforts at industrial infrastructure facilities development.

However, the economic policy Blueprint released by the Obasanjo administration to guide economic reinvention and reengineering for the period 199-2003 apportions high priority to agriculture, manufacturing, small/medium enterprises and the informal sectors as key instruments for achieving the targeted goals enumerated in the policy (Business Time, July 19,- 15, 2001, P.6).

There is little doubt that it has been fully realized and acknowledged; that an energized and fully functional small-scale industrial scale-sector has the potential of transforming the industrial base of the country as well serve as the propellant for the much needed economic rejuvenation.

The contribution of SMEs to the industrialization process is still generally low in Nigeria compared to countries with similar backgrounds in South East Asia Latin America. Although efforts have been made by many successive governments, right from independence to promote SMEs in the industrialization process, the development of the sub-sector has been constrained by a number of factors, both internal and external.

According to Chief Kola Jamodu, the minister of industry these factors include:

  1. Unstable macro-economic environment;
  2. Inconsistent character of policy measures
  3. Poor implementation and coordination of efforts on SMEs;
  4. Absence of suitable institutional mechanism;
  5. Poor Infrastructural facilities; i.e. roads/railway systems, water supply electricity telecommunications, etc and
  6. Lack of effective financial support systems (Ibid).

In addition to the fore-going, the SMEs in Nigeria was also handicapped by their peculiar internal characteristics, which manifest in the following forms of state-owned enterprises was very poor. The enterprises became a major drain on government revenues. With this background and the adoption of the structural Adjustment programme in 1986, government decided to privatize or commercialize many of its business ventures.

1.2       STATEMENT OF THE PROBLEM

GOVERNMENT REGULATIONS AND THEIR IMPACT ON THE GROWTH OF SMALL-SCALE INDUSTRIES IN NIGERIA