ISSUES, CHALLENGES AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN AFRICA (A survey of Small and Medium Scale Enterprises in Nigeria) (INDUSTRIAL RELATION AND PERSONNEL MANAGEMENT PROJECT TOPICS AND MATERIALS)
ABSTRACT
The purpose of this research is to discuss Issues, Challenges and Prospects of Small and Medium Scale Enterprises (SME) in Lagos, Nigeria.This came about due to the high rate of unemployment in the society and the poor performance of SMEs in terms of employment generation. While the research questions address the extent to which poor financing, inadequate social infrastructure, lack of managerial skills and multiple taxation constitute major challenges in the performance of SMEs in Nigeria, it assumes that government intervention through the provision of financial assistance, social infrastructures and favorable taxation policies will reverse this trend.
This research will replicate the model used by Agwu M.O and Emeti C.I in a research conducted in PortHarcourt city, the research which also tends to investigate a similar topic Issues, Challenges and Prospects of SMEs in the PortHarcourt city. A descriptive research approach using 115 randomly selected registered operators of SMEs in Lagos, Nigeria will used in this particular research.Results from the data analysis indicated that poor financing, inadequate social infrastructure, lack of managerial skills and multiple taxation were major challenges confronting SMEs in Lagos Nigeria, thus Agwu M.O and C.I Emeti in their Journal titled European Journal of Sustainable Development (2014), 3, 1, 101114 recommended: provision of soft loans to SME operators, government guaranteeing of longterm loans to SME operators, establishment of SME funding agency, public/private sector partnership in infrastructural provision /development, capacity building for SME operators and provision of tax incentives for SME operators.
- INTRODUCTION
Small and mediumsized enterprises (SMEs) are widely considered the engine room of economic growth and development in many developing countries as well as in countries with economies in transition. According to the executive summary of the OECD report on (Promoting SMEs for Development: The Enabling Environment and Trade and Investment Capacity Building in 2004, pg 5) “SMEs play a key role in transition for developing countries. These firms typically account for more than 90% of all firms outside the agricultural sector and constitute a major source of employment, generate significant domestic and export earnings. As such, SME development emerges as a key instrument in poverty reduction efforts.” SMEs are in a better position to increase employment, promote industrialization and improve the contribution of non oil exports to government purse.
Small and mediumsized enterprises (SMEs) have been increasingly recognized as a major platform by which many African countries can become developed owing to their existing contribution and capability to further drive the entire African continent to a developed status. According to Charles Yeboah Frimpong in his article on SMEs As An Engine Of Social And Economic Development In Africa (July 2013), For example, “it is estimated that SMEs account for 70 percent of Ghana’s gross domestic product (GDP) and 92 percent of its businesses. They also make up 91 percent of formalized businesses in South Africa and 70 percent of the manufacturing sector in Nigeria”. SMEs are not only the engine of the economy, but can also serve as a stimulus for economic diversification in other sectors of the economy. SMEs with innovative technology have the potential to internationalize and enter foreign markets both regionally and globally. Support for SMEs have the capacity to significantly improve the standard of living of the populace and improve the economy of not only many countries in subSaharan Africa but the African continent as a whole
