THE EFFECT OF GOVERNMENT ECONOMIC POLICIES ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISE
ABSTRACT
It is recorded that 99 per cent of the business bodies in Nigeria are MSMEs which has been an instrumental component in GDP and hub for work opportunities. Even so the identification of the important roles SMEs play in Nigeria, their evolution is mostly bounded by a number of elements, such as the existence of laws, ordinances, and rules that frustrate the growth of the sector. The study reviews the relationship between government policies and small and medium enterprises (SMEs) performance in Nigeria. The study offered some relevant recommendations to policy makers, entrepreneurs, and SME managers to ensure the appropriate scheme to improve the SME sector in Nigeria.
CHATER ONE
INTRODUCTION
1.1 Background of the study
Hanson (1966), a renowned economist stated in a textbook of economics “that one of the principal aims of economics policies of government throughout the world is to improve the standard of living of their people. That, the standard of living of people directly depends to a large extent on the size of the National Income”. So, the resultant effect of an effective management of available resources in any economy is growth in the Nation’s Gross Domestic Product (GDP) which is directly involved in the management of resources in any economy, which are the organized private sectors, the public sector and most importantly the government. This invariably shows that the main aim of all these economic exercises is to better the living standard of the people, given the different economic and political environments in which they operate. The managers of these resources are guided by some rules and regulations emanating from or instituted by that environment to reduce short fall that might be experienced in the process of managing this economic resources such as inflation, deflation, and economic recession. In a capital economy emphasis is placed on free enterprise while private ownership of economic resources is highly encouraged. The capital economy is also known as a market economy which allows for the inter-play of demand and supply forces. Therefore, the policies made there are directed toward the exploitation and manipulation of economic resources and the development of the citizenry in general. While in a social economy, there is government ownership of productive resources. Policy formulation and distribution of productive resources is done with some application of force by the government in a bid to equitably distribute resources amongst people in the society.In Nigeria, since independence, the major aim of government that have come and gone(that is talking about military and civilian) is to achieve high degree of industrialization which will help in the adequate capitalization resuscitation of available resources. But with Nigeria, according to Chief S. B. Falegan (1987), writing an introduction to his book “Redesigning Nigerian’s Financial System” said “The potential economic environment is high but the political, social, and cultural conditions do not readily facilitate efficiency of resource manipulation. As a result of these disproportional politics, economic development has been a meandering slackness on the development of productive resources. Because of these, the developments of the nation industries (the large scale, middle scale and small scale industries) have been highly effected. As a measure to curb these retardants effect or add some growth incentives, the Federal Government of Nigeria had over the years been promulgating economic policies. These government economic policies are made to induce steady tool used by the federal government to regulate the economy and the fiscal and monetary policies. Government also issue other policies, such as the income policy guidelines, dividend rates to be paid to shareholders, customs tariff, and etc. Over the years, since the introducing of the Structural Adjustment Programme (SAP) which is one of the major federal government policies, a section of the industrial sector, the small scale industrialist have been having their business impinged on by these government policies.
Therefore, from happenings in the business industry, past and present observation and statistics of fallen businesses or growth of some businesses have shown that government policies have a high degree of impact on the development of small scale industries.
THE EFFECT OF GOVERNMENT ECONOMIC POLICIES ON THE PERFORMANCE OF SMALL AND MEDIUM SCALE ENTERPRISE
