THE ROLE OF SMALL SCALE INDUSTRIES IN ECONOMIC DIVERSIFICATION

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THE ROLE OF SMALL SCALE INDUSTRIES IN ECONOMIC DIVERSIFICATION

Title                                                                         page Acknowledgement         i

Certification……………………………………………………………………………………. ii

Table of contents……………………………………………………………………………… iii-v

Definition of terms…………………………………………………………………………… vi

Abstract………………………………………………………………………………………….. ,vii

Chapter one: Introduction

  1. Background………………………………………………………………………………….. 1
    1. Statement of the problem………………………………………………………………… 2
    1. Objectives of the study…………………………………………………………………… 3
    1. Research questions………………………………………………………………………… 4
    1. Research hypothesis………………………………………………………………………. 4
    1. Significance of study……………………………………………………………………… 5
    1. Scope of study………………………………………………………………………………. 5
    1. Research methodology…………………………………………………………………… 5
    1. Conceptual clarification………………………………………………………………….. 5

1.1O Chapterization of study………………………………………………………………… 6-7

Chapter two: Literature review and theoretical framework

  • Introduction…………………………………………………………………………………. 8
    • Literature review…………………………………………………………………………… 8-10
    • Reasons for setting up small and medium scale enterprises…………………………………….. 10-12
    • Challenges faced by small and medium scale enterprises………………………………………… 12-15
    • Sources of finance for small and medium scale enterprises……………………………………… 15-17
    • The role of central bank of Nigeria towards SME financing……………………………………. 17-19
    • The contribution of commercial bank to the growth of small and medium enterprises…19 2.8.1 Type of credit facilities……………………………………………………………………………………………………… 19
      • The primary functions of commercial to SME…………………………………………………….. 20
      • Challenges in lending to SME…………………………………………………………………………… 20
    • Contribution of SME to Nigerian economy…………………………………………………………… 21

23

  • Non tariffs measures……………………………………………………………………………………….. 23
    • Customs administration…………………………………………………………………………………… 23-

24

  • Other barriers………………………………………………………………………………………………… 27-

28

  • Theoretical framework………………………………………………………………………………………. 28-

29

  • The linear stages theory………………………………………………………………………………….. 29-

31

  • Structural change model………………………………………………………………………………….. 32-

33

  • The neo-classical dependence model………………………………………………………………… 33
    • The neo-classical counterrevolution…………………………………………………………………… 34-

35

Chapter Three: SME, their roles and contribution

  • SME their role and contribution to economic development……………………………………. 36
    • Role and contribution of SME to economic development……………………………………….. 36-37
    • Case company Alahteef Nigeria limited………………………………………………………………… 37
    • Historical background of Alahteef Nigeria limited………………………………………………….. 37
    • Objectives of the organization……………………………………………………………………………….. 38
    • Organisational structure of Alahteef Nigeria ltd……………………………………………………… 39-

40

Chapter Four: SME as the backbone of economic development

  • Introduction………………………………………………………………………………………………………. 41-

42

43

  • Characteristics of SME in Nigeria………………………………………………………………………… 44
  • SME performance in Nigeria………………………………………………………………………………… 45-

47

  • Economic advantages of SMES in Nigeria…………………………………………………………….. 47
    • The small and medium industries equity investment scheme…………………………………….. 48-

49

  • Recent development of entrepreneurship in Nigeria………………………………………………… 50
    • Challenges of SME in Nigeria………………………………………………………………………………. 50-

55

  • The relationship between entrepreneurship and economic growth or development……… 55-

57

Chapter Five: Summary, conclusion and recommendation

  • Summary……………………………………………………………………………………………………………. 58
    • Conclusion…………………………………………………………………………………………………………. 59
    • Recommendation…………………………………………………………………………………………………. 59

References………………………………………………………………………………………………………………. 60-

65

DEFINITION OF TERMS

EC                   European Community

NCI                  National Council of Industry

SME                 Small Medium Enterprises

MSME             Micro Small and Medium Enterprises GDP Gross Domestic Product

NCI                  National Council of Industry

NASME           National Association of Small Medium Scale Enterprises CBN                         Central Bank of Nigeria

NERFUND      National Economic Recovery Fund

NASSI             National Association of Small Scale Industries

MASME          National Association of Small and Medium Sized Enterprises SSE                         Small Sized Enterprises

SMIEIS            Small and Medium Industries Equity Investment Scheme OPS                         Organized Private Sector

NISER              Nigerian Institute of Social and Economic Research SAP                          Structural Adjustment Program

NIPC                Nigerian Investment Promotion Commission FDI                         Finance Development Institute

IDC                  Industrial Development Centre

NIDB               Nigerian Industrial Development Bank NBCI                        Nigerian Bank of Commerce and Industry NEXIM                        Nigerian Export and Import Bank

IFS                  Informal Financial System

FFS                 Formal Financial System

NAIRA           Nigerian Currency

ABSTRACT

Small Scale Industries all over the world have been the engine room for viable economic growth and development. In the light of the above, this research work identifies the role of small scale industries (SSI) in the growth of the nation’s economy. Various related literatures were reviewed from which it was noticed that Small scale Industries are central to the growth of the nation’s economy.

This is evident in the policies created by government to accelerate the development of small scale industries through the establishment of agencies like DFRRI, NDE, NAPEP NERFUND SMIEIS SMEDAN etc.

In the course of this research, it can be concluded that SSIs are a sine qua non for economic growth. From the conclusion made above, this research wish to recommend that government should create the enabling environment for the growth of small scale industries such as macroeconomic stability, reduction in fiscal imbalances, stability in exchange rate, increasing small scale industries access to credit facilities etc. also, favorable policies should be made so

as to promote other infant industries in their strive for good standing so as to eradicate the evils of unemployment.

CHAPTER ONE:

  1. INTRODUCTION

This is an insight into the world of the small and medium scale industries and their relationship with financial institutions and government with the sole aim of bringing about economic development and relative growth to a nation.

Nigeria can be said to be a country which practices mono economy of which oil generate almost 85% of the revenue at the disposal of the federal government of Nigeria. Over the years, Nigeria has relied solely on oil sector thereby neglecting other minerals which could generate multiple streams of revenue for government investment and expenditure.

In addition, theoretically she can be said to be a mixed economy even though in the real sense it is almost a capitalist economy.

Citing from a write up by Aigbedion and Iyayi S.E (2007) as thus;‖ The growth of petroleum industry in Nigeria appears to have brought domestic changes in economic structure since 1970‖. It goes further to say that this is due to the fact that crude oil one of the world most sought after natural resource required as a crucial input in contemporary economic activities.

According to  Anyanwu et al 1992, crude oil is a versatile , non renewable  natural resource  as it is highly recommended In both rich and poor countries due to global energy requirement and the evolving trend of technology.



THE ROLE OF SMALL SCALE INDUSTRIES IN ECONOMIC DIVERSIFICATION