CHAPTER ONE

1.0      INTRODUCTION

Small and medium scale business constitute an important component of the Nigerian industrial sector. The importance of this sector cannot be over emphasized, especially in a typical developing country like ours where the level of youth unemployment is rising beyond control. Hence small and medium scale industries generate employment opportunities per unit of capital investment because they are generally more labour intensive which are more capital in nature. A large scale industry that cost N20million for instance, may employ a mere 70 (seventy) workers or less. Where as a small and medium scale industry that cost just N150,000 (one hundred and fifty thousand naira) may employ about 20-30 workers.

Small and medium scale business specialized in the production and marketing of various products and services ranging from food, beverages, drinks/sachet water, cosmetics, spare parts and many others.

Kilby (1969) acknowledge the diversity of terms of the degree of specialization and division of labour and the quantity of raw materials and output and the character of markets being served by small and medium scale businesses. As a result the bulk of Nigerian business falls within the small and medium scale business which account for over 80% of the number of enterprises in the country. (Ekunna 1992 Pg.160)

Several number of small and medium scale business are successful while other fail or are staggering for survival due to poor background management, lack of qualified manpower, poor capital base, lack of marketing research and appropriate technology and credit rating among banks and other lenders. These problems continue to militate against the establishment, survival and growth of small and medium scale business in Nigeria. Although successful government in Nigeria have been emphasizing on the importance of small and medium scale business and have established institutional support agencies to facilitate industrialization.

However, small and medium scale business still operate in uncertainty and are faced with serious obstacles, this raises the questions of whether  the federal government is actually up to the responsibility in the promotion of small and medium scale business in Nigeria.

1.1      OBJECTIVE OF THE ESSAY

The main objectives of this study is to evaluate the impact of federal government in the promotion of small and medium scale business in Nigeria. This study will specially seek to achieve the following:

a.   To evaluate the marketing challenges facing small and medium scale businesses.

b.  To identify the sources of funds to the activities of the industry.

c.   To find out the extent of government involvement in  promoting the activities of the business.

d.  To bring to light the contribution of the industry to the development of national diploma in marketing.

Finally, it is myhope that the students of marketing and others in related discipline will find this study very informative and useful tool in their respective studies.

1.2      SCOPE OF THE STUDY

As the title of this essay indicates, the study focuses its attention to federal government support to small and medium scale business enterprises in Nigeria, it causes various policy, guidelines, direct and indirect financial assistance and other programs and initiatives designed to promote this vital sector of the country.

1.3      SIGNIFICANCE OF THE ESSAY

The significance of this study lies basically on its contribution to knowledge and its benefits to individual and organization. The current economic crises in Nigeria has deciminated the growth of infant industries and encourages the establishment of similar business venture in both small and large scale proportions.

Although successful governments have vowed to support individuals and group initiatives in the establishment of small and medium scale businesses.

The current state of most small and medium scale business in Nigeria is a far cry particularly when structural adjustment programme (SAP) was introduced, which brought about the problem of devaluation of the naira and the scarcity of foreign exchange of raw materials from abroad which has adversely affected production unit especially under a depressed economy.

This study is an attempt to evaluate the role of government in the promotion of small and medium scale business in Nigeria as a country.

1.4      DEFINITION OF TERMS

The following terms and abbreviations used in the extended essay are defined below:

a)   (SSICS) Small and medium scale Industries Credit Scheme

(SME)  Enterprises

(NIDB) Nigerian Industrial Development Bank

(NERFUND) National Economic Reconstruction Fund

(NDE) National Directorate of Employment

b)  Small and medium scale enterprise: Apart from size, it is a type of business that is self initiated, largely self financial, closely self managed and is of relatively small in size when considered as part of the industry.

c)   Management: Is the part of loaning organizing, directing and motivating others so as to enhance productivity with maximum utilization of available resources and achieving the organizational goals or objectives.

d)  Resources: These are the primary inputs that needs to be put together into function before the proper management activities really take place. These activities include; men, materials , money and machines.

e)   Enterprises: This is one of the fundamental principles of management that is concerned with the division of labour and assigning of responsibilities with authority for the well being of business unit.

CHAPTER TWO

2.0   LITERATURE REVIEW

This chapter attempts to review some of the existing literature on the role of government in the promotion of small and medium scale businesses. The aim of the exercise is to enable the researcher delve into the elements under study and to bring to limelight the reality of the situation.

2.1   SMALL AND MEDIUM SCALE BUSINESS DEFINED

The term small and medium scale business is a relative term that has been defined in different ways by many organizations, government agencies and individuals as they deem fit.

The National Economic Reconstruction Fund (NERFUND) consider small and medium scale enterprises as those with fixed assets other than land but inclusion of the cost of investment not exceeding N10million.

Similarly, the world bank in an agreement with the federal government of Nigeria enter into partnership to support industrialization in Nigeria considered medium and small and medium scale business to mean that the total capital cost of the business must not exceed one million naira (N1million) excluding land but including working capital.

According to Lewis (1874) a small and medium scale business is a venture with capital investment of notmore than N60,000.oo (sixty thousand naira), whether such an enterpriseuses factor method of production or not.

Small business act 1934 defined a small business as one which is independently owned and operated and is not dominant in its field.

Small and medium scale businesses have been defined in various ways in order to have proper understanding of what they are. They have been defined based on some specific characteristics by some institutions and units in its credit guidelines to banks. The central bank of Nigeria states that in the case of commercial banks, small and medium scale business are those with annual turnover not exceeding N500,000. In the case of merchant banks, they are with capital investment not exceeding N2million (excluding cost of land) or with maximum turn over of not more than N5million.

The federal ministry of industries (1973) defines a small and medium scale business as all manufacturing units with a total capital investment of up to N60,000 and paid employment of up to 50 persons.

The Nigeria association of small and medium scale industries (NASSI) defines a small and medium scale business as one that has a total assets less than N4million and an annual turn over of less than N4million with employees 30-35.

In a report of the study in kaduna state (Jan, 1992) considered small and medium scale industry with capital based not exceeding N150,000 in machine or equipment and the number of workers within the range of fifty (50).

Base on the various definitions given above, one could deduce that definitions of small and medium scalebusiness vary from palace toplace or from one industrial area to another and such definitions changed over time as the economy situation changes.

Hanson (1972) considers small and medium scale business as a small firm whose optimum business is small in size.

Onuche (1993) stated that the number of employees can be used to determined the smallness or largeness of firm, provided that all firms are labour intensive, it is expected that a large number of employees will meet its output capacity than a small and medium scale whose output is relatively small than a large one.

The size of a business enterprise may be determined on the basis of total investment made in it by  the owners. In this case, the owners of a company are the shareholders those of the partnership are the partners and that of a sole proprietors is the sole owner. The definition based on this criteria considered capital employed investment amount to be N600,000 or less than that.

One can use annual sales the firm makes to determine it sizes, based on this standard, the confederation of theBritish industries (CBI)K considers a small  firm in Britain to be one whose total annual sales or turn over isless than one million pounds sterling.

The government figure is 500,000 sterling.

As to Steincoff (1979) a small business is one which possess at least two of the following characteristics:

1.  Management of the firm is independent, usually the managers are also the owners.

2.  Capital is supported and the ownership is held by an individual or a small group.

3.  The relative size of the firm within the industry must be small when compared with the biggest units in the field.

4.  The area of operation is mainly local.