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University of Nigeria Research Publications
OKENYI, Chidiebere Anthony
Aut
hor
PG/MBA/02/36994
Title
Entrepreneurial Problems in the Establishment of Small- Scale Industries in
Enugu Urban A Study of Selected Small Scale Industries
Facu
lty
Business Administration
Dep
artm
ent
Management
Dat
e May, 2004
Sign
atur
e
TITLE PAGE
TNTREPRENEURIAL PROBLEMS IN THE ESTABLISHMENT OF
SMALL- SCALE INDUSTRIES IN ENUGU URBAN.
(A STUDY OF SELECTED SMALL SCALE INDUSTRIES)
BY
OKENYI CHIDIEBERE ANTHONY
PG/MBA/02/36994
UNIVERSITY OF NIGERIA.
A THESIS PRESENTED TO THE DEPARTMENT
OF MANAGEMENT
SCHOOL OF POST- GRADUATE STUDIES
UNIVERSITY OF NIGERIA, ENUGU CAMPUS
Y PARTIAL FULFILMENT OF THE REQUIREMENT FOR THE
I AWARD OF MASTER OF BUSINESS ADMINISTRATION
DEGREE (MBA) IN MANAGEMENT.
MAY 2004.
' CERTIFICATION
Okenyi Chidebere Anthony, a post graduate student in the department
of management and with registration number PG/MBA/02/36994 has
satisfactorily completed the requirements for course and research work for
the award of masters degree in Business Administration (MBA) in
Management.
The work embodied in this dissertation is original and has not been
submitted in part or full for any other diploma or degree of this or any other
university.
Supervisor
............................... DR. U. J. F. Ewurum Head of Department.
DEDICATION.
c A dedication to my Nneka Ojide, She is my jewel of inestimable value. 1
ACKNOWLEDGEMENT.
I am ever gratefbl to God almighty for his love kindness and
protection throughout the duration of this programme and in my life. I was
able to complete this programme because his grace and mercy is upon me, to
him I say, may all glory, all adoration, all holiness be unto his name now and
forever- Amen.
Perhaps, this work would not have taken off at all if not for the
I interest of my supervisor, Mr C.O. Chukwu has for the topic. His constant
encouragement and assurance that he will help see to the completion of this
thesis made me not to look back till I put the final full - stop. He worked so
tirelessly and selflessly even at odd hours just to make sure that I did justice
to the research work. I am therefore very much indebted to him.
My appreciation also goes to my parents Chief, Sir and lady I.U.
Okenyi (KSJ), my brothers and sisters for their moral and financial support.
My unreserved thanks to my ever caring friends Nne-Afam Agu, Love
- Tony Ude, Aloy-Eze, Nltem-Omeh (Mrs) Nnacheta Onaga and the rest of
you out there whose names I can not mention here, you all are simply
wonderful. M y appreciation also goes to Eneasato 0 . S. on whoes ideas I
improved on.
v
Mention must be made of the unquantifiable contributions of b'neka
Ojide who has stood by me like a pillar at all times especially when she is
mostly needed. The emotional stability she provided was a source of
encouragement to me.
I wish to express my profound gratitude to all those who in one way or the
other contributed directly or indirectly to the successfid completion of this
thesis.
I accept responsibility for all mistakes in the research work.
OKENYI CHIDI ANTHONY.
vi
ABSTRACT
The study was done to ascertain the entrepreneurial problems in the
establishment of small-scale industries in Enugu Urban. The aim uras to
determine the extent to which commercial banks and other financial
institutions have given out loans to small-scale industries and to look into
other problems associated with capital faced by small-scale entrepreneurs .
Other problems that were looked into were the problem of recruiting
employees and government assisted areas where expert advice is nceded.
Information was gathered through questionnaire, personal interviews and
observation, and the data collected were analysed using tables.
From the results, it was gathered that small-scale entrepreneurs have
not benefited substantially from commercial banks and other financial
institutions interms of funding.
In addition, it was gathered that the enthusiasm and inducement to ask
for credit facilities by small-scale entrepreneurs from commercial banks and
other financial institutions decreased significantly due to the level of
collateral requirements. Other problems the small scale entreprtmeurs
envisaged as regards being accommodated by commercial banks and other
financial institutions include illiteracy, small size of their business, little
capital, lack of tangible assets, and so on. Also most government polices
vii
have not been favourable to small-scale entrepreneurs especially in thr: area
of importation of required basic materials and tax.
A number of measures were perceived as capable of solvins the
problems posed. It was suggested that banks and other financial institutions
should adjust their lending habit to accommodate the competence of small-
scale industries particularly in the demand for high interest rates and
collateral securities.
Also the government can solve this financial problem by rel:~xing
some of its policies on banking because it has been discovered that banks are
operating within a very rigid rules set by the monetary authorities.
Finally, the entrepreneurs should advertise job vacancies and also
employees should be selected based on merit. The government sl-tould
equally provide infrastructure to enable the entrepreneurs have a conducive
environment to operate on.
... Vl l l
TABLE OF CONTENTS.
- Titlepage
Certification Page
Dedication.
Acknowledgement
Abstract
Table of Content.
List of Tables.
CHAPTER ONE
INTRODUCTION:
1.1 Background of Study
1.2 Statement of Problems
1.3 Objectives of Study
1.4 Research questions
1.5 Significance of the Study
1.6 Scope and Limitation of the Study
1.7 Historical background of the organizations
REFERENCE:
CHAPTER TWO.
Review of related literature.
2.1 Definition of small-scale business.
1
. . 11
iii
iv
vi
. . a
Vll l
xi
CHAPTER FIVE.
Summary of Findings, Recommendations and Conclusion
5.1 Discussions
5.2 Summary of findings
5.3 Recommendation
5.4 Conclusions.
BIBLIOGRAPHY
APPENDIX A.
LIST OF TABLES.
Table 4.1 The major source of finance for small-scale industries
Table 4.2 The problems faced by entrepreneurs in the establishm~nt of
their industries.
Table 4.3 The extent insuflicient capital affect entrepreneurs in1 the
establishment of their industries.
Table 4.4 The extent basic infrastructure affect entrepreneurs i.1 the
establishment of their industries.
Table 4.5 The extent scarcity of raw materiaIs affect entrepreneurs in the
establishment of their industries.
Table 4.6 The extent Iack of management know how affect entrepreneurs in
the establishment of their industries.
Table 4.7 Role played by government in order to redress the issue.
Table 4.8 Role of small -scale industries in the economy.
Table 4.9 Factors that cause the failure of an established business.
Table 4. 10 Method of recruitment.
Table 4.1 1 Level of product competition.
Table 4.12 Ways of overcoming competition.
Table 4.13 Ease of sourcing for adequate capital.
TabIe 4.14 Initial capital used by entrepreneurs.
Table 4.15 Best ways of making capital available to small-scaIe
entrepreneurs.
Table 4.16 The effect of government policies in the establishment and
Management of small-scale industries.
Table 4.17 Specific areas where this policy does not favour.
Table 4.18 Areas where expert advice is needed.
CHAPTER ONE
1 . BACKGROUND OF STUDY
Nigeria, like all other less developed countries is engaged in the
process of diversification of the economy. It is a movement away fiom
capital intensive, large-scale industrial projects to small-scale industrie~; with
immense potentials for deveIoping domestic linkages for rapid, susta nable
industrial development. Nigeria as a country chose the mixed eccnorny
option, that is an economy where both the government and the individuals
are free to own and operate factories and industries. The federal govemment
has been encouraging the private sector and participating direcly in
industrial ventures where necessary, and also encourages the use ol' local
raw materials. Thus, Inyang and Ukpong (1992) state that "Apart fiom their
potential for ensuring a self-reliant industrialization in terms of abiIity o rely
largely on local raw materials, smalI scale enterprises are also in a better
position to boost employment, guarantee a more even distribution of
industrial development in the country including the m a 1 areas and fa4:ilitate
growth of non-oil exports. Based on the definition of small b~siness
administration in Steinhoff and Burger (1993,P4), approximately 98 percent
of all business firms in the United States are small. This means tha: there
were about 19 million "small" firms providing products, services and
information within the United States in 1989. While the importaxe of
small-scale enterprises to a nation's development has been well recognized
the entrepreneurs of these enterprises are equally faced with a number of
structura1 problems which have constrained their ability to play the pivotal
role expected of them.
Nzelibe (1990) found that causes of small scale business failures are
as follows: inadequate sales, inadequate finance, competitive weakness,
heavy operating expenses, receivable difficulties, poor location and poor
management. Other problems facing small business according to Inyanf; and
Ukpong (1992) include small size of small scale enterprises, dearth of
tangible assets, high mortality rate, high risk rating and low produclivity
among the small scale industries.
The role of credit finance in promoting development and also the
problem of capital scarcity in the operation of small-scale enterprises in most
developing nations is generaIly well known. According to Yewmde
(1991,P4) "the issue of inadequate credit facilities to small scale indu~tries
has for a long time been the main problem facing the national associaticn of
small- scale industries (NASSI) which is the umbrella organizatior for
small-scale industries. Government in it's own way have been supporting the
growth of small-scale business. The government has devoted a lot of
financial resources to this sector in order to Iiberate the entrepreneurial skills
of Nigerians. New lending schemes and credit institution such as the
National economic recovery fund (NERFUND). World bank assisted small
scale enterprises loan scheme, Nigeria Export and Import Bank (NEXYM),
3
The Nigeria Bank for Commerce and Industry (NBCI), People's Bank of
Nigeria (PBN) and the Community Banks have emerged at both Nat'onal
and local level to boost the flow of development finance to small ,;tale
enterprises which have so far depended largely on personal funds and credit
from informal sources for both their investments and working capital.
Establishing an industry of one's own is like venturing intc the
unknown which is fraught with problems. It is based on this fact and the
importance of this category of industry to our nation economic growth, that
the researcher deemed it necessary to bring out some of the pec~~liar
problems facing the entrepreneurs in the establishment and operating; of
small-scale industries.
1.2 STATEMENT OF PROBLEMS:
To be a paid employee in this modem age is very risky, this is as a
result of irregular payment of salaries associated with it. Consequently, one
cannot depend completely on hidher salary. Oshagbemie (1983,P2) states
that "This has motivated both the government and individuals to focus their
interest on small-scale industrial development at least to solve the problem
of unemployment for owner and create some employment opportunitie~ for
others. This enthusiasm not withstanding, only very few individuals in the
final analysis succeed in establishing their own small-scale industries". "his
shows that the dynamic role of small-scale industries in our national
4
entrepreneurs are not being realized, all to the great disadvantage 3f the
whole economy.
To satisfy the inquiring n a t ~ ~ r e of this study, the following problem
areas are to be given prominence.
Lack of management ability on the part of the small-scale b~~siness
managers.
Inadequate capital or finance.
Inability to identify projects that are viable and executable.
Lack of infiastructural facilities.
Competition from bigger and more favourably placed industries..
Effect of government policies and regulations, some of whic3 bring
distortion in the structure and management of small-scale busiress.
OBJECTIVES OF THE STUDY
The objectives of this study is :
To identi@ the roles of small-scale industries in the general economy
of this country.
To identify the core problems that hinder people from establishing and
operating their own small-scale industries.
To find out the prospects of small-scale industries in Nigeria as a
whole.
To find out causes of these inhibiting factors and finally giving
possible suggestions.
5
To find what remedial actions that have been taken to ameliorrie the
problems.
RESEARCH QUESTIONS
What are the major sources of finance for small-scale industries"
What are the problems faced by entrepreneurs in the establishrr ent of
their industries?
What role have the government played in order to redress the issue?
What are the roles of small-scale industries in the general econo ny?
What other factors cause the failure of an established business?
SIGNIFICANCE OF THE STUDY
Small-scale industries provide employment for a good number of
people, therefore as the world economy is moving towards a brighter- future
in the area of industrialization, there is need to continue to promote the
small-scale industries. In this respect, the role of small-scale industries
becomes stimulating. The findings of this work will help in finding
solutions to those myriads of problems militating against the performance
of small-scale industries in Nigeria. The information as will be seen in this
research work will establish facts why some small-scale industries fail. It
will also serve as a motivating force for our people who would like to
establish and manage their own enterprises.
1.6 SCOPE AND LIMITATION OF THE STUDY
SCOPE: This investigation will cover firms having employment
strength of not more than fiRy employees and operating in Enugu urban.
A sample of three firms with the same product line will be studied.
The scope of firms under study will be limited to processing, lhat is
business enterprise that undertake the physical transformation of mrteriaIs
from one form into another and offering same for sale to satisfy cus~omers
wants.
LIMITATIONS:
The limitations encountered in conducting this research work ranges
from personal handicaps to environmental constraints.
1. FINANCE: Due to the location of these firms under research, a large
sum of money was spent in transportation by the researcher. Also a
reasonable amount of money was spent on research materials.
2. RESPONDENTS: The researcher encountered a great c'eal of
problems here, most of those given questionnaire were very reluctant
to supply answers to the questions while some other group were afraid
that the information given by them may get out and cause them
administrative problems. Despite all the effort made by the rerearcher
to explain how confidential those informations will be treated :md that
there is no provision for supplying personal names, many still feared
completing the questionnaire.
7
Therefore, out of 35 questionnaires given, only thirty was
Collected. The other five was not collected because despite :dl the
effort made by the researcher to see them at the office, they were no
where to be found.
SAMPLING LIMITATION: The fact that all the smal -scale
industries in Enugu urban could not be studied and the fact that
information obtained from the few firms cannot stand the test of 100%
accuracy to the population are obvious limitation in themselves.
TIME: The time that one has to carry out detailed study of this nature
was definitely too short.
BIAS: It cannot be ruled out completely as it is possible that, some
workers or managers felt that they would present an information in a
particular way either to boost company's image or denigrate their
image.
HISTORICAL BACKGROUNDS OF BRADOE NIGERIA. LTD.
Bradoe Nigeria Limited was established as a very small firm in 1993
and was equally registered under the Corporate Affairs Commission (CAC)
in the same year as a public liability company. It started with three (3)
employees, the director, secretary and foreman. At present, Brarloe has
about ten (10) employees under it's payroll, and it has about {bur (4)
branches scattered in Enugu and Port Harcourt.
8
The entrepreneur encountered a lot of problems at the initial
stage of this business and they include:
1. Insufficient capital to take off.
+Qn 2. Stiff competitio~foreign and local
3 . Lack of adequate awareness of the
competing aluminum comparlies.
company in the market.
When this company started, they were merely assembling produ :ts
b m g h t from other companies, but today, they are manufacturing their own
products.
SALMACO STANDARD ALUMINM MANUFACTURING
COMPANY
Salmaco came into existence in 1998 and was registered under
Corporate Affairs Commission (CAC). The owner started it as a family
business with the ownedmanager sourcing and raising all the initial capital
needed for the take off. He employed four persons later, the production
manager, secretary, technician and driver. Presently, he has above thirty (30)
persons working in the company. They deal on fabrication, s:des of
accessories of aluminum products, installation of alumaco doors and
windows, banks cubicles etc. The company has about 3 board membcrs. The
initial capital will be like MOO, 000 both for rentages, fittings of sharp
machines, (location of the shop is a determinant factor to cost of rent age and
taking off. The company has branches in some eastern states.
9
The entrepreneur faced some problems at the initial stage, which
includes:
1. The Nigeria government policy on importation of foreign p-oduct
made it difficult for them to get adequate raw materials.
2 . The banks do not support them by way of giving them loan.
3. Lack of capital to pay staff.
Salmaco aluminum manufacturing company has as one of it's
company's policy not to employ anybody that have not passed through
secondary schools.
KENMATEK INDUSTRIES LIMITED.
Kenmatek industries limited is a company established in 1901 and
was registered under Corporate Affairs Commission (CAC) in 1998. The
entrepreneur started the business as a small business. He started the
business with 81500, 000, this money was raised mainly through his 'iiends.
They deal on fabrication and installation of aluminum products, building
components- windows,doors, roofing sheets and suspended ceiling.
At the initial stage of the business, the owner acted as the director and
the foreman, he employed just one person, the company's secretary who
sf. doubles~he cashier.
But at present, Kenmatek industries limited has about ten (10)
employees under it's payroll, and the salaries of this emplojees are
10
negotiable based on economic fluctuations, that is, there could be increase
or sIash on the salary. Kenmatek has about two branches. Also the company
has about 3 board members.
REFERENCES
1. A.P. EDET "Small-Scale Industrial Development. A Vital Strategy
for Rapid industrialization". Business Concord, Nigeria, Fr id~y 1 4 ' ~
Oct. 1983.
2. S.A. Uaboi Development of Small-Scale Sector, What role ior the
Federal Government? The Nigerian Banks Vo17 No. 1 (1 987).
3. Inyana E.E. and Ukong G.E. A Review of Small-Scale Enterprises
Credit Delivery Strategies in Nigeria. Seminar Paper (1992 P.2:)
4. Nzelibe C.G. Management of Small-Scale Business in Nigeria. Enugu
Fourth Dimension Publishers 1990 P.5.
5. Oshagbemi T.A., Small Business Management in Nigeria Lagos
Longman Publishers 1993 P.2)
6. Steinhoff, D. and Burges J.F. Small Business Manaq~ement
Fundermentals bth Edition, MCGRAW Hill, 1993 P. 4.
7. Yewande E.D. Financing Small Business in Nigeria. Busines~ Times
Sept, 9 1991 P. 14.
CHAPTER TWO
LITERATURE REVIEW.
2.1 DEFTNITION OF SMALL SCALE BUSINESS.
The meaning of the term small-scale enterprise varies fro~n one
country to another and from one industry to another even within thc same
county.
The united nations industrial development organization
(UNDO) has located about fifty (50) different definitions of small-sc ale
industries in seventy -five (75) different countries (Akinrinade, 1989:28).
According to such, various definitions were based on parameters such as
installed capacity utilization, output employment, capital type of industry or
other criteria which have more relevance to the industrial policies of t he
specific country.
Accordingly, some people would undoubtedly consider all businesses
that had not more than a specified number of employees (5 or 10) to be
small. Others would beIieve that a small business is one that operates only
in the local market area. In Nigeria,several definitions have been
documented. The 1989 industrial policy in Nigeria defined small-sca.e
industries as those with total investment between %100,000 - @ZOO, 000
exclusive of land but with working capital requirement. Medium scale
industries are defined as those with total investment out lay between g 2 m
13
excluding land but including working capital (New Nigeria, Decemb1:r 16
1991 P. 28).
The Central Bank of Nigeria credit policy currently defines a srnall-
scale enterprise for the purpose of commercial and merchant bank loms as
one whose total cost excluding cost of land but including working c~pital is
above 1 million but does not exceed 10. million.
The Nigeria bank for commerce and industries (NBCI I for the
purposes of it's revolving loan scheme for small-scale industries defined
small-scale enterprises as those investing not more than &500,000
(excluding the cost of land but including working capital). Neverth =less,the
bank's official definition since 1985 has been firms whose capital cost does
not exceed 86-750,000 (including working capital but excluding land).
The National Directorate of Employment defined small scale
business to accommodate project with capital investment as low a ; N5,000
and employing as few as three (3) persons. The Committee for Ekonomic
Development (CED) of the United States of America offers a eefinition,
which states that a business will be classified as small if it meets two or
more of the following criteria.
1) Management of the firms is independent. Usually the
Managers are also owners.
2 ) Capital is supplied and the ownership is held by an individur 1 or
small group.
14
The area of operation is mainly local with the workers and cwners
living in one home community. However, the market need not be
local.
The relative size of the firm within it's industry must be small
when compared with the biggest units in it's field.
The measures can be in terms of sales volumes, number of emldoyees
or other significant compassion. The small business act of 1953 p?-ovides
that a small business concern is one which is independently owned and
operated and not dominant in it's field of operation". The features of
dominance has come to be of great importance in most atterlpts to
determine whether a particular firm qualifies as a small business.
However, the Center for Management Development (CR ID) has
recommended to the Federal Government of Nigeria that the official
definition of small scale industry is any rnanfacturing, processing or service
industry whose investment in plant and machinery, land and building does
not exceed 500,000.00, utilizes power, plant and machinery in it's
operations and employ up to fifty (50) h l l time workers.
Ayuba (1989:7), citing a research published by the Certre For
Management Development, Lagos in 1974 noted that small businesc: cannot
be adequately br defined in terms of number of employees, sales volume,
assets employed or a combination of the above because of the inherent
fallacy that would be embedded in such a definition. Therefore in order to
15
create a clear picture of what a small business is, certain characte-istics
which are more often associated with small firms than with Iarge ones was
agreed upon in the research report. And these are:
1) That in a small business ownership, management is usually ve:ted in
the same person or persons.
2 ) The firm usually has a small share of the market (or alternatively a
significant share of a highly specialized low- volume market) and in
general is not in a position to significantly influence the size of the
market.
3) That the Chief Executive generally participates actively in mos,. levels
of the decision making process and in the day to day operation<; of the
firms, usually with inadequate specialist support.
The Chief Executive can know and be known by all employees thrrtughout
the firm.
2.2 THE ENTREPRENEUR.
The American heritage dictionary by Webster described an
entrepreneur as one who organizes, operates and especially assesses the risk
of business ventures. In the word of Udeh J . 0 (1990,p.13) entrepreneur is a
person who risks his or her time, effort and money to start and operate
business. He hrther stated that entrepreneurship implies a willingness to
take a calculated risk, both personal and financial and doing el erything
possible to influence the odds.
According
does not invest i
hire itself, goods
16
to Eworom (1994,p.25) it is generally known that money
tself, profits are not made by themselves, labour does not
1 and services do not come by themselves and risk is not
taken by itself. Where these activities and behaviors are embeddcd in a
business environment, entrepreneurship does occur. According to Harris
(1970, p.350) entrepreneurship is often rather vague abstraction which is
subject to varying interpretations.
There are two typ&f entrepreneurs, the one who establishes alld runs
business of his or her own, and the one who is hired to manage a business
which he or she does not own. Entrepreneurs are also known as an action-
oriented, highly motivated individual who has the abiIity to see and evaluate
business opportunities, gather necessary resources to take advan-age of
them, initiate appropriate action to ensure success and takes risks to chie eve
goals.
Entrepreneurs plays some vital roles in the development of the
economy. Educationally, entrepreneurs have contributed immensely to the
growth in educational institutions in the country and in that sense supporting
government in its bid to eliminate illiteracy by the year 2010. Several
educational institutions in different parts of the states and countries are the
good work of many individuals and organizations. Entrepreneurship
accounts for a large proportion of industrial establishments in the country for
production of goods and services. Efficient employment of resoul ces and
17
employment generation are the core hnctions of entrepreneurship. These
facts underline the magnitude of contributions attributed to the entrepreneurs
as the greatest provider of jobs and employment opportunities for the people
especially the youths.
It is worthy to note that entrepreneurs have contributed immersely to
the area of management development and training. Entrepreneurs tr iin and
improve the skills of the people either through apprenticeship programme or
by the award of scholarship to their relatives or to other brilliant men-bers of
the society.
However, available literature on entrepreneurship highlights a number
of constraints which limits entrepreneurs from the establishment o-" small-
scale industries. E.J. Nwosu (1981 p.3) stated that a number of p?-oblems
inhibit the full realization of the benefits of entrepreneurship. The p-obIems
facing entrepreneurs' range from human factors, capital shortage, lack of
infrastructural facilities, political instability, culture and orientat on and
managerial abilities. These problems will be fully discussed du4ng the
reviewing of related literature of ~ $ ~ e s of failures of small 'msiness
enterprises.
2.3 THE IMPROTANCE OF SMALL SCALE BUSINESS TO THE
NATION.
Small-scale enterprises contributed reasonably to the e:onomic
development of Nigeria. The existence of strong, healthy, small business
18
community has always been recognized as the best way to preserve
competition in our capitalistic society and also prevent monopolists in our
control of any industries and this assure the population of the benefits of
competition through better price and quality products. Although a single
small-scale enterprise requires only a few workers, the ease, simplic;ty and
rapidity with which small business can be created suggest them as a potent
force in aid of Nigeria's economic revival. The ability of the group of
enterprises to play this role is enhanced by the fact that they are gelerally
labour intensive since they use relatively more labour than capital. This
characteristics coupled with their numerical strength in the industrial set up
makes encouragement and creation of small scale enterprises in area: where
they are feasible a possible cure of the unemployment problem. Also, small
enterprises could play an important role in arresting the persistent decline in
the value of gross domestic product. This category of enterprise:. could
infact be counted upon for promoting stability and growth in gross domestic
product (GDP) through the quick return they generates.
In his statement of budget 1988, president Babangida stated that small-scale
industries have a vital role to play in achieving a sustainable economic
growth. Onuoha (1996:326-328) citing Okongwu (1986), Ukwu (1987),
Nwosu (1% l), Faleye (1 985), and others concluded that sma' 1 scale
business perform the following roles in the economic development of the
third world countries in general and Nigeria in particular;
(a) Creation of employment.
(b) Stimulation of indigenous entrepreneurship.
(c) Transformation of traditional industry.
(d) Utilization of resources etc.
Bate James (1963 p.9) in his report "financing of small business"
affirmed that small scale industries provided employment for tripple that
offered by the large scale industries, it equally acts as incubator for the skill
development of both artisans and managers. Manyappa (1969 p.2) st2ted that
small-scale business helps in large scale employment, securi~g and
mobilization of local resources and finally makes for more equitable
distribution of resources.
In recognition of the importance of small scale business to imerican
economy, the American president, Jimmy carter, in January 1980 c alled for
a White House conference on small business in Washington D.C', Carter
stated that "small business community constitutes the single most i nportant
segment of our free enterprise system". He continued by sayin;: that, it
accounts for more than forty-eight percent of our gross national product,
more than half of the American labour force and continued to 3e major
source of inventions". He concluded by saying that small busines: is truely
the backbone of the American economy. President Reagan procl;.imed the
week of May 8 through 14, 1988 as small business week in realization of the
contribution of small business concern to the nations econom! . Reagan
20
stated that " small business provide well over two-thirds of all new
American jobs as well as 40% of aggregate national out put, the bulk c f new
American products and technologies, and more than two-thirds of a 1 first
Jobs" he added that, majority of the jobs held by younger, old minori .y and
female employees are in small business. The Nigerian Economist bt lieves
that Nigeria's march to industrialization can only be attained throu~h the
establishment of small scale cottage industries adding that some third world
countries like china, India, south Korea, Hong Kong and Taiwan hav: done
this and succeeded.
Contributing on the importance of small scale industries t o the I
economic development of the country, Okorie (1982,p.9) Stated thii small
scale business provide employment on a large scale and therefore, m ake the
possibility of equitable distribution of national income more realisfic. He
added that by creating more employment opportunity, they 'kelp in
mobilization of capital and human resources that would otherwise' be left
idle. The above review on the importance of small-scale business hl:lped to
emphasis the fact that there is economic justification for the continued
existence and survival of small businesses.
2.4 THE FEDERAL GOVERNMENT AND SMALL SCALE
BUSINESS.
It is abundantly clear that the Federal Government is dedicated o the
preservation of strong, healthy and profitable businesses. Many legidative
acts have been passed with profound policy statements to this effect.
According to Anammah, the role of small-scale industries havr long
been identified by both Federal and State Governments as we11 as their
agencies. The catalogue of incentives contained in almost every feden 1 and
state budgets, and government guidelines to banks on their min mum
percentage loans to small scale industries show for this. First, goverr ment
established a co-ordinating umbrella organisation called small-scale
industries corporation in 1971 with responsibilities for promoting s nall-
scale industries, generally through the provision of extension services and
technological / managerial assistance as well as meeting the training reeds
of small scale enterprise. In addition, government has established a nu:nber
of institutions and programmes to provide development capital to the ST ?all-
scale enterprise. To this end a mix of financial institutions and scl-erne
!programme has evolved over the year. Notable among these caedit
institutions and programmes are the following:-
1) Small-scale industries credit scheme. (SSICS)
2) The Nigeria bank for commerce and Industry (NBCI)
Central Bank of Nigeria special credit programme for small scale
enterprise
The National economic reconstruction find (NERFUND)
World Bank facility for the small and medium scale enterpri: e loan
(SMEX Loan).
Nigeria Export and import Bank (NEXIM)
The People's bank of Nigeria
Community banks.
These financial institutions provide medium and long term firancing
aid for both public and private sector companies, a hnction consideled not
satisfactorily performed by the commercial and merchant banks.
The establishment of National Directorate of Emplryment
Development programme in 1988 by the Federal Government was ai ned at
providing loans to young graduates to establish their own choice of bu siness.
According to Nzelibe (1990.~9) this programme spawned the 'lighest
number of small-scale business in Nigeria.
Also the establishment of the National Economic Reconstructio I Fund
(NERFUND) under decree 2 of 1988 is designed to correct any inade( luacies
over the past years which have stifled financing of small and mediurr scaler
industries.
The Federal Government also established small business relief ?md in
1999. The h n d which applies only to enterprises with an annuzl sales
-
turnover of MOO, 000 or below gave a lower rate of company taxai Ion, ZUYO
to cover the first three years of the operation of the enterprise. Elluipment
Ieasing incentive provides enormous benefits to companies u ing this
financial method. The relief are available to the lessor and lesset , for the
lessee, the lease costs are chargeable against the profits madt by the
business, any additional expenditure incurred for the upk1:ep and
maintenance of the leased equipment is also chargeable against tbe profits
for the period involved. The lessor enjoys the normal capital a Iowance
given to owners of similar equipment in the normal course of their o )eration.
The Federal Government in her industrial policy stated that rural a seas will
henceforth be made to feel the positive impact of industrial deve oprnent,
through a programme of national dispersion of industries to cover he rural
areas and Hitherto neglected areas of this country. To achieve this pal, the
government resolved to set up a co-eeordinating body in federal mi listry of
industry known as small-scale Industry Corporation. This body is charged
with the responsibility of promoting small-scale industries through
development of policies and programmes, provision of extension : ervices, .. " *-- ' - - . ''.. - ' , technical and management assistance.
+-..,T.. , - It . - .
2.5 CAUSES OF SMALL SCALE BUSINESS FAILURE.
Basically, there has been so many information on the impor ance of
small-scale industries as the grease that oils the wheel of e( onomic
24
development of any nation, but there are some inherent prokllems in
establishing and operating a small-scale industry.
Evidence shows that many small-scale business have their txistence
within a short period, few remain for quite some time and can develop to
medium and large scale businesses. Nzelibe (1990, p.5) stated t h ~ t at @st
three out of every four small scale businesses fail each year. T l ~ e major
objective of this study is to find out the factors that frustrates the
entrepreneurs in the establishment of small-scale industries.
Different researchers and writers have at different times explored
some of these problems that fi-ustrates the entrepreneurs from different
perspective. Nzelibe still in her survey, found that the causes of sr lall-scale
business failures are as follows. Inadequate sales, competitive 1 ~eakness,
heavy operating expenses, receivable difficulties, poor location and poor
management. Horn (1982, p.15) listed the problem of small scale business
which include the problems of acquisition of additional finance, specialist
personnel competition from other more favourably located firm, ri: ing costs,
government policy on taxation.
The political economy of any particular nation has a great ~earing in
fashioning out the industrialization policy of such a country eslecially as
they relate to the investment motivators for a progressive growt 1 in small
scale industrial development, there must be a sincere polic:? for and
execution to uplift the status of small scale industries. Thus ac:ording to
Nicolin (1 977, p. 19, governments industrial policies ar G W I ~ ~ L uc u l u r l l c a
whether there will be boost or hindrance to small scale illdustrial
development, this result from either governmental or legislative decisions
which affect the current and future conditions of industry. Government of
developing nations pays much attention on high technological ir dustries
contrary to or against the low technologically based industric s. This
collaborates what Ibezim (1977, p.4) called a top-down industrial policy
whereby emphasis is laid on high tech- capital intensive industries to the
disadvantage of the cottage or small scale industries. Nwosu E. (15 84, p.2)
equally highlighted the negativism in this type of policy when he ~sserted
that government with vision should encourage the small entrepreneurs since
its enlightened self interest lies in massively supporting their aspiratic In.
Oshunbiyi (1 989, p. 10) stated that lack of finance is the key r jroblem
facing most small business in Nigeria. He added that whether for the
establishment of new industries or to carry out expansion plant, hat the
inability to attract financial credit has stifled the growth of this sut -sector.
According to Ndebbio.10, (1988p.7) the problem of finance is ,he key
problem especially that of working capital is compounded by lending
policies of commercial and merchant banks. Most of the banks ar d other
lending institutions prefer lending against tangible physical as :ets. In
addition, the detailed and never-pleasing lending procedures of l inancial
houses constitutes bitter experiences to small-scale business.
The life wire of any business organization especially at the initial stage is
money. Available literatures have shown that the bull mark of sm: 11 scale
industrial development the world over, is money and lack of it shows slim
probability for its success. Even the industrialized countries of Japan and
USA still provides financia1 assistance to their small industries su3-sector.
Thus according to Berman (part11 No 21186, p.3) "If a project is
economically sound and sponsor is willing to take some responsildity for
the enterprise during its infancy, the chances of survival are greatly
enhanced". In a survey as reported by Teriba (1 977 p.53) the mo: t serious
problem areas by proprietary entrepreneurs was capital shortage, Capital
shortage was found to be the most-pressing problem attracting 75% of the
survey result. Equally, the provision of some infrastructural faci ities like
electricity, water supply, good access roads, etc encourage ~leople to
establish small scale industries especially in the rural areas. Actu illy, their
availability "is sine qua non to the official performance of sriall scale
industries". This is because the industries, does not require to g I into the
trouble of developing these facilities thereby wasting the small resources at
his disposal.
Among the critical problem causing the extinction of rmall-scale
industries in Nigeria is poor and inefficient management. Accortling to the
business all alone. Edemereyor
Q b
industries in Nigeria are owned
(1985, p. 13) stated
by proprietors who
that many small-scale
have neither adequate
education nor the required skill to manage such enterprise. He added that the
management of such businesses are on the basis of trial and error which
ultimately leads to failure of these businesses. Also partly due to financial
problems, a small industry cannot afford to set-up highly qualified workers
as exists in large organizations. This is partly responsible for the bad
accounting practices and inefficient operation witnessed in many small
firms.
Drucker (1 954, p. 197) in his own study, postulated that industries can
exist in the small, fair size, large and very large size categories. He
contended that these four do not form a continum. A business does not
imperceptibly grow from fair size to large. Each of these stages is distinct.
The biggest problem of size is problem of growth, the problem of changing
from one size to another and the problem of growth is largely one of
management attitude, the requirement for successfid growth is primarily the
ability of management to drastically change its basic attitude and behaviour.
By this, Drucker clearly recognized the vital role management could play in
the existence of any industry. According to Orjiako in his published article
(1987, p.40) " One problem of small scale business is lack of strategic
planning, this problem hinders sound decision making". Roger (1964,p.48)
in his own view stated that most small business see planning as a luxury
28
which could be afforded only by a large corporation. He added hat even
when they plan, the tendency is that they concern themselves cnly with
short-term plan. In his own view, Rice (1964, p.98) stated that 1a:k of the
use of modem method of gathering and analyzing data constitute; a weak
point in the small business strategic planning effort.
Dada (1 958, p.7) stated that the price the economy has to p; y for the
adoption of Structural Adjustment Programme (SAP) is the elimi lation of
infant industries, through keen competition for scarce foreign excl lange, he
further stated that the determination of the exchange rate throug'~ foreign
exchange market (a core component of SAP) has edged out small industries
requiring foreign exchange due to scarcity of working capital lvhile the
fluctuation of rate do not allow for any meaningful and consistent business
transaction. As a result of the frequent fluctuating in the Foreign IIxchange
Market (FEM), exchange rates, most industries are in disadvantagec position
to plan ahead or forecast cost and market trend since cost of materials
ordered for importation at Foreign Exchange Market (FEM) rate are found to
vary by the time the goods are received.
According to Edemereyor (1988,p.12) " Mass retrenchmeqt is the
major contributor to the present sharp rise in the number of srr all scale
industries registered." He noted that many people started these b~sinesses
not because they were ready, but because circumstances have for ;ed them
into making such decisions. He finally said that about 50% of t h ~ ~ s e hired
29
businesses fold up within six months of their operation. He w ~ s of the
opinion that hurried entry into business was one of the prime causes of
premature exit because of improper financial arrangement, lack of technical
know how, lack of proper market survey etc.
2.6 FINANCING AVENUES FOR SMALL SCALE ENTER PRISES.
Having seen from the related literature how capital inadequacy j1:opardizes
entrepreneurial efforts toward~establishment of small-scale indu tries, it is
necessary to review the related literature on the financing avenue; for small
scale enterprise. A number of avenues have been identified. According to
Amao (1987.p.189) they include local money Esusu contributims, small-
scale industries credit scheme, External Loan, African Develop nent Bank,
Nigeria Industrial Development Bank, ~ornrnerciaf~erchant B: nk, Central
bank and World Bank.
Traditionally, small scale enterprises source thei! financing
requirements through private savings, borrowing from friends, Velatives and
the local money lenders, Ezike (1986, p.47) classified the m Ire common
sources into three namely. Institutional sources, private sourc :s and direct
government assistance.
1) PRIVATE SOURCES: Private sources include owners capital,
ploughed back profit and accumulated savings as well as soc'al loans from
friends and relatives. Under the present dispensation, deperdence on this
source of finance could be likened to building on shifting sand. This is
fi , because of low level of per capital income, many built in economic, social
r and environmental constraints as well as the inherent characteristics of the
indigenous businessman such as extreme individualism, lack of financial
credibility and extreme social pressure. Thus, these sources are virtually
ineffective for SSE's.
. .. 2) INSTITUTIONAL SOURCES.
The institutional sources are categorized into three different sub-
groups;
r- a) Commercial Banks.
b) Merchant Banks
t c) Specialized financial institutions and ESUSU/ Co-operative Societies.
a) COMMERCIAL BANKS:
The importance of commercial banks lies in the fact that they are at the grass
roots of development and as such are more suited to tap and mobilize funds
I - fi-om the surplus sectors of the economy and channel them to the deficit
sectors. However, in Nigeria, the experience has shown that commercial
banks are ill equipped to service the SSE's medium and long term needs.
This stems from the mismatch in the maturity of their deposits and loans. As
a result, Commercial Banks prefer to invest in ventures which are
economically desirable, technically feasible and commercially viable. The
3 1
demand for collateral securities beyond the reach of the average : mall-scale
enterprise.
Nevertheless, there seems to be an increase in Commer1:ial Banks
loans made available to the small business sector. According - o Owuala
(1987, p.7) the voIume of commercial banks loans to the sma 1 business L
sector rose from 2% of their aggregate loans and advance in 198(\ to 18.3%
in 1987. And presently the aggregate loans and advances is close t ) 30%.
b) MERCHANT BANKS
These are wholesale bankers principally concerned wit1 granting
credit on medium and long term basis. By virtue of the Central Ba 2k's credit
guideline they are expected to allocate a minimum of 16% of their total
loans and advance outstanding to small-scale enterprises wholly owned by
Nigerians. Like the commerciaI banks they performed below ex 3ectations.
In particular their maturity structures are predominantly short tern-.
c) SPECIALISED FINANCIAL INSTITUTIONS.
There is three specialized financial institutions from which ;SES have
received hnds in varying degrees. These are Nigeria Agricultur 11 and Co-
operative Bank, Nigerian Industrial Development Bank and Nigl :rim Bank
for Commerce and Industry. Of these three, only NBCI will bc discussed
since it is the greatest supplier of credit to small-scale enterpri ;es among
others.
NIGEFUAN BANK FOR COMMERCE AND INDUSTRY.
The NBCI set up in 1973 primary to provide equity and loan (:apital to
indigenous entrepreneurs and business organization for medium :md long
term investments in industry and commerce. NBCI operates a loan scheme
F..
for small-scale business called the Federal ministry of finance spec ial loans
for small-scale industries. Under the scheme, the bank provides lmg term
finance ranging form N5, 000 to N200,OOO accepting as collateral tlie landed -
property of the borrower or plants and machinery of the business. The loan
repayment is spread over an average period of five- (5) years. In 19116, NBCI
introduced, "seed capital" (a form of venture capital to assist retired civil
servants and soldiers who want to go into business with their initial capital.)
The loan ranges form N250,OOO to N1.5 million. The personcl stake of
the promoter should be 10% of the fund requirement but NBCI m.iy reduce
this to as slow as 1% depending on the type of project. No co.latera1 is
required, rather the emphasis is on the profitability of the project.
The sources of funds for the NBCI are grants by the Federal ministry
of finance and Central Bank of Nigeria. These source accordim
(1987,p.g) have almost dried up and the bank is strivi
U J
ng to be self reliant by
accepting term deposits from the public at competitive : rates of interest.
3. DIRECT GOVERNMENT ASSISTANCE
Government in recognition of the vital role of small-scale enterprises
in industrial development had made and continues to make efforts aimed at
promoting SSE's. In the 1960s, the small scale industries credit scheme
(SSICS) was established following the disappointing perforrnar ce of the
Federal loans board set up earlier to provide modest loans to s nall scale
Nigerian industrialist. According to Amao (1 9 8 7 , ~ . 193) S' ;E's was
supposed to be founded by pooling of resources from th: Federal ..
Government and State Government level while the credit sc'lerne was
- expected to be managed by the state ministries of industries trafle and co-
operatives through loan management committees. Under the scheme, credit
was extended to small industrialists for the purchase of mad inery and
equipment and for working capital.
Unfortunately, both the Federal and State Governmer t became
unenthusiastic to provide their receptive matching hnds part'y because
many of the financed projects were considered unsuccessful o+ing to the
weaknesses in the approval of the projects and in the necessary follow- up
action.
Other forms of direct government assistance include the esiablishment
- of agricultural credit guarantee scheme and the Central Bank c~edit policy
guidelines. Government's most recent efforts in the area of finan :ing small-
scale enterprises are the establishment of National Economic Rec ~nstruction
Fund (NERFUND) as well as the small-scale Industries Corporation. "
. According to Oshunbiyi (1989,p.lO) NERFUND was set to correct any
inadequacies over the past years which have stifled financing of small scale
enterprises and medium scale industries. The small scale and met ium scale I'
enterprise that can only be funded by NERFUND include manufac. wing and
agro related projects, mining, equipment leasing and other ancillar . projects.
Small-scale Industries Corporation on the other hand will serve as a co-
ordinating organization which will promote the growth of s.nall-scale
industries through the provision of credit facilities, techr ical and
management assistance as well as extension services.
2.7 EFFECT OF STRUCTURAL ADJUSTMENT PROG RAMME
ON SMALL SCALE ENTERPRISES.
Structural Adjustment Programmed (SAP) is a strategy introduce 1 in 1986
by the Federal Government to address the endemic problem of thc Nigerian
economy. Thus Okongwu (1988) stated that the aim of the poli :y was to
reflate the economy, provide for economic growth, generate err ployment
and improve the general well being of Nigerians. The major aim i ; to move
the economy in the direction of liaisez faire.The objectives of SAP include:
i) Optimal allocation of available resources to boost the produ :tive base
of the economy.
ii) Diversification of the economy and reduced dependence on ~ i l and on
import generally.
iii) The creation of a platform for reither sustainable non ir flationary
growth.
To achieve the above stated objectives, some policy instrurrmts were
put is place. According to Ikpe (1988,p.23) they include a freely f uctuating - exchange rate policy, privatization, revised tariff structure, in1 =rest rate,
deregulation policy and continuous formulation of other fiscal and monetary
policies to arrest some critical developments in the economy as 1 hey arise. .
Two of these policy instruments greatly affect the small-scale ,:nterprise.
First, the fluctuating exchange rate policy has resulted intc massive I*
devaluation of the Naira, since small scaIe enterprises are still sij ,nificantly
dependent on imported technology, the devaluation of the Nain makes it
extremely difficult for them to obtain the needed equipment.
Secondly, the deregulated interest rate structure made tl e cost of
credit (interest rate) to go up highly. As a result, most small-scale I mterprises
cannot obtain loan finance. Thus Osaze (1 986,p.8) stated tk at "banks
demand extensive collateral security from smaII scale industries :)ecause of
perceived high risks." It may then be said that the present di ;pensation
hampers the development of small-scale enterprises since they encounter
productive costs in procuring spare parts and replacing obsolete ec uipment.
The review of related literature provided the theoretical foul ldation for
this investigation.
REFERENCES.
( I ) Akinkugbe I .Om Evolving a National strategy for small-scale
business organizational development 1980, p.56.
(2) Amao J.0 " Modes of financing small scale industries
proceeding of the national conference on small scale industr es
and the development of Nigeria organized by NISER Ibac an 22-25
February 1987 p. 187.
(3) Amao J.0 Op cit P. 193.
(4) Ayuba, F.O. (1985) " A strategy for the development of
small-scale industries in Nigeria" CBN economic and
financial review, Vo1.23 No 3 September.
(5) Bate James Financing Of Small Business (London sweet
and Maxwell Publisher 1977 p.9 and 71).
(6) Berman A. Jeffrey " The Birth of black business " A report
from Harvard business school on small-scale business seriet (Part 1 1
No 21 186) P.3.
(7). Dada F.0 " Small firms in developing nations"
Business Time January 25, 1988 p.7.
(8). Durcher P.F. The Practice Of Management New York, Ha per
and brothers 1954 p, 197.
(9). Edemeryor M " Cause Of Failure Of Small Business"
Business Time September 16 1985 p. 13.
37
(1 0) Edemereyor M. Op cit P. 1 3.
(1 1). Enworom S.A. Entrepreneurship in Nigeria, Manawment i g
Nigeria Vol. 30 1994 p.25.
(12). Ezike J.E. "The stock market as a source of srnalI business fir ance
in Nigeria" Securities Market Jour
1986 p.45-47).
(13) Ezike E.J op cit p.47.
(14) Harries (1993) " Industrial entrepreneurship in N
in Wagner Nafziger, the relationshi
and entrepreneurship in Nigeri;
developing Area vo1.4 Nigeria (Apri
(15) Horn C.A Is small really beautiful 1982 p. 15
(1 6) Ibezim M.0 "Economic development in developi
countries problem and prospects" - Ac
(vo1.2 No. 1 1977)
(17) Ikpe K.I."Financing small scale business enterprises m N I ~ I ma
under the Structural Adjustment Programme
" ICONNEWS vo1.4 No3 3Ist January 1988, p 23.
(1 8) Ikpe K.1 Op cit P.45 citing president Ibrahim Babangida's
statement of budget 1988 p.24.
(19) Nanyappa "Small industries assistance programme in India,"
on 1 st Afro-African conference an the developr lent -
of small industries held in Cairo in 1969 p.9.
(20) Ndebbio l.E " Cause of small business failure in Nigeria
" Business Concord July 5 1988 p.7 L
(21) Nicolin curt Private industry in a public world. Addison We ley
Publishing company 1977 p. 15.
(22) Nwosu E.J " The political economy of ma11 business develol ment
in Nigeria". Nberia Journal of development studies
(vol . 1 No2 Enugu 1984).
(23) NwosuE.J. OPcitvol. 1 No2 1984
(24) Nzelibe C.G.Manapement of Small -Scale Business in Niq @.
Enugu fourth dimension publisher 1990 p.52..
(25) Nzelibe C.G op cit P.5.
(26) Okongwu S.P.C. " Statement on the fiscal budget
'' Management In Nigeria January to Februa y 1988.
(27) Okorie N.N. Small scale enterprises. Its impact on the Nige~ ia
economy Oduduwa Business Journal No 8 15 82 P.9.
(28). Onuoha, chima B (1996), " Small business enterprises and xonomic
deveIopment "in B. Chima Onuaha and C.1, Udensi,
government and business relations, the Nigerian
perspective. Enugu Precision printers and publi :hers.
3 9
(29) Onuoha, Chima B. (1994), Entrepreneurial development in
-. Nigeria; An integrative perspective Okigwv Nigeria:
AVAN global publication.
(30) Orji 11.0. "Policy options and new approaches venture
capital financing "Business Times" 14 September 1987 p.9.
(3 1) Orjialco O.F. Problem of small-scaIe enterprise in Nigeria.
The business Administrator vol. 15 UNN Enui ,u -
' 1987 p.40.
(32) Osaze B.E. "Developing small scale enterprises in
Nigeria "Business Time 17 February 1980 p.8.
(33) Oshurnbiyi Olufela "Ensuring survival of small scale
industries "Business Time April 10 1989. P. 10
(34) Oshunbiyi Olufela op cit p. 10.
(35) Owuala S.J. " Nigeria needs a comprehensive support polic:
for small business" Business Times 14 September 15 87 p.9.
(36) Rice G.H "strategic decision making in small business" Jou rnal
, of General Management vol. 9 No5 Autumn 1' 80 P.63.
(37) Roger G. "A practical planning for small business"
Ha ward Business Review vol. 42 No5 1964 p.( '8.
(3 8) Teriba o. Industrial development of Nigeria 1977 p.52.
(39) Ude J.O. "Key to successfU1 entrepreneurship
Business Concord Dec 1 1 1990 p. 1
CHAPTER THREE
RESEARCH DESIGN AND METIIODOLOGE
The essence of showing the details of the procedures used ill carrying
out this study in this chapter is to give the reader a background ir formation
on how it evaluates the findings and make concIusions.
RESEARCH METHODOLOGY
Two research methods were used for this particular analj sis, these
Historical research method
Descriptive research method using surveys.
The topic of study is that which has historical background. f :ence, the
historical research of the origin of the problem wiIl be appropriate and that
historical research interprets past, trends of attitude, event and fact.
Secondly, since this research was aimed at investigating t1 e factors
that frustrates the entrepreneurs, in the establishment of sr ]all-scale
industries, the descriptive method of research was considered adequate for
' the solution of the problems raised in the research. Hence, the dscriptive
method of research was used in the study.
3.2 SOURCES OF DATA
The researcher exhausted the two main sources of data c ~llection,
which are the primary and secondary sources.
PRIMARY DATA
The primary sources of data collection encompasses the -01lowing:
questionnaires administered to the entrepreneurs of the three firms and other
top managers whose operational limit fall within the scope specil ied in the
scope of the study. Questionnaires involve making a list of questions
prepared by the researcher for respondent who answers the que: tions and
return through mail the compIeted forms to the investigator.
But considering the class of manufacturers under study, the nesearcher
administered the questionnaires direct by himself and/ or his agen s. Oral or
. . personal interviews were also conducted. It involves conversatio:~ between
the interviewer (the researcher or his agent) and the respdmdent or
interviewee, with the sole purpose of getting certain informatior from the
respondents in their places of work or any other pIace for that ma ter that is
convenient for the respondent.
SECONDARY SOURCES
This source of data collection comprises the following: (a) P ooks
. (b) Magazines (c) Newspapers (d) Journals (el Seminar papers wh :re related
issues were discussed.
The final source of information was through observation of the fac .ors which
fnrstrate or encourage entrepreneurs in the establishment of .mall-scale
industries.
3.3 VALIDITY AND RELIABILITY MEASURING
INSTRUMENT.
Validity has got to do with the extent to which the instr lment of
measurement of the data succeeds in measuring what is intenc ed to be
measured. Therefore an instrument is valid based on the extent it is geared to
achieve the research objectives.
The validity of the instrument of this research was el sured by f- -
structuring the questions in such a way that they focused on th: relevant
information necessary for the achievement of the purpose and ob ectives of
' . the project. The questions were simplified to reduce ambiguity ayld make it
comprehensible to the respondents, this measure is to ensur : that the
instrument is reliable. In some cases, the same questions were differently
framed to confirm the consistency of the data and enhance the re liability of
the instrument.
The essence of the precautions above is to ensure that the instrument
possessed the necessary characteristics for a good measuring instr ument.
3.4 DETERMINATION OF THE POPULATION AND SE LECTION
OF SAMPLE SIZE
DETERMINATION OF POPULATION
The following small-scale firms were studied specific ally in the
research:
1. BRADOE ALUMINUM
2. KENMATEK ALUMINUM
3. SALMACO ALUMINUM
The population size was determined from the entrepreneurs, mar agement
and other few experienced staff of these firms, all located in Enuj,u urban.
The following are the number of entrepreneurs, management and (~ther few
employed staff whom the researcher felt that are in a position to ill in the
questionnaires.
TABLE 3.1 DETERMINATION OF POPULATION
Firms
Kenmatek Aluminum
Bradoe Aluminum
Salmaco
Entrepreneurs Management Experienced Total Staff
Aluminum TOTAL
DETERMNATION OF THE SAMPLE SIZE
From the information obtained from the population, the nun- ber of the
entrepreneurs, the management and other experienced staff vhom the
researcher felt can supply the information needed are 35 persc ns on the
whole from the three case study firms.
3 11
This other staffs are chosen along with the entrepre!,leur and
management based on the salary level and experience in the job. The sample
size is determined mathematically using the formula below.
1 + ~e~ .. Where
n = sample size N = the population E = allowance error or level of significance 1 = constant
Thus: N=35 E = 0.05
Substituting in the equation and solving for n, we obtained
1.80875 n = appropriate 32 (32)
The sample size is therefore 32 Since 32 is very close to 35,35 questionnaire .-.
will still be administered.
3.5 TREATMENT OF DATA
Descriptive method was used in analyzing the data obtainec from this
study. The data was properly tabulated in frequency distribution r nd further,
, for ease of interpretation, statistical figures such as bar chart, tables and
percentages could be used.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
This chapter analysed the findings of the study. 35 queslionnaires
were shared out, however 30 respondents filled and returned theirs
representing 85.7% success rate. I
After the questionnaires were collected, the researcher wer t through
the information supplied theredin and deductively analysed the facts -
presented on the entrepreneurial problems in the establishment of snalll scale
industries with particular reference to three selected firms namely;
1. Kenrnatek Industries Limited.
2. Salmaco Standard Aluminum Manufacturing Company.
3. Bradoe Nigeria Limited.
For the purpose of this study, the researcher made use of tables,
percentages, and bar chart to analyse the data collected. The following
are the findings from the major questions administered.
4.1 RESEARCH FINDINGS
1. What are the major sources of finance for small-scale industries?
TABLE 4.1 The major source of finance for small-scale industries.
Answers Personal savings
No of respondents 15
Loans from the bank / other financial houses Borrowed from friends
TOTAL 4.1 above shows that 50% of entrepreneurs started their business
Family TOTAL
- with personal savings. 33.3% of the respondents obtained their initial capital
10
5 0
30
through borrowing from banks and other financial houses. 16.7% of the
33.3% I
16.7% -4
respondents borrowed fi-om their friends while none of the respondents
borrowed from the family. The data revealed that the majo-ity of the
entrepreneurs started business with their personal savings and loans from the
banks and other financial houses, friend and relatives.
Unfortunately, Nigeria being a developing country has low per capital
income, thus it is very difficult for one to save a reasonable sum of money.
This is the major reason why entrepreneurs find it very difficult TO establish I - .
small-scale firms. I 7eJIly
2. What are the,problerns faced by entrepreneurs in the establishment of
their industries?
.-. TABLE 4.2: The problems faced by entrepreneurs in the establishment of -
their industries.
Answers Insufficient capital
I Bad location 1 1 I 3.3% 1
No of respondents 10
. .
From the above table 33.3% of the total respondents said that
insufficient capital was the major problem towards establishing small-scale
Lack of raw materials Scarcity of raw materials Lack of management know how
.-
industries. While 26.7% see their major problem as 1 f basic
infrastructure, while 16.7% attributed their problems to lack ot mmagement
know-how. Only 3.3% saw location as their major problems. T l e finding
8 6 5
1 TOTAL
revealed that insufficient capital, lack of basic infi-astructu raw
30
materials and lack of management know-how are some of tne promems that
103% 1
hinder entrepreneurs from establishing small-scale industries.
Bar chart of problems faced by entrepreneurs in establishing their husiness.
Fig. 1
KEY
I 1 Bad location
Scarcity of raw materials
Lack of basic infrastructure
Insufficient capital.
3. To what extent does insufficient capital affect entrepreneurs in the
establishment of their industries?
TABLE 4.3 The extent insufficient capital affects entrepreneurs in the
establishment of their industries.
( Marginally 6
Answers To a very great extent Great extent
From the table above, 47.69% of the respondents r--larl +L+
No of respondents 15 9
-1 TOTAL
' insufficient capita1 affect entrepreneurs to a very great ex1
O h of respondents
30
concluded that it affects entrepreneurs to a great extent w
attested that it affects entrepreneurs marginally.
4. To what extent does lack of basic infrastructures affect entrepreneurs
in the establishment their industries?
TABLE4.4 The extent lack of basic infrastructures affect entreprerleurs in
the establishment of their industries.
Answers Great extent Marginally Not at all TOTAL
No of respondents 10 12 8
30
% of respondents
-
Table 4.4 above indicated that 36.92% of the respondents testified that
lack of basic infrastructure affects entrepreneurs in the establishment of their
industry to a great extent, 53.84% revealed that it affects them marginally
while 9.24% says that it does not affect them at all.
5. To what extent does scarcity of raw materials affect entrepreneurs in
the establishment of their industries?
TABLE 4.5 The extent scarcity of raw materials affect entrepreneurs in the
-- establishment of their industries.
1 To a vew meat extent I 16 Answers
1 Great extent 1 10
No of respondents
Table 4.5 above revealed that 52.3 1 % of the respondents maintained
that scarcity of raw materials affect entrepreneurs in the establishment of
their industry to a very extent, 32.31% says that it affects them to a great
extenl
, 6
Marginally TOTAL
4 30
TABLE 4.6 The extent lack of management know how affects entrepreneurs
in the establishment of their industries.
The above table (4.6) revealed that 62.69% of the resl~ondents
indicated that lack of management know how affects entr
% of pondents
establishment of their industry.27.69% says that it affects entrepren x r s to a
To a very great extent Great extent Marginally TOTAL
great extent, while 4.62% testified that it affects them marginally.
10 12 8
30
' 7. What role have the government played in order to redress the issue?
TABLE 4.7 Role-played by government in order to redress the issue.
( commercial banks and I I I Answer
Making capital available through
' In table 4.7 above, 16.7% of the entrepreneurs agreed on the suffic iency of
No. of respondents 5
Development banks. Raw materials Import subsidy Provision of infrastructure TOTAL
capital made available by the government, while 33.3% indicate i on the
% of
availability of raw materials. It also revealed that 10% of the entrepreneurs
10 3 12 30
indicated government assistance through import subsides while 40 '/0 Of the
33.35; 10'6 40' 6 lOC% 2
r-
' respondents agreed on their support through the provision of infrast-uctures.
Generally, the government has not supported the growth of small-
scale industries as regards making capital available to them in the above
table and this has been the major problem faced by entrepren
8. What are the roles of small-scale industries in the penera1 economy.
TABLE 4.8 Role of small-scale industries in the ecol
Answers a) Creation of employment
I resources I I I
No. of respondents 70 or 10
b) Self- reliance c) Encourages the use of local
1 d) Manpower training 3 10% 1 I TOTAL 1 30 I I rj no/, I
9 8
The above table (table 4.8) revealed that 33.3% of the respo
26 7%
that small-scale business provide employment, while 30% agL;ScU C l l a L 1 C
makes one to be self-reliance other than waiting for peopI y you or
looking for non-existence jobs.
The table also revealed that 26.7% of the entrepreneurs rgreed that
small-scale industry encourages the use of local resources other than waiting
for imported goods at exorbitant prices, while 10% reveal:d that it
encourages manpower training.
9. What other factors cause the failure of an established business"
TABLE 4.9 Factors that causes the failure of an established busines5.
r._ .. TABLE 4.9 above indicated that 33.3% of the respondents testified that
Answer a) Under capitalization b) Lack of experience c) Poor business account ability d) Inadequate planning
TOTAL
under capitalization is the major cause of failure of an establishec business
while 16.7% revealed that lack of experience is another causcm of such
No. of respondents 10 5 5
10 30
failure. In the table above, it was also found out that another 33.3% of the
O/o of
respondents agreed that lack of proper planning is responsible for :he failure
of an established business while another 16.7% says it is partly d ~ e to poor
business accountability.
10. How did you recruit your employees ( indicate the main source only)
TABLE 4.10 Method of recruitment
.-
I - I
Answers a) Family members or relatives b) Through advertisement for vacancies in the newspapers or notice board. c) Through recommendation fiom fiiends d) Indicate other sources
TOTAL
No. of respondents 15 10
5
0 30
% of rrqondents 5( 1%
33.3%
1 t .7%
0% 00%
Table 4.10 revealed that 50% recruited their employees among their f~mi ly
members and relatives, while 33.3% recruited employees through ad~rert in
newspaper and notice boards. 16.7% recruited employees through
recommendation from friends.
1 1. Does your line of product face stiff competition?
TABLE 4.1 1 Level of product competition.
TABLE 4.11 Above shows that 83.3% of the respondents fac: stiff
..
-.
competition always while only 16.7% said that they sometimes face
competition. This indicates that most entrepreneurs are afraid of establishing
Answers a) Always b) Sometimes
TOTAL
small-scale industry because they could not find their feet amon'; other
competitive products.
No. of respondents 25
5 30
12. If yes, how do you overcome the competition.
83.3% 16.7% 100%
TABLE4.12 ways of overcoming competition,
.a
Answers - a) By working harder 3 % c) By media promotion d) By increasing the quality of the 12
Product. TOTAL 30
The information
respondents overcome
55
obtained from table 4.8 indicates that 10% of the
the competition by working harder. 16.7% of the
respondent said that they overcome there own competition by making the
product cheap. 33.3% carry out adequate product promotion so as to
overcome competition. 40% of the respondents do their's by increasi,lg the
- quaIity of the product.
This shows that entrepreneurs needed enough capital to either increase
- the quality of their product or embark on promotions and this could bs done
by advertisement.
13. Generally, do you easily secure adequate capital for your operations?
TABLE 4.13 Ease of sourcing for adequate capital
1 Answers 1 No.of respondents I
From the above table, 30% of respondents found it easy to secure alequare
capital for their operations while 70% did not find capital sourcing easy.
a) Always b) sometimes
TOTAL
14. How much was your initial capital?
9 21 30 11
TABLE 4.14 The initial capital used by entrepreneurs.
1 Answers
b) Above ?+50,000 below ~ 1 0 0 , 0 0 0
c) Above#100,000 but below I W00.000 I d) Above#200,000 but below
TOTAL
The table above revealed that only 10% of the respondents started their
business with amounts below %50, 000. 20% started with amounts above
W50, 000 but below #100,000 while 66.7% of the respondents started theirs
with amounts above N100,OOO but below N200,000.
From the information above, it is dear that only a few indi1:iduals
started with the sum of money above N200,OOO. The fact remains that
majority of the entrepreneurs have inadequate capital to establish their firms,
leading to the foIlowing consequences.
The entrepreneurs find it difficult to employ qualified lal~ourers
because payment for labour is a major contributor of the production and
where capital is inadequate, the available option is to minimize cost by
employing few personnel. At times, most entrepreneurs employ unqualified
staff so that they can pay their salary. The implication of this is that they
cannot give the firm qualitative service, this could lead to the collapse of the
firm.
No. of respondents 3
% of responlrlents 10%
With inadequate capital the entrepreneur has no option than to cut
down his production capacity according to the amount of resources at hislher
disposal. This has been the major probIem of small-scale industries in
Nigeria.
15. What in your opinion is the best way to make capital availablc to
Small- scale entrepreneurs?
TABLE 4.15 Best ways of making capital available to smzll-scale
entrepreneurs.
Answers a) Reduce interest rate b) Reduce bank requirements
c) Government guarantee e) Making small-scale
Table 4.15 revealed that 33.3% of the total respondents maintained that the
best way to make capital avaliable to small-scale entrepreneurs is by
seducing interest rate and bank collateral. 13.3% are of the opinion th: t it is
by making small-scale indostries a preferred sector while 16.7% sail1 that
government acting as guarantee to the entrepreneurs will help banks to grant
them loan.
Com~onent bar chart best wav to make catital available.
No. of respondents 10 10
Industries a preferred sector f) To create more development banks
TOTAL
% of
5 4 13.3%
1
30
3.3%
100%
FIG. 1 1
KEY
I ( Reduce interest rate
Reduce bank requirements
Government guarantee
Making small-scale industries a Preferred sector. To create more development barks.
C
16. Is government policies favourable to the establishment
and management of your business.
TABLE 4.16 The effect of government policies on the establishmelt of
small-scale industries.
Answers I No. of respondents I % of responden is I a) Always 4 13.3%
TABLE 4.16 above shows that 86.76% of the respondents agree(1 that
b) Sometimes
government policies are not favourable to the establishment and
management of their business, while 13.3% said that it is favourable tr) their
26
business.
3
86.7% TOTAL 30 100%
TABLE 4.1 7 Areas were this policy does not favour
1 guarantee I I I
[ Answers Tax law & regulation importation of raw materials Business registration NO policy on government
When the respondents were asked to speci@ the area where government
policies does not favour their business, 23.3% of the entrepreneurs answered
No of respondents 10 12
5 3
I TOTAL
that it is on the area of tax law and regulation, the small-scale enterprise are
usually taxed heavily. 33.3% said that government policy does not. favour
-' importation of raw materials. 16.7% of the entrepreneurs said that thl:i-e is no
policy on government guarantee and this affects them adversely especially
when they want to obtain loan from bank and other financial houses. Finally
% of respor~dents 23.3% 33. % 26.7% 16.7% 4
30 100% 1
26.7% of the respondents stated that government policy does nct favour
importation of raw materials.
18. In which of the foIIowing operational areas would you need expert
advice? "
- TABLE 4.18 Areas where experts advice is needed.
% of Answers a) Financial record keeping b)Technical knowledge c) Management d) Planning
TOTAL
No. of respondents 8 3
10 9
30
60
The infomation from table 4.17 revealed that most of the res ~ondents
(33.3%) indicated management as the area where their businesr, needed
advice. 26.7% needed advice mostly on how to keep financia records
followed by 30% who indicated that they needed some counsel on ~lanning.
10% of the respondents needed advice on how to get loan from .he bank.
The low percentage is caused by the attitude of the financial ixstitutions
..-.. whose stringent lending conditions make it almost impossible for sl nall-scale
business to obtain financial assistance from them. Most of the re ipondents
are not just interested or have faith in the financial institution as a source of
revenue. They believe in self-financing.
From table 4.17, it will be clearly seen that most of the ent Sepreneurs
of small-scale business studied need counseling mostly on how o manage
money and how to plan well. The problems of poor manag:ment and
planning may have contributed to the stagnant nature of these industries,
since poor management and planning is a major pre-requisite in ar ~y business
organization.
-.
6 1
Bar chart of areas where expert advice is needed. FIG. 1 1 1
KEY
I .................. I How to manage
M How to plan
How to get loan
owoooaooooo 000000000000 Financial record keeping
62
CHAPTER FIVE
SUMMARY OF FINDINGS, RECOMMENDATIONS AND
CONCLUSIONS.
5.1 DISCUSSIONS.
A lot of information have been given on the importance of sinall scale
industries as the life wire of economic development of any nation. But these
small scale businesses experience/encounter some problem,< in the
establishment and operating of their business in as much as most of their
businesses have their existence within a short period. Nzelibe 11 990 p.5)
confirmed this in her research which revealed that three out of
small scale business fail every year.
four
The increasing rate of failure experienced by small-scak ouslness
operators have been a source of major concern to many ind viduals,
industrialist and government. According to Akpakpa (1988 p.2) the reason
for small scale business failures may be attributed to the fact ihat the
entrepreneurs lack the resources and expertise to manage these entxprises
on one hand and that the general economic environment of this country is
not conducive for small business to thrive. And also the commercial banks
are not making things easy by their refusal to grant loans to most of the
entrepreneurs. Most of these small-scale businesses go out of business due to
their lack of competitive strength with the big ones.
The Federal government in 1985 tried to reduce the level of
unemployment in the country by introducing the National Directorate Of
Employment and entrepreneurship development programme. The major aim
of this is to grant loans directly to young graduates to establish small-scale
business of their choice. This programme have really helped these set of
individuals and others to establish a business away from their field of
specialization. Based on this fact, such entrepreneurs should have a sound
knowledge of the problem which they are likely to encounter while
establishing their own small scale firms so as to know how to overcome
them and excel in their various businesses.
5.2 SUMMARY OF FINDINGS.
The study revealed that majority of the entrepreneurs started their business
from the scratch while very few inherited it from their family or relations.
It was also gathered that most of them source their materials from
foreign companies thereby making the cost of production and of-course
sales to be high.
A good number of these entrepreneurs source their initial capital from
family members and friends.
It was also discovered that most people go into business because of
economic motives.
The next important reason was found to be lack of unemployment. This
conforms to Nzelibe's view (1990,pS) that unemployment has forced people
64
into establishing businesses of their own which they are not ready for. The
end result of such venture being business failure. -
A high percentage of the entrepreneur have obtained either 1 WD,BSC
or BA showing that most of them are literate. Illiteracy on the part of the
entrepreneurs is one of the problems they face in the establisiment of
small-scale industries.
The study revealed that about 83% of the entrepreneurs got their
business idea through apprenticeship for periods ranging from 3 to 5 years,
while the others did not undergo any training.
Majority of the entrepreneurs employed their staff throug'~ family
members or through recommendations from friends. Only very f e ~ embark
on advertising the vacancies in newspapers or notice boards.
This shows that entrepreneurs do not base their recruitment on merit but on
sentiments.
The study revealed that entrepreneurs face stiff competition and
majority of the entrepreneurs overcome the competition by improvin: on the
quality through promotion.
It was also discovered that the major problems faced by the
entrepreneurs are lack of capital, poor management, lack of infrast~vctural
facilities, scarcity of imported raw materials and bad location of the
industries.
High percentage of the entrepreneurs started business w
- above N100, 000 but below N200, 000 while very few respond1
with amount above N200,OOO showing that entrepreneurs have Inadequate
capital to establish their firms.
83.3% of the entrepreneurs applied to banks or financial ins itutions b -
for assistance while only 16.7% did not apply. The study also revealed that
- out of all the people that requested for loans, only few entremenelTrs were
granted loans while greater majority had their request iurneu uu7,vn. lne
entrepreneurs revealed that the reason for the poor assistance ot the bank is
' due to the fact that banks see small scale business as a source c
also banks demand for collateral securities before loan is granteu CIJ LU U U L ~
~f credit risk,
.A r... A l..r.-l,e
also request for government guarantee. The study a1
of fund was not easy at all for over 70% of the ent --,----__.--.
also revealed that most entrepreneurs suggested that capital c o ~
be made available by reduction of interest rate and Cwlait:ral, and
.. government guarantee.
Finally the study revealed that majority of the respondents needed
advice in the area of management and planning. The fact that poor financing
is a major problem of these industries called for a more pruder~t way of
managing the business. Also the call for advice on how to pla~l well in
business showed the weakness of these small business over plannir rr.
66
5.3 RECOMMENDATION.
Based on the findings of this study, the following recommeqdations
are made.
Since it has been discovered that the major problem~,facec' by the
entrepreneurs is lack of capital to carry on with their businesses, it is
suggested that the banks and other financial institutions would adjust their
lending habit to accommodate the competence of small scale industries +
particularly in the demand for high interest rate and collateral securi5es. The
entrepreneurs must not own landed properties before loans are granted to
them. Credit institution: should create feasibility study department whose
duty will be to investigate the project proposals of the entrepreneurs to know
if they are viable enough to attract loan facilities. They should also establish
business advisory units where these young entrepreneurs could seek for
advice. The government can solve this financial problem situation by
relaxing some of its policies relating to banking because it has been
discovered that banks are operating within a very rigid rules s€t by the
monetary authorities.
It is also recommended that a small-scale credit guarantee scheme be
established to reduce the risk of lending to small industrialists. It is
suggested that the entrepreneurs should advertise their vacancies so that
candidate will come from different places to vie for the oost instead of
basing their employment on recommendations from frie
67
This will help to avoid sentiments in employment and more capable hands
will be employed. The entrepreneurs of small-scale industries must be
educated on the need to separate ownership and management where the
managetnent skill and efficiency do not lie in such entrepreneurs.
The government should provide basic infrastructures such as L
electricity, good roads and pipe borne water in the rural areas to stimulate
4 , . - the establishment of industries in these areas.
There is need for proper planning at the onset of business and fi:asibility
study should be carried out so that the entrepreneurs will have already
- mapped out strategies for carrying out their business operations.
In the monitoring or controlling of these business, pre-controls,
current and past-control methods should be employed. These contr-01s will
enable management to establish desirable standards, measlire the
performance, compare the actual performance with the standards m d then
make adjustments to correct deviations and regard goad performance.
.. Other recommendations include the need for sourcing out raw
-. - -
. materials locally, the use of dynamic and aggressive salesmen
good sales, possible disposal of fixed but idle assets to enhance wwr~lng
capital position and seek outside management counsel to assist in various
management problems. 1 .
This study does not claim anyway to have made exhaustive
investigations on all the problems encountered by the entrepreneu-s while . -
68
establishing small-scale industries in Nigeria. The study has been
concentrated on the selected small-scale industries in Enugu urban. It is
therefore suggested that similar studies be carried out in many other states. It
is strongly believed that such studies will help in no small measure to
highlight possible peculiarities of each area studied. L
5.4 CONCLUSIONS
- The government over the years have recognized the vital role sm: 11 scale
enterprises can play in ensuring meaningful and sustainable zrowth.
Unfortunately, it has been discovered that small scale business entrepreneurs
are faced with many problems such as insufficient capital, lack of trained
and qualified staff, lack of infrastructures, inability to attract enough market
and make predictions about the economy, lack of planning, c o m ~ etitive
weakness and lack of inventory control e.t.c.
A number of recommendations have been introduced to ass st the
growth of this class of enterprises. One major area of assistance is that of
improving access of small scale enterprises to credit throug'~ the
establishment of a small scale credit guarantee scheme to reduce the risk of
lending to small scale industrialists, the use of outside management cc unsel
to assist in various management problems and in educating 0 7 the
entrepreneurs on the benefit of franchising since it could shield them from
aggressive competitions of the big industries.
69
In the light of the above it is believed that this work will be~efi t not
only the new entrants but those already engaged in various iields of
businesses.
REFERENCES
1) Akpakpa B.A. Management and monitoring of small scale industry ,.
May 4 1988 p.2.
. 2) Nzelibe C.G. Management of small-scale business in Nigeriit Enugu
fourth dimensions publisher 1990 p.5.
BIBLIOGRAPHY BOOKS + Bate James Financing Of Small Business (London Swmt and
Maxwell Publisher). 1977 P.9 and 7 1.
+ Broom H.N and Longnecker J. G."Small Business Management" Ohio south publishing company 1986 P 1 1.
+ bucker P. E The Practice Of Management New York, Ha~per and brothers 1954 P. 197
+ Hisrich R. D. and Peters M. P. Entrepreneurship Starting Deve 'oping - And Managing A New Enterprise Boston R. R. Donelly aqd sons
company 1989.
+ Nicolin Curt Private Industry In A Public World Addison 1 Jesley Publishing company l977.Pl5
+ Nzelibe C. G. Management Of Small-Scale Business In Nigeri:: Enugu fourth dimension publisher 1990 P.52.
+ Steinhoff Dan and John Burges F. Small Business Management Fundamentals fifth edition, printed in U.S.A., 1988 P.15.
+ Steinhoff Dan and Burges John F. op cit P.4
+ Steinhoff and Burges op cit P. 16 citing President Jimmy Carter, White House Conference On Small Business. Washington IC. Jan. 1980.
+ Steinhoff and Burges op cit P. 16 citing President Ronald Reaga 13 Proclamation At Small Business Week Washington DC.May 8,1988.
MAGAZINES AND JOURNALS
+ Akinkugbe 1.0. Evolving a National Strategy for small-scale miness organizational development 1980 P.56.
+ Amao J.O. "Modes of financing small-scale industries." Proceedi ~ g s of
the national conference on small-scale industries and the development of Nigeria organized by NISER IBADAN 22-25 January 1 987 P. 1 : 7.
4 Amao J. 0. op cit P. 193.
4 Anammah B.O. B "SAP and small-scale industries" Business Times - August 14,1989 P. 18
4 Berrnan A. Jeffrey " The birth of black business." A report from Harvard business school on small-scale series (part I1 No 2 1 186) P.3 Central Bank of Nigeria circular No2, 199 1 Lagos CBN puhliratinn
4 Dada F. 0. Small firms in developing Nations Business Ti1 January 25, 1988 P. 7
4 Edemereyor M. "Causes of failure of small business" busmess i lmes September 16, 1985 P. 13
4 Edemereyor M op cit P. 13
4 Eworom S. A. Entrepreneurship in Nigeria Management In Nigeria, Vol. 30, 1994 P. 25
4 Ezike J. E. "The Stock market as a source of small business finmce in Nigeria". Securities Market Journal vol. 3 1986 P.45-47.
+ Ezike op cit P.47
+ Federal Ministry of Industry. Industrial Policy Guideline Governwent printer.
4 Harris (1993) "Industrial Entrepreneurship in Nigeria."Cited in wagne Nafziger the relationship between Education and Entrepreneurrhip in Nigeria. The journal of developing area vol. 4 Nigeria (April 1970, P.350)
4 Ibezim M.O. "Economic development in developing countries, prcjblems and prospects". Academic Star (vol. 2 No 1.1977)
4 Ikpe K. I "Financing small business enterprises under the Stmctural Adjustment Programme" ICONNEWS Vol. 4 No 3 ,3 1" July 1988. P.23
+ Ikpe K. I. Op cit P. 45 citing President Ibrahim Babangida stptement of budget 1988 P.24
+ Inyang E. E. and Ukpong G. E. A. Review of small-scale elterprises credit.
+ Delivery strategies in Nigeria Seminar Paper (1992) P. 23.
+ Nanjappa " Small industries assistance programme in India. On 1'' Afro- African conference on the development of small industries heli in Cairo in 1969 P.9.
+ Ndebbio I. E. "Causes of small business failure in Nigeria" Business - Concord July 5 1988 P. 7.
+ Nigeria Bank for Commerce and industry: the Stallion Lagos Vol. Xxxii 1989. Nwosu E. J. " The political economy of small business development in Nigeria". Nigeria Journal of Development, Studies (Vol. I No. 2 Enugu 1984).
+ Nwosu E. J. Op cit vol. I No. 2 1984.
+ Okorie N. N. "Small-scale enterprise. Its impact on the Nigeria economy" Oduduwa Business Journal No. 8,1982, P. 9.
+ Okongwu S. P. C. "Statement on the fiscal Budget" Managelnent in Nigeria, January to February 1988.
+ Orji H. S. "Policy Options and New Approach Venture Capital Financing" Business Times September 14 1987, P.9.
+ Orijiako, 0. F. "Problems of small-scale enterprises in Nigeria"
4 The Business Administrator, vo1.15, U.N.N. Enugu 1987,P. 40. Osaze, B. E. "Developing small-scale enterprises in Nigeria9'Business Times February 17,1986, P. 8.
+ Oshunbiyi, Olufela "Ensuring Survival of small-scale industries (6
Business Times April 10, 1989, P. 10.
+ Oshunbiyi Olufela, Op cit P. 10
+ Owuala, S. J. "Nigeria needs a comprehensive support policy for small business" Business Times September 14, 1987, P. 9.
+ Rice G. H. "Strategic decision making in small-scale business" Journal of General Mana~ement vol. 9, No. 5, Autumn 1980, P. 63.
+ Roger, G. "A practical planning for small business" Haward Business Review vol. 42, No. 5, 1964, P.98
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to successful entrepreneurship" Business Concord Dec 1 1, 199 , A . , , .
- 4 Yewande E. 0. " Financing small-scale business in Nigeria" Business Times September 9 199 1, P. 14
74
APPENDIX I
RESEARCH QUESTIONNAIRE FOR SMALL ENTREPRENEU RS.
I am a postgraduate research student working on the topic
"Entrepreneurial problems in the establishment of small-scale indust] ies". I
sincerely solicit your assistance in completing this questionnaire, whir :h will
help me in collecting relevant information for the survey. All infornlation-
supplied would be treated in absolute confidence and used only jor the
purpose of this study.
Thanks for your anticipated co-operation.
Yours faithfully,
Okenyi C.A.
PG/MBA/02/3 6994.
Department of Managemer t
University of Nigeria
Enugu Campus.
Please tick (I/Jln the box that satisfies your answer to the fo: lowing
question.
1. What are the major sources of finance for small-scale industrie: ?
a) ( ) Personal savings.
b) ( ) Loans from the bank and other financial house
c) ( ) Borrowed from friends
d) ( ) Family.
( ) Marginally.
To what extent does lack of management know hov
entrepreneurs in the establishment of their industries?
( ) To a very great extent
( ) Great extent
( ) Marginally.
What role have the government played in order to redress the i
( ) Making capital available through commercial bar
development banks
( ) Raw materials
( ) Import subsidies
( ) Provision of infrastructure.
8.What are the roles of small-scale industry in the general ecor m y '
a) ( ) Creation of employment
b) ( ) Self-reliance
c) ( ) Encourages the use of local resources
d) ( ) Manpower training
9.What other factors can cause the failure of an established busi less
a) ( ) Under capitalization
b) ( ) Lack of experience
c) ( ) Poor business accountability
d) ( ) Inadequate planning.
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10. How did you recruit your employees (indicate the maill source only)
a) ( ) Family members or relative
b) ( ) Through advertisement for vacancies in newspapers or
bill boards
c) ( ) Through recommendations from friends.
d) ( ) Indicate other sources
1 1. Does your line of product face stiff competition?
a) ( ) Always b) ( ) Sometimes
12. If yes, how do you overcome the competition?
a) ( ) By working hard
b) ( ) By making the product cheaper
c) ( ) By increasing the quality of the product.
d) ( ) By media promotion.
13. Generally, do you easily secure adequate capital for your operations?
a) ( ) Always (b) ( )Sometimes
14. How much was your initial capital?
a) ( )Below W 50,000.00
b) ( )Above W 50,000 but below U 100,000
c) ( ) Above 81100,000 but below N2200,OOO
d) ( ) Above $4200,000 but below ~300,000
15. What in your opinion is the best way to make capital availablt to
small-scale entrepreneurs?
( ) Reduce interest rate
( ) To create more development banks
( ) Reduce bank requirements
( ) Making small-scale industries a preferred sector
( ) Government guarantee.
Are government policies favourable to the establishment and
management of your business?
( ) Always (b) ( ) Sometimes
If yes, specify the areas where this policy does not favour in your
business?
Importation of raw materials
Tax law and regulation
No policy on government guarantee
Business registration
In which of the following operational areas would you need
expert advice?
( ) Financial record keeping
( ) Technical Knowledge
( ) Management
( ) Planning.