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SMALL SCALE INDUSTRIES AND INDUSTRIAL DEVELOPMENT IN NIGERIA
THE CASE OF NIGER DELTA REGION
TABLE OF CONTENTS
Title Page i
Table of Contents v
CHAPTER ONE: INTRODUCTION
1.1 Introduction 1
1.2 Statement of the problem 2
1.3 Objective of the study 5
1.4 Research question/hypothesis 6
1.5 Significance of the study 8
1.6 Delimitation and limitation 10
CHAPTER TWO: THEORETICAL BACKGROUND AND LITERATURE REVIEW
2.1 Introduction 11
2.2 Background 11
2.3 Definitions 13
2.4 The role of MSE sector in the economy 14
2.4.1 Contribution to employment 15
2.4.2 MSEs Contribution to output 15
2.5 Constraints of the MSE sector 18
CHAPTER THREE: METHODOLOGY
3.1 Introduction 23
3.2 Research design 23
3.2.1 Sample size 23
3.3 Method of data collection 24
3.4 Techniques of data analysis 25
3.5 Summary 25
CHAPTER FOUR: DATA PRESENTATION
4.1 Introduction 27
4.2 Secondary data presentation 27
4.3 Primary data presentation 29
4.4 The Chi-Square (X2) test 31
4.4.1 Calculation of expected frequencies 32
CHAPTER FIVE: DISCUSSION, CONCLUSION AND RECOMMENDATION
5.1 Introduction 36
5.2 Discussion of findings 36
5.3 Conclusion 37
5.4 Recommendation 38
The research work examined the dynamic role of small and medium scale enterprises as the engine of growth in developing process of the Niger Delta region of Nigeria. The Niger Delta region of Nigeria is endowed with natural resources, especially hydrocarbon deposits, and crude oil exports from the region donates to the Nigerian economy, accounting for over 90% of the nation’s total export earnings, also has abundance of natural gas with potential values. With all these characteristics of the Niger Delta region one would have expected that development of this region will be rapid but the reverse is the case, that is where the MSEs comes in to play its role as the engineering factor of growth and development in the area. In that MSEs constitutes at least 95% of total enterprises are relied upon to:
Ø Accelerate the rate of job creation
Ø Raise productivity through various forms of innovation
Ø Create entry points or opportunities for entrepreneurship
Ø Facilitate transfer of technology
Ø Create opportunities to utilize resources that might otherwise remain idle.
Ø Raise the local content of large companies which are mostly multinationals. Various attempts in policies have been put in place adopted my policy makers to promote small and medium scale enterprises. A great deal of emphasis has been placed on scheme designed to improve access to credit by MSEs in the belief that capital shortage is a major constraint on the establishment and growth of enterprises. One of the latest schemes is the small and medium industries equity investment scheme (SMIESI). This study is one of the strategies being adopted by the central bank of Nigeria (CBN) to ensure SMIEIS, unlike previous schemes, to achieve the goals set out for it.
In posing the Niger Delta region as a development, which constitutes the central theme for this discourse, we need to briefly explicate the meaning of the Niger Delta Region.
The Niger Delta Region means different things to different people and interests. In terms of natural and human resource characteristics, here professor Onokerhoraye (2000) defines the Niger Delta Region in terms of its geology, geography and ethnography. There is hardly any controversy over the geological, geographical and the ethnographical meaning of the Region. With the ascendency of crude oil in the Nigerian economy, the Niger Delta Region is synonymous in the perception of many Nigerians, with the oil producing areas of Nigeria. The provisions of the recently passed Niger Delta Development Commission Act, 2000/and of its forerunner, the Oil Mineral Producing Areas Development Act, 1992 accentuate this perception.
The Niger Delta region has thus increasingly emerged as a distinct socio-economic political formation, characterized by huge resource extraction from it over the years to the rest of the world and re-cycled for development of the Nigerian people and communities (minus the people and communities of the Niger Delta Region).
In consequence, the Niger Delta Region has been characterized by enormous problems of increasing poverty and improvisation, backwardness and under development starkly manifested in increasing rates of unemployment and crime, and marked by enormous problems of growing internal colonialism. We seek to demonstrate the hypothesis that the current developing crisis of under development and poverty of the Niger Delta Region has been a manifestation of the pattern of petroleum resource exploitation and the resultant distorted and perverse fiscal federalism in Nigeria. To the extent of the demonstrate of this hypothesis, we will identify and discuss alternative development option for empowering and developing the Niger Delta Region. In the cause of discussing alternative development options, emphasis will be made on small scale industries and industrial development impacts on the Niger Delta Region of the Nigerian economy.
1.2 STATEMENT OF THE PROBLEM
The Niger Delta Region of Nigeria is endowed with natural resources, especially hydrocarbon deposits, and crude oil export from the region dominates the Nigerian economy, accounting for over 90% of the nation’s total export earnings. There is also an abundance of natural gas with potential value far in excess of income derived from crude oil. Indeed the Niger Delta region has positioned Nigeria as the largest producer of crude petroleum in Africa, with a third of the 60billion barrels of the continents proven reserve and in among the world’s top ten producers.
In addition the region hosts key industries, including three refineries, two petrochemical plants, liquefied natural gas plants, a fertilizer plant; around which numerous economic activities revolve. The region is therefore, locally and internationally strategic.
Within this background, one would expect the region to be brimming with prosperity. Anyway the opposite is the case, with poverty for the majority of the people, both in the rural areas, where about 75% of the population resides, in the urban centres.
Just as earlier mentioned in the introductory part of this discourse the region is characterized by enormous problems such as:
i. Inadequate infrastructure i.e. road, water, electricity, telecommunications, etc.
ii. Low level of economic activity, especially in the rural areas
iii. High unemployment, especially among youth.
iv. Prevalence of abandoned and/or poorly executed projects.
v. Lack of/dilapidated social infrastructure schools, healthcare facilities etc.
vi. Low standard of living.
vii. Restiveness, especially among youths in Delta, Bayelsa and Rivers States.
The Niger Delta Region master plan design and development framework provides for measure geared towards tackling poverty at its roots and therefore, addresses seven broad sectors:
ii. Environmental management
iii. Agriculture, forestry and aquaculture
iv. Private sector promotion.
vi. Social development
It also has a major focus on rural development. The awareness of the need to promote a viable private sector is borne out of the clear realization that as in other successful economies such as Japan, united states, Hong Kong, Singapore and other Asian countries who has attained developed state, got there through development of micro and small enterprises. The private sector can be the engine of sustainable economic development in the Niger Delta Region and MSEs can also play a major role in it. Strong emphasis has to be on more income earning opportunities in a friendly business environment so that the bridge within the poor and the rich will be gaped by engaging in productive and well-paid work suggested by master plan. Other alternative development policy options directed at radically accelerating and restructuring the Nigerian economy along the path of self-reliance, people centered integrated and poverty alleviating development, which conceives economic development as a process that encompasses a progressive advancement form an inferior socio-economic state, characterized by the dominance of low productivity of primary production, slow growth or stagnation in employment generation, wide spread poverty, and low quality of life for the bulk of the population to a superior state characterized by high level of living standards, that is based on a sustained rise in productivity associated with advancing technology, full-employment, and high level of per capital income, even at these is still not satisfactory. The growth and development rate of the Niger Delta region economy is not encouraging at all, thus giving rise of interest in this project to seek investigation as to why problems and setbacks still exist and occur in the rapid development of this region. The crime rate is very much at an alarming state, insecurity of lives and property that raises the question of where are we going to? Who is the next on line to go down? Political crisis bombing and burning of properties, prison yards being bombed and setting prisoners free and some death, all manners and all sorts of crime you can ever imagine. Foreign investors withdraw investments leaving us with the question which way forward? How do we attain development irrespective of all government interventions and policies put in place? This is what we are to find out.
1.3 OBJECTIVES OF THE STUDY
This study has its major focus, the task of reviewing the existing situation of micro and small enterprises as well as informal enterprises in the Niger Delta Region with the aim and objective that play their role in the socio-economic development of the region to proffer solution on how the sector can be supported in order to ensure growth and expansion of existing enterprises as well as development of new ones.
i. To determine the impact of the small scale industries on employment creation and skills acquisition in the area.
ii. To ascertain the impact of small scale industries on the industrial development of the Niger Delta Region.
iii. To find out if entrepreneurial spirits is present in the region; and
iv. To analyze the problem militating against the small scale industries or MSE in their bid to achieve industrial development.
1.4 RESEARCH QUESTIONS/HYPOTHESIS
The study shall be guided by the following research questions as we gradually make progress:
i. Will a boost in small scale industries bring about industrial development in the Niger Delta region?
ii. To what extent has the small scale industries contributed to the creating of employment opportunities and promotion of skill acquisition in the Niger Delta Region and of what effect is it?
iii. What are the problems hindering the growth of MSEs in the area?
iv. If there is any of such constraint there, why are more and more people venturing into small medium scale business.
v. Is there any aid or solution put in place by government or non-constraints agencies to reduce or stop these challenges/ constraints facing MSEs and if there were any in place, how effective was it
vi. How do these constraints faced with MSEs influence or affects the Nigerian economy?
viii. What are the benefits derivable from this sector?
In summary to demonstrate the hypothesis that the current deepening crisis of under development and poverty of the Niger Delta Region has been a manifestation of the pattern of petroleum resource exploitation and the resultant distorted and perverse fiscal federalism in Nigeria. And these are in alternative development options for empowering and developing of the Nigeria Delta Region.
1.5 SIGNIFICANCE OF THE STUDY
The Niger Delta Region of Nigeria Abia. Akwa-Ibom, Bayelsa, Cross River, Delta, Edo, Imo, Ondo and Rivers State is an area endowed with immense natural resources, especially hydrocarbons. Crude oil production and export from the region dominate the economy, accounting for over 90% of the Nation’s export earnings. It is a also estimated that the value of natural gas in the region when harnessed could significantly exceed the total economic benefit being derived from crude oil presently. This confers on the region a considerable economic role and value in both national and international terms. The balance development objectives of the current revenue allocation system has paradoxically, created conditions of deepening crisis of underdevelopment and of grinding poverty in the region because the objectives has failed to address practical development policy issues such as environmental impact of resource exploitation, intergenerational gap created by present resource exploitation, and balancing present losses (opportunity costs) with gains/benefits to the area where revenue generating resources are located. This reality has increasing been brought to national and international audience by the daily anguish of the Niger Delta people in an eye of instant communication technology, graphically describing how the area is saddled with destruction trough the activities of the oil industry, ecosystem, topography and surface vegetation, and how many lives are currently being lost, due to fire outbreak from oil pipes, farmlands, fish ponds and homes are being devastated by oil pollution and leakages of oil pipelines.
Studies have shown that micro and small enterprises (SMEs) have in many countries provided the mechanism for stimulating indigenous entrepreneurship, enhancing greater employment opportunities and aiding the development of such countries. They help to mobilize savings for investment and promote the use of raw materials as well as mitigate rural urban migration. MSEs in these countries are regarded as the engine driving the growth of the economy.
Therefore, a well-developed and growing MSE sector in the Niger Delta is considered to be of immense importance putting into consideration that in the Niger Delta, a large majority of the business are micro/small enterprises accounting for about 75% of the total employment in the region with potentials of employing even more.
The appropriate of this work further consist in the fact that current government policies and programmes deigned to eradicate poverty, unemployment etc the economy in geared towards encouragement of small scale industries. The recent federal government of Nigeria policy under the leadership of President Olusegun Obasanjo is focused on poverty alleviation and creation of jobs through self-employment and small scale industries. This study of nature proves useful to assist NDDC, government and non-governmental agencies and international organization intervene in the development of the MSE sub-sector of the Niger Delta Region, by articulating and prioritizing the programmes, policies and infrastructure required for developing it.
1.6 DEFINITION AND LIMITATION
This work as a matter of fact largely borders on developmental strategies; programmes and policies aimed at the strengthening these inter related components with a view to ultimately producing a vibrant MSE sector in the Niger Delta. Also the rationale here is that manufacturing activities are capable of increasing the degree of self-reliance of our economy. Main while the study is limited to access of finance which is a very critical component of MSE development. Medium scale industries where there is foreign interest were less using SMIEIS funds. A number of firms in the food and beverage sub-sector refused to complete the questionnaire because they were not registered by NAFDAC and were afraid of the implications of providing data about their firms. Form the result of the questionnaire it shows that a lot of people are keeping away from manufacturing and they prefer selling finished goods.