THE IMPACT OF GOVERNMENT POLICIES ON SMALL AND MEDIUM SCALE ENTERPRISES IN PORT HARCOURT LOCAL GOVERNMENT AREA OF RIVERS STATE.
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THE IMPACT OF
GOVERNMENT POLICIES ON SMALL AND MEDIUM SCALE ENTERPRISES IN PORT HARCOURT
LOCAL GOVERNMENT AREA OF RIVERS STATE.
TABLE
OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgment iv
Table of contents v
List of Tables vi
Abstract vii
CHAPTER
ONE: INTRODUCTION
Background to the study 1
Statement of the problem 3
Purpose of the study 4
Research questions 5
Hypotheses 5
Significance of the study 5
Scope of study 6
Limitation of the study 6
Organization of chapters 7
Definition of terms 7
CHAPTER
TWO: REVIEW OF LITERATURE
Theoretical framework 10
Definition, characteristics and benefits of
SME 10
Government policies affecting the growth and
development of small and medium scale enterprises (SMEs) 12
Polices and its implications 10
Government policies affecting the growth and
development of small and medium scale enterprises (SMEs) 15
How government policies on small and medium scale
enterprise affect employment process 19
The impact of government policies on small and
medium
Scale profit 22
How government policies affect the ability of
small and medium
Scale enterprise to survive 23
Impact of government policies on small and medium
scale funding
27
Review of related studies 34
Summary 38
CHAPTER
THREE: METHODOLOGY
Research design 40
Population 40
Sample and sampling techniques 40
Instrumentation 40
Validity 41
Reliability 42
Administration of the instrument 42
Methods of data analysis 43
CHAPTER
FOUR: PRESENTATION AND ANALYSIS OF DATA
Answers to research questions 44
Test of hypotheses 44
Summary of findings 49
CHAPTER
FIVE: DISCUSSION, CONCLUSIONS AND RECOMMENDATIONS
Discussion of findings 51
Conclusion 51
Recommendations 53
References 54
Appendices
Appendix 1: letter of introduction (questionnaire) 64
Appendix 2: questionnaire 64
LIST
OF TABLES
Table
1: Mean scores and rank order of
directors and staff on government policies affecting the growth and development
of small and medium scale enterprises (SMEs) 44
Table
2: Mean score and rank orders of
directors and staff on how
Government policies affect
employment process 45
Table
3: Mean scores and rank order of
directors and staff on the impact has government policies on small and medium
scale profit 46
Table
4: Mean scores and rank order of
directors and staff on how government policies affect the ability of small and
medium scale enterprise survive 47
Table
5: Mean score and rank order of
directors and staff on impact of government policies and on small medium scale
enterprises (SMEs) funding 48
Table
6: Spearman rank order analysis of the
impact of government policies on small and medium scale enterprises employment
process 49
Table
7: Z-test analysis of the different
between the mean scores of managing directors and management staff on how
government policies affect the ability of small and medium scale enterprise to
survive 49
ABSTRACT
This study investigated the
impact of government policies on small and medium scale enterprise in Port
Harcourt local government areas of rivers state. Five research questions were
formulated and two null hypotheses were tested at 0.0.5 level of significance.
The population comprised of fifty (50) small and medium scale industries with a
total of two hundred (200) staff, out of this number, a total participant of
one hundred and twenty (120) staff (30directors and 90 staff) representing 60%
of the population were selected as sample using a simple random sampling technique.
The main instrument used for the study was a validated structured questionnaire
called: “government policies on small and medium scale questionnaire (GPSMEQ)
for directors and staff designed by the researcher which has a reliability
index of 0.62. The research questions were answered using mean and rank order
while spearman rank order correlation statistics was used to the test the two
null hypotheses. The main findings of the study indicated that government
policies: affect the growth and development of small and medium scale
enterprises; affect employment process; has negative impact on small and medium
scale profit; affect the ability of small and medium scale enterprise to
survive; have positive impact on small and medium scale funding; does not significantly
affect employment process but significantly impact on the ability of small and
medium scale enterprise to survive. Based on these findings, it was recommended
that government should make polices that will affect direct investment and the
establishment of anit-corrupt bodies among others; government employment
policies should create investment and poverty alleviation, schemes; government
policies that have negative impact on small and medium scale enterprise ability
to make profit should be removed and government policies affecting the survival
of SMEs should provide essential infrastructure such as access roads,
communication facilities, etc that assist and promote investment opportunities
of SMEs and their survival.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND TO THE STUDY
The
production of goods and services in the most efficient manner has continued to
be the only viable and reliable option for development, growth and survival of
any economy. The development of small scale enterprises (SMEs) in Nigeria is
therefore an essential element in the growth strategy. SMEs not only contribute
significantly to improved living standards, they also bring substantial local
capital formation and achieve high level of productivity.
Interest
in the development of small and medium scale enterprise and their contribution
in the development process continue to be in the forefront of government
policies especially in Nigeria. Thus, the role of small and medium scale
industry in enhancing economic development has been well articulated in
different for a of this nature. The specific attention on them is based on
their expected impacted and potential contribution on broad and diversified
production based, as well as hired accelerative effect in achieving macro
objective pertaining to full employment, income distribution and the
development of local technology.
They
are particularly entrepreneurship overtime. Government has been stimulation of
indigenous entrepreneurship overtime. Government has been exhibiting
appreciative function in promoting the survival and growth of small and medium
scale sub-sector can contribute menacingly to the implementation of wide range
development objectives, has thus enunciated diverse policies to foster their
proliferation and make them veritable engines of the economic growth and
development respectively.
Small
and medium enterprises (SMEs) have been widely acknowledged as the springboard
for sustainable economic development. In particular, developing countries
including Nigeria, have since the 1970s shown increased interest in the
promotion of small and medium scale enterprises for three main reasons: the
failure of past industrial policies to generate efficient self- sustaining
growth; increased emphasis on self-reliant approach to development and the
recognition that dynamic and growing SMEs can contribute substantially to a
wide range of development objectives.
These
objectives include efficient use of resources, employment creation,
mobilization of domestic savings for investments, encouragement, expansion and
development of indigenous entrepreneurship and technology as well as income
distribution, among others. Consequently, programmes of assistance in the areas
of finance, extension and advisory services, training and provision of infrastructure
were designed by the government for the development of SMEs to enhance the
attainment of these objectives. however, the full potential of the SMEs in the
development process have not been realized, owing to various constraints which
resulted to formulation of various policies by the government aimed at
facilitating the sub-sector’s development.
The
basic objective of government policies as contained in the monetary and fiscal
policy measures are to improve the financing and other supportive services to
small and medium scale industry by ex panding
and improving the access to credit and infrastructural facilities, reducing
their production cost, boasting their profitability’s encouraging their
survival and growth capabilities as well as enlarging their contributions to
non-oil exports by making their products competitive in the export markets.
This
research is therefore, aimed at examining different government policies and
their impact on the survival and growth of small and medium scale enterprises.
1.2 STATEMENT OF THE PROBLEM
The
small and medium scale enterprises are acknowledged to have huge potential for
employment generation and wealth creation in any economy. Yet in Nigeria, the sectors
has stagnated and remain relatively small in terms of its contribution to gross
domestic product or go gainful employment as a result of myriad of problems
including inimical government rules and regulations as identified by Aftab and
Rahim (1989), Ekpenyong (1983) and Akamiokhor (1983).
Government
policies seem to have constituted a serious problem area for small and medium
scale enterprises. The beginning of harsh government policies towards small and
medium scale industry can be traced back to 1982 with the introduction of
“stabilization measures” which resulted in import controls and drastic budget
cuts. These, in turn, adversely affected the subvention to the financial
institutions established to provide financial assistance to the small and
medium scale enterprises. For example, in 1983, out of a total of 8,380
applications for loans received from the SMEs for a total of 559.13 million
naira, only 18 percent (1,470 projects) for a total of 46.66 million naira was
disbursed.
As
the economic situations deteriorated, the government introduced the structural
adjustment programme (SAP) in 1986. Since the strategy of liberalization and
deregulation of interest rates was implemented, interest rates have continued
to increase. The SMEs, which prior to the SAP had been granted concessionary
rates of interest (particularly for agricultural and housing loans), have had
great difficulties obtaining credit.
The
frequent changes, and sometimes conflicting government monetary policies, have
also tended to hurt the SMEs. For example, the 1996 budget in an attempt to
encourage foreign investment abrogated the indigenization degree because it
made it possible for foreigner to invest in any sector of the economy. Besides,
the regulatory agencies of government appear to be more active than the
facilitation ones. They SMEs guidance from government departments. Most often
than not; they are not even aware of where and when they can obtain help from
government.
Other
problems which are not peculiar but have a serious impact on the SMEs are
apparent duplication of effort by government departments such as in multiple
levies, quality insurance etc. the impact of all these is the drastic stain the
Nigeria economy has gone through which constitute the problem this study is set
to address.
1.3 PURPOSE OF THE STUDY
The
capital investment capacity, the personnel and especially the output standard
in any economy will tell the unified growth and development of small and medium
enterprises in any given nation. Thus, the main purpose of this study is to investigate
the impact of government policies on small and medium scale enterprise in Port
Harcourt local government areas of Rivers State. Specifically, the objectives
of this research were to:
1. Identifying
the major government policies affecting the growth and development of small and
medium scale enterprises (SMEs).
2. Ascertain
how government policies impact employment process.
3. Find
out the impact of government policy on small and medium scale profit.
4. Find
out how government policy affects the ability of small and medium scale
enterprise to survive.
5. Determine
the impact of government policy on small and medium scale funding.
1.4 RESEARCH QUESTIONS
This
research is not complete until some fundamental research questions are put in
place. These research questions will enable us achieve the purpose of this
research work. They are:
1. What
are the government policies affecting the growth and development small and
medium scale enterprises (SMEs)?
2. How do
government policies on small and medium scale enterprises impact on employment
process?
3. What impact
has government policies on small and medium scale profit?
4. How do
these government policies affect the ability of small and medium scale
enterprises to survive?
5. What impact
has government policies on small and medium scale funding?
1.5 RESEARCH HYPOTHESIS
The
following null hypothesis will be tested at 0.05 level of significance.
1. There
is no significant impact of government policies on small and medium scale
enterprises employment process.
2. There
is no significant impact of government policies on the ability of small and
medium scale enterprise to survive?
1.6 SIGNIFICANCE OF THE STUDY
The
implementation of the government business policies received a limited attention
thereby affect the growth and development of small and medium scale
enterprises. Thus, government business policies are supposed to have positive
impact on the development of small and medium scale enterprises and their
business systems to enable them achieve their designed goods/objectives.
This
study wills therefore recommendations or strategic policies. It will help to
make background recommendations or strategic policies for the growth and
development of small and medium scale enterprises. It will equally help to
evaluate the contributions of government and financial institutions in
promoting the development of small and medium scale enterprises. It will
equally help to evaluate the contributions of government and financial
institutions in promoting the development of small and medium scale enterprises
as well as the impact made by the SMEs to the Nigeria economic growth and Port
Harcourt Areas of Rivers State in particular. Finally, it will add to the
existing literature on the subject matter.
1.7 SCOPE OF THE STUDY
This
research work in terms of content was primarily made to cover the impact of
government policies on small and medium scale enterprises in terms of how these
policies affect their growth and development contribution of government to the
growth and development of SMEs and the essential problems encountered by small
and medium scale enterprises.
Geographically,
the scope of the study was limited to small and medium scale enterprises that
are involved in production, wholesales, distribution of personal and
professional services such as the one-man business, partnership, co-operative, family
business, private and public limited company whose main branch operations are
based in Port Harcourt areas of Rivers State.
1.8 LIMITATIONS OF THE STUDY
Various
limitations exist that affected the researcher in the process of this work.
First
time constraint was a limiting factor. Time therefore was so short that many of
the required information were not gathered before the stipulated time.
Secondly,
the researcher, being a student, did not have enough financial resources to
move round for the required data for the research work.
Thirdly,
obtaining data from workers in the area of study was easy as they are in
various units coupled with the bureaucratic processes encountered in various
sub-sectors.
Even
when the research tools have been effectively distributed there were still
problem in collecting back the tools from the respondents, some of them did not
even return their own for the reasons best known to them.
1.9 ORGANIZATION OF CHAPTERS
This
study was divided into five chapters. In chapter one was the introductory part;
the background of the study, the statement of the research problem, purpose of
the study, research questions, and significance of the study among others was
discussed. Chapter two dealt with the literature review relating to the subject
and contents of the study. The methodology analysis such as the research
design, population, sample and sampling techniques, instrumentation, validity,
reliability administration of instrument and method of data analysis was
examined in chapter three. Data presentation, analysis and interpretation was covered
in chapter four while the concluding part of the research work was chapter five
where in a nut shell the discussion of the findings, the conclusions and the
recommendations were discussed.
1.10 DEFINITION OF TERMS
Policies
They
are guides to business operations
Development
A
progressive chart in the stage of an activity or project
Small Scale Industries
An
industry with total capital employed of over N1.50m, but not more than working
capital but excluding cost of land and/or labour size of 11-100 workers.
Medium Scale Industry
An
industry with a total capital employed of over N5.00m but not more than
N200.00m including working capital but excluding cost of land and/or a labour
size of 101-300 workers.
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