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
Table of contents v
List of Tables vi
CHAPTER ONE: INTRODUCTION
Background to the study 1
Statement of the problem 3
Purpose of the study 4
Research questions 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
Review of related studies 34
CHAPTER THREE: METHODOLOGY
Research design 40
Sample and sampling techniques 40
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
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
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.
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
They are guides to business operations
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.