OBSTACLES OF FINANCING SMALL SCALE BUSINESS IN NIGERIA (CASE STUDY OF GARRI PROCESSING INDUSTRY IN ABAKPA NIKE ENUGU)
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OBSTACLES
OF FINANCING SMALL SCALE BUSINESS IN NIGERIA
(CASE
STUDY OF GARRI PROCESSING INDUSTRY IN ABAKPA NIKE ENUGU)
ABSTRACT
Since independent Nigeria the giant of Africa has spent much time and resources
both human and material trying to convince the developed countries and indeed
the whole word that she (Nigeria) is capable of developing her industrial
capabilities.
Much of the efforts made in this
direction have found expressions mostly in international conference and
seminars, newspapers report, radio announcements and various national
development plans.
Industries have actually increase since after the independent, but the
disappointing record of economic performance in the last decade has led to the
reopening of the debate on the strategy of industrialization
Nigeria is still a net import of all sorts of goods from needless to heavy
machinery, simple because most of the industries where established for their
immediate lucrative such as been soft drink and other consumers goods
industries without the consideration to nation’s industrial needs or for the
utilization of local materials.
Besides most of the large scale industries before the industrialization decree
were foreign owned and were associated with significant possibilities of income
leakages. This in spite of the rapid increase in the gross national
productivities (GNP) in last decade, the poorest segment of the population
peculiarity those in the rural areas has received relatively little benefit.
Unfortunately the bulk of Nigeria business are small-scale industries of the
number of business establishments, they account for about 80% or above of the
total number of enterprise in the country.
The important role they play in the development process was observed by the
first progress report of the second National Development plan “in spite of the
anticipated rapid growth of the wage sector, the major solution to the nations
unemployment problem will have to be found in other areas like agriculture and
small scale industries development.”
In spite of all these, the small scale industries sub-sector has continued to
suffer from lack of credit most all the governments financial programmes for
the small industrial credit scheme, fund for small scale industries has
remained largely inadequate and of little effect.
The banks and other financial houses cannot help matters either despite the
central bank credit scheme to industries.
It would be noted in the regard that majority of the small scale industries
would not be able to meet the requirement of the bank and other financial
institution lending policies. Therefore given these financial constraints
TABLE OF CONTENTS
Title
page
Abstract
Table of
contents
1.0 CHAPTER ONE: INTRODUCTION
1.1 Background of the
study
1.2 Statement of the
problem
1.3 Objective of the study
1.4 Research question
1.5 Research Hypothesis
1.6 Significance of the study
1.7 Scope of the study
1.8 Limitation of the study
1.9 Definition of terms
Reference
CHAPTER TWO:
REVIEW
OF RELATED LITERATURE:
2.0 Theoretical
and empirical
2.1.0 Theoretical review of related
literature
2.1.1 Small scale business defined
2.1.2Management and organization of
small scale industries/businesses
2.1.3 Sources of fund to small scale
industries/businesses
2.1.4 Obstacles of small scale
industry/business
2.2
Empirical Review of Related Literature
REFERENCE
3.0 CHAPTER THREE:
RESEARCH DESIGN
AND
METHODOLGY
3.1 Research
Design
3.2 Area of the study
3.3 Population of the
study
3.4 Sample and sampling Techniques
3.5 Instruments for Data
collection
3.6 Method of Data
collection
3.7 Method of Data Analysis
3.8 Method of investigation
References
4.0 CHAPTER FOUR: DATA PRESENTATION
AND
DATA ANALYSIS
4.1 Data presentation and Analysis of
results
4.2 Test of hypothesis
4.3 Summary of
result
Reference
5.0 CHAPTER FIVE:
FINDINGS, CONCLUSION
AND
RECOMMENDATION
5.1
Findings
5.2
Conclusions
5.3 Recommendation
5.4 Suggestion
for further research
Bibliography
Appendix
Questionnaire
CHAPTER
ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
It
is necessary to stress the point that to succeed in business require some
measure of discipline. Most industrialists expect to make a reasonable
profit from the investment of time and resources that they have to make in
other to bring a project to function.
While this may sound simple enough, the bother line is the fact in an economy
wide context, the rate or level of reward that can accrue to various level of
effort, discipline and productivity should never be allowed to get out of
proportion in relation to effort put in.
Experience has shown that industrial pursuits have been found to yield for the
patient and disciplined industrialist rather than stand for business concern
with all kinds of effort mostly unproductive and require no legitimate effort
to reap profits in multiple fields.
After considering the above mentioned statement of facts about industry.
The question is how far are we from being industrialized bearing in mind that
it yields for disciplined and patient industrialist, all things being equal.
Taking cognizance of the fact that a step forward is the beginning of a
mile. Some, therefore Nigeria’s business industrial evolution will only
start when positive steps are taken towards adequate financing of small scale
business. The experience of newly industrialized countries has been an
eye opener.
Finance is the greatest obstacle we are likely to face whenever we talk of
establishing a small scale industry. This is the most crucial aspect of
business enterprise and a lot of controversy surrounding the problem of
inadequate finance. A close look on the small scale industries/business,
all over the country would help to throw further light on the effect of lack of
fund on growing business. The drastic effect is mostly felt when one
tries to study the rate at which our young industries are gradually
collapsing. Even surviving ones are terribly looking for assistance that
they are not sure of.
Funds are scare, hence the growing industries as regarded in this part of the
world as never-do-wells especially Nigeria. When an economy is shaky,
growing industries in that economy tend to suffer most and usually stand the
taste of time. Hence, an increase in the number of causalities in this
regard.
The researcher aimed at exploiting the possibilities, obstacles of financing
small scale business/industries. The project centers on management and
financial obstacles
1.2
STATEMENT OF PROBLEM
There are various obstacles facing the establishment of small scale business
like financial limitation, lack of raw material, poor management and quality of
the management, staff, poor accounting method, high interest charge on loans
and lack of adequate planning and feasibility studies.
The most common and problematic issues is funding. Small scale business
find it difficult to obtain fund from established institution like commercial
banks and because of the some projects have take off but had to be abandoned
half way. The issue involved is the question of capital adequacy.
When a company is under capitalized it cannot realize its full
potentials. Many small scale enterprises in Nigeria experience this
obstacle. They cannot expand their scale of production to optimum level.
To ameliorate these obstacles therefore government should implement the law or
policy that made to enhance small scale business (especially that of in fact
once) such as central bank policy that direct all commercial bank to give out
some percentage of loan to small scale business than those of medium and large
scale industries/business.
1.3
OBJECTIVE OF THE STUDY
The
purposes of this study include:
(a)
To ascertain the present economic state of the life’s of small scale business
with the view to identify the major obstacles that affect the financing of
small scale business bearing in mind the adequate financing stands as an
energizer to its operations.
(b)
To determine what strategies employed by the surviving and successful ones
among them toward alleviating these obstacles.
(c)
To ascertain the extent to which the financial institution has helped to
develop small scale business.
1.4
RESEARCH QUESTIONS
This
issue will not be treated in isolation taking into cognizance the level of
development in Nigeria. Based on this, questions were asked by the
researcher, which include:
a.
What are the present economic states of life’s of small scale business with the
view to identify the major obstacles that affect the financing stands as an
energizer to its operations.
b. What are strategies employed by the
surviving and successfully ones among them toward alternating these obstacle.
c.
How does the financial institution help to develop small scale business?
1.5
HYPOTHESIS FORMULATION
The following hypothesis is relevant and necessary for the carrying out this
research
a. Ho: Lack
of adequate finance has contributed to the failure of economic state of lives
of small scale business.
Hi:
Lack of adequate finance has not contributed to the failure of
present economics state of lives of small scale business.
b. H0:
There is failure in strategies employed by the surviving and successful one
among them toward alternative these obstacle.
Hi:
There is no strategies employed by the surviving and successfully one among
them toward alternating these obstacle
c. H0:
Financial institution has contributed to the failure of small scale business.
Hi:
Financial institution has not contributed to the failure of small scale
business.
1.6
SIGNIFICANCE OF THE STUDY
The
significance of this research is that the result will help identify how
business loan are obtained or secured both locally and internationally from
financial institutions. On this note awareness is being created or it
will help to create it on how fund or finance could be raised to finance small
scale business.
1.7
SCOPE OF THE STUDY
The
area would have been the study of all the small scale business in Nigeria but
however, this would have posed some threats to the researcher. Among them were the
lacks of adequate fund to meet the rising cost of research.
Unavailability of sufficient books by Nigerian authors in the area of small
business and its obstacles. Also the problem associated with the
collection of data.
Consequently, the study is specially design to examine the obstacles of Garri
processing industry at Abakpa Nike, Enugu towards getting financial assistance
from financial houses.
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