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THE CAUSE OF SMALL
SCALE BUSINES FAILURES IN NIGERIA AND ITS REMEDIES.
(ACASE
STUDY OF ENUGU)
ABSTRACT
This is
a research work which examine the causes of small-scale business failures in
Nigeria as such the study will go a long way in identifying and improving
the prospect for survival of small-scale business, consequently contributing to
the economic growth of the Nigeria nation.
In conducting the research, questionnaire and oral interviews where used. The
sample size for the research consist of 30 and 50 business centers and
restaurant owners respectively. The data collected were tested statistically by
the use of x2 (chi-square) the finding of the revealed for the following. That
sex of respondents do not contribute to business failure, that there is a
bearing between educational level respondents and business failure, that
finance is a causative factor to business failure.
Therefore, recommendations such as: encouragement of the financial Institutes
to extend loans at a less stringent condition to the small-scale business
subsection sourcing of cheap and available substitutes (raw-materials) locally;
consistency in government polices as it affects small-scale business,
enhancement of the managerial acumum of managers of small-scale business
through seminars and workshops, business owners should engage in business that
are less competitive, amongst others were suggested.
Conclusion was drawn following the findings that there should be more
commitment when assistance inform of loans from banks and enlightment
programmes like seminar are being organized by government or its agencies, what
are needed therefore for an overall improvement in the performance of
small-scale enterprises are better support, understanding and encouragement by
all concerned.
TABLE
OF CONTENTS
CHAPTER
ONE TABLE OF CONTENTS
1.O
INTRODUCATION
1.1
GENERAL BACKGROUND TO THE SUBJECT MATTER
1.2
PROBLEM ASSOCIATED WITH THE SUBJECT MATTER
1.3
PROBLEM (S) THAT THE STUDY WILL BE CONCEMED WITH
1.4
THE IMPORTANCE OF STUDYING THE AREA
1.5
DEFINATION IMPRTANCE TERMS
1.6
REFERENCE
CHAPTER
TWO
2.0
LITERATURE REVIEW
2.1
THE ORIGIN OF THE SUBJECT AREA
2.2
THE SCHOOL OF THOUGHT WITHIN THE SUBJECT AREA
2.3
THE SCHOOL OF THOUGHT RELEVANT TO THE PROBLEM OF STUDY
2.4
DIFFERENT METHODS OF STUDING THE PROBLEM
2.5
SUMMARY
2.6
REFERENCE
CHAPTER
THREE
3.1
CONCLUSION
3.2
DATA PRSENTATION (HIGHIGHT OF THE STUDY)
3.3
ANALYSIS OF THE DATA
3.4
RECOMMENDATION
3.5
CONCLUSION
3.6
REFERNCE
CHAPTER
ONE
1.0
INTRODCUTION
Nigeria’s quest for
national economic development have been her through several approaches. Since
1960, the year of Independence the country’s development plans have laid a
great deal of emphasis on public sector control of the economy. We have a
situation where the public/private sector mix has increasingly titled towards
public sector donation. In the first National Development Plan (1962-68) the
private sector of which small-scale business was part received 62% of the total
capital expenditure while on the other hand; on the fourth plan (1981-1985)
only 12% of total capital investment was accorded the private sector with the
public sector controlling a staggering 88%. This apparently wrong development
planning did not pass without adverse consequences for the Nigeria economy. The
net effect of the unbridled government participation and control of business
activities through the large scale industries and the oil boom of the 70’s
which dictated the entire frivolous and wasteful attitude of the government and
the people including the relegation of the agricultural sector and private
initiative has now give way to hunger, squalor, spiraling inflation, disease
and mass unemployment. But today the situation is changing. The current
emphasis is on the development and strengthening of the small-scale business
sector as the main foundation of economic self-reliance.
The unemployment
situation in the country coupled with the new government initiative towards
easing social tension among unemployed youths through the programmes of the
National Directorate of Employment (N D E) are new luring a lot of unemployed
Nigeria including graduates and others who want to be their own boss into self
determination through self-employment. Graduates and school leavers are new
realizing that government and the established private companies are not ready
to come to their aid directly through paid employments due to the parolons
state of the economy. Short of alternative, Nigerians including our graduates
are therefore launching themselves into various small-scale business ventures,
such as collage soap and cosmetics production, farming, publishing, writing,
blocking, garri production, food processing, refuse disposal, taxi driving,
cleaning, services, advertising and public relations, business centers,
restaurants and other small business ventures.
1.1
GENERAL BACKGROUND TO THE SUBJECT MATTER
Small-scale businesses occupy a significant position
in the economic development of Nigeria in general and Enugu in particular.
There are basically two board
categories of small-scale business. The first is the business carried out by
traditional craftsmen and artisans, some of whom may need assistance so as to
modernize their skills, tools and techniques of production. The second is the
industry out by groups of small manufacturing or service enterprise,
which produce or provide services to a variety of consumers and clients.
But in both cases, the scale of operations is generally too small to be of
interest to a forest to a foreign investor.
In Enugu, there are
thousands of business, which fall into the category of small-scale business.
They include weaving, carpentry, pattery and ceramics, farming, fishing,
piggery and animal husbandry, metal-works, retail trade, workshop, transport, business
centers restaurants, tailoring and dress-making setting up small-scale business
and managing it to fruition can be rewarding both financially and
psychologically. Many of such small-scale business when established to succeed.
However, small-scale business in
Nigeria today face a litrary of problems occasioned by global economic
reception. A good percentage of these businesses particularly in nsome business
centers and restaurant industry have been forced to wind up due to this
economic situation while many others have managed to survive. According to B.
Kalejaiye, an alarmingly high number of small-scale business has failed. As was
also pointed out by another writer, it is generally believed that a grater
number of people who start up business every year failed than succeed. It has
been established that less than five out of every year twenty business
established survive in the very first year of establishment. Investigation and
observation indicate that a greater number of people who enter the business
field every year fail rather than succeed. The researcher has also witnessed
the fail of some small-scale business which has initially commenced, with high
hopes of success.
It is pertinent to
mention here that many of these small enterprises which go under, do so, not
because their basic aims, polices and strategies when things begin to fall
apart. In addition, it seems that government is yet appreciating the strategic
importance of small enterprises in the National Economy. Although, it’s
importance has been recognized for sometime, was not until recently, that the
government felt it necessary to put in place structures focusing on small-scale
enterprise development. These structures include National Directorate of
Employment (NDU), National Economic Reconstruction Fund (NERFND), fund for
small-scale industries (FUSSI), People’s Bank Of Nigeria, Community Banks,
small and medium Enterprises Loan Facilities (SMELF) among others.
Despite these
measures, the small-scale enterprises still continue to fail. It is against
this background that the study sets out to look at the various causes of the
alarming rate of small-scale business factures with regards to business centers
and restaurants. The suggestions and recommendation to be made at the end n of
this research work will definitely provide enough information to entrepreneurs
both potentials and existing in managing their business ventures successfully.
1.2
PROBLEM ASSOCIATED WITH THE SUBJECT MATTER
The bane of the
Nigeria Economy is the perceived unsurvivability of the small-scale industries
existent in the Economic system. The fact that small scales industries is
essential and an integral failures rate of small –scale industries is essential
and an integral part of the economic system cannot be over emphasized. Bit
having mentioned that the failure rate of small-scale industries is also
alarming.
In general, various
factors have contributed to the alarming rate of small-scale business
failures. What are these causes? Can the sex of an individual cause failure in
business? Could the literacy level affect business performance? Are small scale
business in Nigeria under financed? These questions form the statement of
problem of this study.
1.3
PROBLEM (S) THAT THE STUDY WILL BE CONCEMENT WITH
This study concerns
the causes of small-scale business failure in Enugu. The study will be limited
to two selected economic activities in the area of business centers and
restaurants in the form of inadequate to meet the rising cost of research,
invariability of sufficient books by Nigeria authorizes the area of research
and other problem s associated with the collection of data.
The initial apathy
displayed by some respondents to volunteer information posed a problem to
the research. Above all time constraints constituted a major limitation.
However, the research has attempted to do a good work irrespective of the
aforementioned constraints.
1.4.
THE IMPORTANCE OD STUDYING THE AREA
Two major roles are
expected to be played by small-scale business if given adequate support in the
present economic circumstances in Nigeria. The first is the role of back
ward-forward linkages which in practice means the role of bridging the
gap between the rich and the poor, the second role which in actual sense
is partly related to the first is that of raising the over all
development activities of the nation.
This study therefore
is intended to expose the various, factors, which make small-scale businesses
fail than succeed. If is the researcher’s strong belief that the knowledge to
these various factors is the secret behind the success of those
entrepreneurs that stay alive against all odds. The study will provide a quid
to prospective entrepreneurs who may wish to be self-employed especially in the
line of the business studied. Equally important is the fact that this study
will provide materials for future research in related topic especially given
the death of relevant books in our libraries. It will also enhance mains
knowledge in the field to business management by raising certain issues
likely to engender further research.
1.5
DEFINATION IMPORTANCE TERMS
The following terms are defined and
explained in order to kind clarity and remove ant ambiguity as will as enhance
understanding the entire text. These are: Small-scale business,
Import-substitution, exported, export promotion, restaurants and business
centers.
A SMALL-SCALE BUSINESS
This refers to business establishment employing less than 160 persons the
self-employed workers who may not have employed other person than himself is
also included. The definition is therefore based on the employment statues of
business which apparently area highly capital intensive such problem are solved
regarding such establishments as small-scale and not qualifying them to be
grouped as large-scale in some countries, the extents of capital investment
seems as capital with labour but in ours it is the employment status of
establishment that forms the basis for distinguishing between the small and
large scale business.
IMPORT SUBSTITUTION
This is policy replacing imports by domestic production under the protection of
high tariffs or import quotas. Import substitution reduces world trade and
involves suppressing the principle of comparative advantage. To effect this
policy, countries tent to use to tariffs and quotas to direct domestic
B
IMPORT SUBSTITUTION
This is a policy
replacing imports by domestic production under the protection of high tariffs
or import quotas. Import substitution reduces world trade and involves
suppressing the principle of comparative advantage. To effect this policy,
countries tend to use to tariffs and quotas to direct domestic resources away
from the primary products in which they had a comparative advantage into
industrial manufacturing where they had a comparative disadvantage.
C
EXPORT-LED METHOD
Export-led growth
refers to production and income growth through exports rather than the
displacement of imports.
D
EXPORT PROMOTION METHOD
In contrast to
export-led method, export-promotion method refers to the co-ordination of
domestic price with international price and to encourage both exports and
imports by setting a realistic exchange rate and removing import rustications.
It is therefore a matter of setting price incentives in such a way as to ensure
that the home market does not become more lucrative than the foreign markets.
BUSINESS
CENTRE
Place where different
types of business facilitating equipment like Photostatting machines etc are
made available for customers who could use them in exchange for payment.
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