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SMALL SCALE
INDUSTRIES AND INDUSTRIAL DEVELOPMENT IN NIGERIA
THE CASE OF
NIGER DELTA REGION
TABLE
OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgment iv
Table of Contents v
Abstract vi
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
References
Appendix
ABSTRACT
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.
CHAPTER ONE
INTRODUCTION
1.1 INTRODUCTION
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:
i. Infrastructure
ii. Environmental management
iii. Agriculture, forestry and aquaculture
iv. Private sector promotion.
v. Health
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.
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