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THE IMPACT OF SMALL-SCALE ENTERPRISES FINANCING IN IMPROVIING THE SOCIO-ECONOMIC
WELL BEING OF DELTA STATE
BYBYBYBY
ILOH OSITA P. PG/MBA/07/47004
DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA, ENUGU CAMPUS
JUNE,2009
2
TITLE PAGE
THE IMPACT OF SMALL-SCALE ENTERPRISES FINANCING IN IMPROVIING THE SOCIO-ECONOMIC
WELL BEING OF DELTA STATE
BYBYBYBY
ILOH OSITA P. PG/MBA/07/47004
DEPARTMENT OF MANAGEMENT FACULTY OF BUSINESS ADMINISTRATION UNIVERSITY OF NIGERIA, ENUGU CAMPUS
IN PARTIAL FULFILLMENT OF THE REQUIREMENTS FOR THE AWARD OF MASTER OF BUSINESS
ADMINISTRATION IN MANAGEMENT
SUPERVISOR: CHIEF J.A EZE
JUNE, 2009. CERTIFICATION
3
This is to certify that Iloh Osita Patrick, a Postgraduate
Student of Management has satisfactorily met the conditions
necessary for project research in partial fulfillment of the
requirements for the award of MBA in Management.
The work embodied in this project written by Iloh Osita
Patrick, a Postgraduate Student with Registration Number
PG/MBA/07/47004, presented to the department of Management,
Faculty of Business Administration, University of Nigeria, Enugu
Campus is original. It has not been submitted in full or in part for
any other diploma or degree programme of this University or any
other tertiary institutions.
------------------------------------------ ILOH OSITA PATRICK PG/MBA/07/47004
----------------------------------- DATE
--------------------------------- ----------------------------------- CHIEF J.A EZEH MR. C.O. CHUKWU SUPERVISOR HEAD OF DEPARTMENT ------------------------------- ----------------------------------- DATE DATE
DEDICATION
4
DEDICATED TO GOD ALMIGHTY
ACKNOWLEDGMENT
5
With profound gratitude, I acknowledge the almighty God who
gave me the courage and fortitude to handle all the activities
culminating in the writing of this project.
I wish to express my sincere gratitude to Chief J.A Ezeh, my
project supervisor for his unflinching support, direction and
assistance which helped me in making this research work, a reality.
In spite of all the commitments, he had the patience to guide and
constructively offer corrections that made it a success.
I appreciate the efforts of all the lecturers in the Department of
Management.
I am immensely indebted to my brother, my parents His Royal
Highness Igwe and Lolo Ugochimalueze, R.N Iloh (Ise-Nise) and a
host of others for their moral and financial support in the whole of
my academic pursuit.
My acknowledgment will not be completed if I do not express
my appreciation to those who have through one way of the other
contributed to the success of this project.
6
ABSTRACT
The dynamic role of Small and Medium Scale Enterprises (SMEs) in developing countries have been highly emphasized. These enterprises have been identified as means through which the rapid industrialization and developmental goals of these countries can be realized. This project work explores the impact of SMEs in developing countries. This work ensured from the failure that pervades the small and medium scale enterprises. The methods used for the gathering the data were primary and secondary sources of data. The work revealed that SMEs is the foundation and strength of any economy. That SMEs can employ more than any sector. The conclusion of the study is that small and medium scale enterprises has been identified to be the pivot of industrialization of any country, and it facilitates sustainable growth and development.
TABLE OF CONTENTS
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Title Page = = = = = = = = = i
Certification = = = = = = = = ii
Dedication = = = = = = = = iii
Acknowledgment = = = = = = = iv
Abstract = = = = = = = = = v
Table of Content = = = = = = = vi
CHAPTER ONE: INTRODUCTION
1.0 Background of Study = = = = = 1
1.1 Statement of the Problem = = = = = 2
1.2 Purpose of the Study = = = = = 3
1.3 Significance of the Study = = = = = 4
1.4 Hypothesis = = = = = = = 5
1.5 Scope of the Study = = = = = = 5
1.6 Limitations of the Study = = = = = 6
1.7 Operational Definition of Terms = = = 8
CHAPTER TWO: LITERATURE REVIEW
2.0 What Constitutes a Small-Scale Enterprises = 9
2.1 Small-Scale Enterprises Development in
Delta State = = = = = = = 14
2.2 The Role of Small-Scale Enterprises in
8
Delta State: = = = = = = = 19
2.3 Sources of Capital for Small-Scale Enterprises = 26
2.4 Problems of Small – Scale Enterprises = = 28
2.5 The Impact of Small – Scale Enterprises
in Improving the Socio-Economic well being of Delta
State: = = = = = = = 37
2.6 Economic Importance of Small – Scale Enterprises: 39
References: = = = = = = = 42
CHAPTER THREE
3.0 Research Design and Methodology: = = = 44
3.1 Population of Study: = = = = = = 46
3.2 Research Instrument: = = = = = 46
3.3 Method of Data Collection: = = = = 46
3.4 Data Analysis and Interpretation: = = = 47
CHAPTER FOUR
4.0 Data Presentation and Analysis: = = = 49
4.1 Data Presentation Analysis: = = = = 49
4.2 Testing of Hypothesis: = = = = = 50
4.3 Hypothesis: = = = = = = = 50
4.3.1 Decision Rule: = = = = = = = 51
9
4.4 Computed Values of expected frequency: = = 53
4.4.1 Computed Value of Chi – Square: = = = 53
4.4.2 Cement: = = = = = = = = 54
4.4.1 Test Statistics: = = = = = = = 55
4.4.2 Decision Rule: = = = = = = = 55
4.4.3 Computed Value of Expected Frequency: = = 56
4.5 Summary: = = = = = = = = 65
CHAPTER FIVE:
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 Summary: = = = = = = = = 67
5.2 Findings: = = = = = = = = 68
5.3 Recommendations: = = = = = = 71
5.4 Conclusion: = = = = = = = 73
Appendix: = = = = = = = =
Research Questionnaire: = = = = = 74
Bibliography: = = = = = = = 77
CHAPTER ONE
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1.0 BACKGROUND OF THE STUDY
According to Adekunle (2005), the importance of the Small
Scale Enterprises to Economic development of any country whether
developing or developed cannot be overemphasized.
Small Scale Enterprises considered to be one of the driving
forces in economic development. They stimulate private ownership
and Entrepreneurship skill, they are feasible and can adapt quickly
to changing market, demand and supply situations they also
generate employment, help diversity economic activities and make
significant contribution to expert and trade.
According to the guidelines for accessing credit facilities for
Small Scale Enterprises in Nigeria by R.K. Moruku (2002), “There is
potential in Small Scale Enterprises to create employment, reduce
underemployment and poverty, utilize local raw materials output
expansion and transformation of indigenous technology. Others are
those to reduce intermediate goods, promote even development and
reduce income inequalities. Thus, they constitute a strategic choice
in industrialization and economic development, even served as a
new development aid model.
11
In view of growing unemployment and poverty including the
working poor in Nigeria, the indignity poverty inflicts on and threat
to the survival of human kind, no efforts should be spared in
nurturing, supporting and sustaining Small Scale Enterprises in
Nigeria.
1.1 STATEMENT OF THE PROBLEM
The economy at present needs diversification and expansion.
Despite the fact that government goals of encouraging economic
growth along with decreasing employment and providing a well
trained labour force have been activity pursued since the re-
construction period of the civil war and the oil boom era. The nation
however is still loosing grounds in the area of unemployment,
inflation, economic stagnation and over/under supply of skilled
labour force.
In Nigeria expects to solve HS social economic problem in
efficiency; it must take a critical look at the development of the
Small-Scale business because of this development sector can be
synonymous with national economic growth.
12
The emphasis on the small business sector, was not
encouraged until recently and this changing emphasis was caused
by some set backs presented by other sectors of the economy. It has
been discovered that the public sector alone failed to significantly
encourage economic growth.
This recognition informed the need of desore to examine
critically the impact of Small–Scale Enterprises financing in
improving the socio- economic well being of the Nigerian people.
1.2 PURPOSE OF STUDY
The purpose of this research is to investigate the impact of
Small Scale Enterprises financing in improving the socio economic
well being of the Delta State.
The objective of this study can be clearly set below:
i. To show the role of Small Scale Enterprises financing.
ii. To show the problems encountered in financing small scale
enterprises.
iii. To the prospects of small scale enterprises financing.
iv. To identify the feature as well as the source of capital for
small scale enterprises.
13
v. To show the activities of these enterprises in terms of
revenue generation.
vi. To make valuable recommendation useful to policy makers
based on the findings of this study.
1.3 SIGNIFICANT OF THE STUDY
This research has great importance for all enterprises such
that:
i. It will enable Small-Scale Enterprises operator to know their
impact on the socio-economic well being of the Nigerian
people.
ii. This study will also guide the operation of most large and
Small – Scale Enterprises (publicly and privately owned) and
since most public companies are now being, privatized, this
paper will be of immese help in their dealing with Small Scale
Enterprises.
1.4 HYPOTHESIS
The hypothesis that are to be tested in this study are now
stated as follows:
14
i. That government contributes to the socio economic well being
of the Nigeria people
ii. That educational level affects diversification of business
interest.
iii. That establishment source for credit facilities from financial
institutions.
iv. That Small-Scale enterprises should employ and retain the
services of accounting officers.
1.5 SCOPE OF THE STUDY
This study will cover number of Small – Scale enterprises from
2000 – 2004 owned and operated by Nigerians who are single
owners.
Directory of small – scale enterprises in Delta State in
2000 by the state ministry of commerce and
industry, Asaba outlined some enterprises in Delta State. Thus this
research is restricted to selected Small – Scale enterprises in
Aniocha North Local Government Area of Delta State such as
Pazuka Enterprises Nigeria involves in a soap making, Pakan
Universal Agencies Nigeria, involved in poultry rearing, Vicmili
15
organisation involved in bakery, Lucky group of designers involved
in garri processing, Iweka wood workers involved in furniture
making etc.
This research will also deal with the impact of small – scale
enterprises financing in improving the socio-economic well being of
the Nigerian people.
This work will also look at how banks help to finance small –
scale enterprises activities of those business in terms of revenue
generation and employment and income accruing to the owners.
1.6 LIMITATION OF THE STUDY
There were certain limitation that the search encountered in
the course of carrying out his study. They include;
i. Financial constraints which limited the scope of this study on
the ministry of commerce and industry, Asaba and Banks.
ii. Another problem is time constraints, a research of this nature
which is expected to reduce for researching result would
certainly have required a lot of time to make an in-debt look at
personal observation possible. However since the work has to
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be submitted within a specific time, I had to combine lectures,
semester course work and examination with research work.
iii. Another limitation borders on poor response from small-scale
enterprises business owner and large earners (employees)
This is because of the non- challant attitude of small-scale
industry owners to disclose relevant information about their
business for fear of tax collectors.
Despite the limitations mentioned above, great efforts have
been made by researchers to collect comprehensive information
from few Small – Scale enterprises necessary for the study. The
study should therefore be assessed in the light of the said scope
and limitations.
1.7 OPERATIONAL DEFINITION OF TERMS
Impact: To have strong impression or effect on something.
Impression could be positive or negative and effect could
be positive or negative.
Small – Scale enterprises: Small – Scale enterprises comprises
those enterprises with total cost inclusive of land of
above one million (N1, 000 000.00) and having manpower
strength (labour size) of 14 and 35 workers according to
17
E. E. Ohibundu (2002) on Industrial trends and
opportunities on page 34.
Financing: Financing is the efficient and effective allocation of
resources with a view of maximizing the shareholder’s
wealth.
Improving: Advancing to a higher level.
Socio Economic: Control and management of a community, society
or household.
Economic/Psychological: To have a sense of well being or a
state of being healthy and happy.
REFERENCES
Adekunle .O. (2005); Small Scale Business as the solution for the Economic Development in our society. Ibadan, Jacky Kola Printer.
Moruku R.K. (2002) Small Scale Business Enterprises as for
Accessing Credit Facilities for Nigeria Economy, Kawara, Olariwaju Printing Company.
Ohibundu E. E. (2002); “Industrial Trends and Opportunities for
Nigeria Organizations and Economic Development, Owerri Nkwo Enterprises.
18
CHAPTER TWO
LITERATURE REVIEW
2.0 WHAT CONSTITUTES A SMALL – SCALE ENTERPRISES
The definition of Small – Scale Enterprises is relative from
industry to industry and from country to country. What constitutes
Small – Scale enterprises or business in great British, Japan and
United State of America may be classified as medium or large-scale
enterprises in Nigeria.
19
Also what was regarded as medium or large – scale in the early
sixties and seventies can no longer be classified as such and may
simply be classified as cottage in view of current value.
The Small business administration, an agency of the
government of the United State of America defined Small – Scale
enterprises as follows:
� Not dominated in its field of operation.
� Independently owned and operated for profit
� Maximum number of employee varies from industry to
industry but not exceed two hundred and fifty employee.
The federal ministry of industries Guidelines (1991) and the
Nigerian Bank for Commerce and Industry (NBTCI) defined Small–
Scale Enterprises as those with total capital not exceeding N1.5
million excluding cost of land but including working capital.
The NBCI (Nigeria Bank for Com merce and Industry) in it’s
regular operations adopted the definition of small – scale
enterprises as those with cost of capital not excess of seven
hundred and fifty thousand Naira (N750, 000) excluding land but
including working capital. Prior to the federal ministry guideline of
1991, there was the credit guideline of the Central Bank to
20
Commercial Banks, and Merchant Banks in 1989. In the case of
Commercial Banks, Small-Scale Enterprises are those with annual
turnover not exceeding N500, 000.00 while the case of Merchant
Banks, Small – Scale enterprises are those with capital investment
not exceeding N2.0 million (excluding the cost of land or with
minimum of N1.0 million).
Small-Scale Enterprises were identified with the following
characteristics by Aluko (1972) in a study he organized.
� There are enterprises where the manager/proprietor takes
charge of the functional activities such as finance, production
and marketing.
� The industry is integrated and meets only the immediate need
of the local community in which it operates. The entrepreneur
usually does not have knowledge of wider or distant markets.
� They seldom keep adequate financial and accounting records.
� It is one in which the level of education of the proprietor is
usually low with consequently low level of business
management techniques, skills or marketing information. He
also fails to plan for management succession.
21
� The rate of failure is usually because of dominance of the sole
proprietor. The replacement rate is also very high because of
the ease of starting new ones. There is also very high because
of the ease of starting new ones. There is that reluctance of
combining in partnership of limited liability companies
because of mutual distrust of other.
� It is one in which the enterprises is generally weak, poorly
equipped and there is that reluctance of requesting or even
accepting assistance for reasons ignorance, prejudice of fear
that information about the enterprises might reach the
authorities or near by competitors.
The Nigerian Economic Reconstruction Fund (NERFUND) 1991
also defined Small Medium Scale industry as those with fixed assets
other than land but exclusive of lost new investment not exceeding
Ten million Naira (10, 000, 000.00) (Investment and working
capital) not exceeding seven hundred and fifty thousand Naira (750,
000.00) with the continue slide and instability of the value of Naira,
aforementioned definitions do not really serve their real purpose
they ought to any longer. According to Odife (1991), a member of
conceptual changes have also been introduced in keeping with
22
changing economic scene, Small – Scale Enterprises definition has
change from one which has a turnover of only Five Hundred
Thousand Naira (500, 000.00) to one which has turnover of up to
Five Million Naira (5, 000, 000.00) used, it will be recalled that five
hundred thousand naira (500, 000.00) to be the limit maybe
exchanged for five hundred thousand Dollars before the advent of
Structural Adjustment Programme (SAP) of 1983. Nigeria today, five
hundred thousand dollars would be nothing less than forty one
million five hundred thousand Naira (41, 500, 00.00). It is not only
turnover that has been rectified, the total assets of a Small – Scale
enterprises used to be limited to ten million (10, 000., 000.00) but
also this was when five naira (N5.00) bought or exchange for One
US Dollar. With the present situation of things a project with a total
cost of between fifteen million naira (N15, 000.00) could be small or
medium scale enterprises. The situation is even more pathetic one
here one US Dollar is exchanged for about Eighty three to Eighty
four ($3/$4.00) official and even up to one hundred and thirty six
naira (136.00) in the black market. It is hope that the shore up the
value of the Naira and stop. This persistent skidding. In this study,
however, a small – scale enterprises as adopted as that with a total
23
net worth not exceeding five million Naira (5, 000, 000.00 and with
total strength not exceeding fifty (50) It should also formally and
properly incorporated.
2.1 SMALL-SCALE ENTERPRISES DEVELOPMENT IN NIGERIA
ECONOMIC
In Nigeria, various efforts have been made by successive
administration to encourage the development of small-scale
enterprises in Nigeria economy.
According to Yusuf (1991), effective economic development in
any modern society is not a matter of trail and error. It can only
drive a properly articulated package of policies intended to boost
the economy along a predetermined path of growth. The first stage
of the development plan involved the establishment of a Nigeria
Local Development Board which was charge with the following
responsibilities;
� The promotion and development of village crafts and
enterprises and the industrial development of the products of
Nigeria.
� Other suitable project approved by the Governor in council.
24
� The setting up and operation of experimental undertaking for
the testing of industrial process for the development of any
Nigerian product.
� Aid and provide Nigerian enterprises activities by granting
loans to cooperative, partnership and companies registered in
Nigeria.
The Nigeria Local Development Board was however dissolved
and was subsequently replaced by the Western, Eastern and
Northern Development Boards and Colony Development Board
for Lagos Colony.
The aim and objectives of the dissolved board and the new one
formed remained uncharged.
In 1964, the Nigerian Industrial Development Bank (NIDB) was
established as a development bank for medium and long term
capital for medium and large – scale enterprises. The banks current
minimum lending to every project is fifty thousand Naira (N50,
000.00) it maximum lending is fifteen million naira (N15, 000,
000.00), it also lend to Small-Scale industrialists with total
investment working capital not exceeding seven thousand and fifty
thousand Naria (750, 000.00). Due to the present value of our
25
Naira, the Nigeria Industrial Development Bank (NIDB) has been
organized and its share capital increase upward to enhance its
performance. The Nigerian Industrial Development Bank has
continued to play a vital role in financing and nurturing of small
and medium scale enterprises in Nigeria.
In 1973, the government set up Nigeria Bank for Commerce
and Industry (NBCID) to provide among other things financial
services to indigenous enterprises community particularly the small
and medium scale enterprises.
Again, government policy of ensuring adequate funding for
small and medium scale enterprises was further demonstrated
when it accepted the recommendation of the financial system review
committee of 1976 that Nigerian Bank for commerce and industry
operated as apex financial institutional body for small and medium
scale enterprises. The Nigerian Bank for commerce and industry
obtain fund from the Federal Government to assist Small-Scale
Enterprises each with project coat of not exceeding seven hundred
and fifty thousand Naira (750, 000, 00). The loans do granted are
soft. In addition to its regular function, it administer the federal
ministry of industries social fund from the federal government
26
assist small enterprises each with project cost not exceeding seven
hundred and fifty thousand Naira (N750, 000.00).
The loans are very soft, the bank is guided in the ministry’s
guideline for this purpose and it receive grants from federal
government to fund small enterprises in Nigeria. The second
national development plan (1970 – 1975) was corrective plan in re-
addressing the nations industrial policy. Much was achieved
because the import substitution polices of the first national plan
was still carried forward and implemented irrespective of the fact
that is was clearly stated therein that in the furtherance of the
government policy to increase rapidly the present level of
indigenous ownership and participation in manufacturing active
support will be given to the prompt and development of small-scale
enterprises.
In 1986, the national Directorate of Employment was
established. The government promoted the development of Small-
Scale Enterprises through the N.D.E. In 1987, the National
Directorate of Employment (N.D.E) launched a number of
programmes to generate employment and fund in 1986 also, the
federal government formed the Directorate for Food, Road, and
27
Rural Infrastructure (DFFRI). The objective of DFFRI are to facilitate
the development of the rural areas by providing roads, electricity
and pipe borne water and also mitigate the rural/urban draft for
setting up small – scale enterprises and cottage enterprises.
In the recent time, President Olusegun Obasanjo has shown
interest in development of small-scale enterprises through the
development programme of National Directorate Employment
(N.D.E) to empower youths.
From the foregoing, the Federal government has continued to
play active roles in the government of small and medium scale
enterprises. With all these infrastructural facilities being laid and it
is hoped that these small – scale entrepreneurs and industrialize
will grab this golden opportunity to expand their scale of operation
to bigger ventures.
2.2 THE ROLE OF SMALL SCALE ENTERPRISES IN THE
ECONOMIC OF NIGERIA
The government has recognized the role of small – scale
enterprises has to play in Nigerian Economy in putting a firmly on a
sustainable self reliance, integrated and poverty alleviating growth
in the new millennium of the 21st century.
28
Owualah (1987) stated that the significance of Small – Scale
enterprises is attributed to their influence in stimulating indigenous
entrepreneurship and technology. It is through acting as a scated or
nursing usually for the indigenous population, that they serve as
vehicles for industrialization and diffusion of innovative ideas for
reaching dimension.
According to Kasiumu (1992), “no country which is desirous of
rapid industrialization can afford to relegate the small and medium
scale enterprises to the background.
Japan in her early stages of industrialization the economy was
dominated by traditional and small enterprises, which draw their
strength not from the abundance of capital but from her supply of
labour. Then labour was very cheap, they used what they have to
acquire what they wanted. Japan recognized that Small and
Medium Scale Enterprises constitute the fountain head vilify for
her national economy and consequently their problem have been
virtue of their number, diversity, penetration in all sector
production and marketing, contribution of employment and to the
prosperity of particular region.
29
Invention and innovation are among the foundation of any
economy. Let us take United State of American for example, their
increase in productivity over hundred years of their existence as a
nation are rooted on one principle source less effort at a lower cost.
This singular principle enhance productivity.
According to the office management budget of the United State
of America, more than 50% of the major technological advance and
innovation originated with individual investors and small
companies.
The also provide linkage within the economy by producing
cheap intermediate goods as input for large – scale enterprises
simply because of low over head cost of production of small
enterprises. From the foregoing role of small – scale enterprises
could be succinctly summarized as follows;
� Stimulation of indigenous entrepreneurship.
� Development of local technology.
� Mitigation of rural urban migration.
� Greater employment creation per unit capital invested.
� Promotion of effective recourse utilization
30
� Facilitation of managerial training for unskilled and semi –
killed workers.
� Ability to meet the special need of small group of consumers.
� Enhancement of regional economic balance through industrial
disposal.
� Small – scale enterprises constitute diverse organized
activities.
According to Omorodion (1989) these activities comprises
handcraft, household production small maintenance and repair
works etc.
A common characteristics of small enterprises in the way they
are managed and operated. It has been recognized that the small –
scale enterprises play some vital role in expanding and diversify the
economy.
According to Oluwo (1985), it is believed that through the
promotion of small – scale enterprises;
� Reduce regional disparities and rural urban migration.
� General substantial indigenous entrepreneurship.
� Facilitate effective mobilization of local resource such as land,
labour and capital.
31
According to Adekunle (2005), other relevance of Small-Scale
enterprises to any country includes;
� Small – scale enterprises act as a catalyst for technological
development.
� They serve as an essential source of innovations. This is
possible because in most cases, technology in use is less
complex which can be handled, manipulated and managed by
the entrepreneurs
� In area of globalization in which the world has been reduced in
to global by break through in information and communication
technologies. Many small- scale enterprises make increasing
use in computer and other advance technical equipment,
promotive of the much needed technological culture which is a
strong catalysts for technological development. In this
direction, developing countries, they help to reduce the
development gap between them and advanced countries,
which is largely technology.
� Small – scale enterprises are a major source of employment for
a large majority of people. They have a higher capacity for
32
generating employment, as their modes of operations are more
labour intensive.
� Small – scale enterprises have been accounting for a higher
percentages of industrial employment in Nigeria than large –
scale enterprises. In 1987 for example, they accounted for
about 70% and the situation has remain largely the same. It
has also been observed that more job per unit of invested
capital and per unit of energy consumed are created world
wide by small – scale enterprises than in large – scale
enterprises.
� They provide a training avenue for the creation of local
entrepreneur in several area of economic activity.
They ensure regular supply for potential local entrepreneurs.
They also provide opportunities for talented enterprising individual
of limited financial means who are eager to engage in activities that
will develop the national economy, provide productive outlets for a
good number of individualistic people who have a working prefence
in small units.
Over looking the economic and social importance of small –
scale enterprises sector of the economy is the same as ignoring
33
excellence development opportunities and creating frustration,
despair and hardship in many quarters of the economy. To avoid
any of such situations, assistance and development activities
should be directed to the small – scale enterprises sector by both
the public and private sectors of the economy.
Internationally, the World Bank estimated Nigerian labour
force 40% of the population in 1980, by the end of the century, it is
estimated that Nigerian population would have risen to loom at
labour force growth of 29% per annum. It became obvious that
Nigerian has employment problem which is characterized by mass
retrenchment of workers. It is in this regard that Nigeria Small –
Scale Enterprises set up would make an immense contribution in
providing employment for thousand unemployed.
Already statistics has shown that the sector employs not less
than 30% of the Nigerian labour force.
The United Nation agencies that are primarily concerned with
developing nations said that development of small – scale
enterprises sector is an important component of industrialization
an employment creation.
34
Furthermore, at the first Africa symposium on small and
medium size enterprises held in Rabat, Morocco, participants were
unanimous in the acknowledgement of small – scale enterprises as
a relevant elements in socio – economic transformation of Africa
counties. The symposium were organized by the association of
Africa Development Finance Institution (AAFDI, 1979).
It was noted in Morocco that the official framework, the leather
and household were industries employ less than 200 people new
account for about 92% of the country’s industrial sector employs
46% of the labour force and account for 30% of gross the domestic
product in the terms of value added.
Also in Nigeria, an indirect estimate in 1988 of the role of
small – scale enterprises by Ogunpole (1979) put the contribution
or Gross Domestic Product (GDP) and industrial sector at 25% and
just over 63% respectively.
These facts underline not only the magnitude of the
contribution that small – scale enterprises can make in an
economy, but specifically the significance of the production and
employment opportunities which vary from the country to another.
35
2.3 SOURCES OF CAPITAL FOR SMALL – SCALE
ENTERPRISES
According to Osaze, B. K. (1981), firm use funds in the hope of
increasing return of shareholders. These are various combination of
different types of securities issued by a company.
The optimal capital structure is the blend or mix of these
securities that ensures maximum potential value to owners of the
company. There has been various usage of the mix or constellation
of securities that must be admitted in to capital structure of firm.
This means therefore that capital means different things to different
people. To some, capital structure of a firm, this means therefore
that capital means different things to different people. To some
capital means ownership equity, investments analysis use a
broader view in analyzing the capital structure of a firm.
The following are the appropriate capitals
(i) Owners equity
(ii) Long – term creditor investment in firm of debenture or
unsecured loans capital structure can be seen as the variable
total book value of proportion of the following;
- All shares
36
- Loan capital
- Retained earning
- All other additions to outstanding capita in general, it
seems to a proportional relationship between various form
of long – term debt and equity.
2.4 PROBLEM OF SMALL – SCALE ENTERPRISES
According to Oguntoye (1984) to access the progress of any
business ventures whether incorporated or not, big or small, proper
documentation and presentation of financial statement information
is necessary such financial information must be timely and relevant
to needs of the particular enterprises.
Unfortunately, small- scale enterprises do not have financial
departments at all; the few ones that have, maintain ill ones and do
not effectively make them. Some of them even rely on the one year
annual financial report pieced together by external financial analyst
by which time a lot of things most have gone wrong. One of the
reasons why entrepreneurs of small – scale enterprises do not easily
have access to loans and credit facilities from banks and other
37
creditors is poor record keeping and presentation of finance report
information.
IMPROPER FINANCIAL RECORDS
According to Anaco (1975), records should be set up at the
same time that business is commencing so as to know all the
expenditure right from the beginning. Records such as the opening
cash, opening stock, other current asset, fixed assets at first
shareholders contribution (capital) etc in setting these
financial/records for small – scale enterprises, recognizance must
be taken to know the nature of the business that small – scale
enterprises is into.
As regards small – scale enterprises, that are into
manufacturing such as fashioned designing, printing, cabinets
making, bakeries etc the following records would be appropriate for
them.
� Stock records raw materials work in progress and finish
goods.
� Recording of trading activities including purchase and sales.
� Records of all assets and liabilities
� Records of cash and cheque receipt and payment.
38
� Records of production.
Records of production, stock of raw material and working
progress would not be relevant for small scale entrepreneurs in
merchandizing, but stock of finish goods bought for re-sale must be
properly kept.
SALARIES AND WAGES BOOK
According to Anao (1975) all forms of salaries and wages of all
employees are recorded in this book. The director or entrepreneur
must place himself on a fixed and reasonable salaries and may keep
a separate salary book for himself. The salaries and wages book is
usually updated with the time cards time sheet of individual
employees. The gross pay is made up of basic salary, overtime,
allowance and bonuses and the different between this and the
various dedications such as tax, national housing fund loan etc.
give the net pay which is commonly referred to as the take home
pay. It is always advisable to pay salary by cheque because of theft
incidence … all of the above books and records of prime entry. They
constitute the basic of posting accounting information into
permanent record known as ledger, which ensures the due enter
39
double (enter) to be achieved. This ensure hat completeness of
accounting information method of recording events.
Some different forms of ledger that could be maintain are;
� The Private Ledger: This contain the names of details of
customers that bought goods on credit and suppliers who give
credit the business. This usually updated through the
purchase and sale day book.
� Real Ledger: This records the assists of the company capital
equipment.
� Nominal Ledger: This contains the total of the trading
activities such as sales and purchases.
� Stock or Store Ledger: This information relates to raw
materials working – progress and finished goods. It is usually
kept away from the stores. Usually, it update with the goods
received note for purchases made and stores issues vouchers
for issue to productions.
The business has selected a particular method of pricing issue
for production in order for the recording to be thoroughly done. It
may be simply average method of the weighted average method of
40
the first in first out method (FIFO) or last in first out (I – IFO)
method. Whatever method chosen should b consistently followed.
SKIPPING INSURANCE
Insurance according to Anyanwu (1979) is an aid to trade, it is
a provision which a wise trader makes against the occurrence of
some future loss. The hazards of a business are many, ranging
from fire, burglary, accident, to the fidelity of a worker. If any of
these hazards strike a business he result in most cases will be
liquidation.
WRONG LOCATION OF INDUSTRY
According to Olomu (1985), another problem facing small-
scale enterprises, experiences has shown that next to the choice of
product is the choice of location. This is the most important
decision and entrepreneur would have to make because the success
or failure of an enterprises depend to a large extent on its location.
There are three criteria for deciding the site of an industry. They are
techno economic administrative and personnel.
Techno-Economic is purely technical and economic reason e.g.
the availability of raw materials and the location of the market. It is
41
important to ensure that the location of the enterprises is at least
near one of the two factors named. It is much better for the
entrepreneur to site the enterprises near both the market and the
source of raw materials.
Employment of unskilled personnel according to Olomu
(1985), the practice of negotism, tribalism and ethnicity in
employment of people cut across as the Nigeria society is one other
single factory militating against the success of small-scale
enterprises in Nigeria. The exploitive tendency of some
entrepreneurs and the habit among most of them to employ
pensioners who have been sapped of physical and mental energy.
Such old people are prepared to settle for any wages, however low.
But those who hire them in place of younger energetic people who
can grow with the company, pay in the end dearly in terms of low
productivity and difficulty in communicating with them. Those who
hire the old timers on the basis of so-called experience can be
counter productive knowing too much is as bad as knowing little
what is needed is willingness to learn this another fact which most
Nigerian small – scale enterprises are yet to learn.
42
INADEQUATE COMMUNICATION SYSTEM
According to Olomu K. A. (1985), there is business whether
small or large that operate independently, without luisement,
communication is the key to that factor. There is need for business
world and its embodiment for small-scale producing enterprises.
There is need for the communication of their product and services
to the targeted market. There exist the need for exchange of
information that can facilitate growth in the business sector. But
looking further, the development economy disallows this condition.
The mailing system has been clouded with efficiency, corruption
and delay. The small scale enterprises cannot turn to any other
means of communication like the telephone system due to
inadequate finance. This retardate and some times demises small-
scale enterprises.
ECONOMIC PROBLEM
According to Nites M. Hanson (1972), incidence to both the
small – scale entrepreneur and the countryest large in trhe short
run are factors such as the demise of current statistical data for
43
interpretate and forecast basic economic phenomena on which apt
investment decision could be analysed.
The land use decree in its present form has been found to be
major disincentive to investment by small – scale business. It is
very difficult for the average small – scale investors to acquire land
on which to establish a worth while project.
Frequent change in fiscal and monetary policy tries to
destabilize and pulverize the already conceptualized projects. This
is most problematic in the sense that small – scale enterprises lacks
training sophistication and connections possessed by cheap
companies in anticipating, analyzing and coping with abrupt policy
changes inherent in our macro-economic system.
Galloping inflation expatiates the problem by worsening the
already inadequate capital available for small-scale enterprises in
Nigeria here by projecting the expiration of many organisation
whose ventures would have turn profitable.
The competitive economy, which erupted because of
adaptation of the mixed economy system of government (Nigeria)
has promulgated the phasing out of small – scale enterprises that
cannot compete with large – scale enterprises.
44
SOCIAL PROBLEM
According to Baumack (1973), man is said to be a product of
its environment. The Nigerian small – scale management is
therefore hindered by a milieu of society. some of these barriers are
mentioned and discussed below:
(1) The Profit Motive: The profit motive is not and end itself but
a means to an end. Even where the small-scale investors is
able to gather little money, he ‘sprays’ it away at parties,
builds large family embark in fun fair pluralization and
indulges in conspicuous consumptions to the negligence and
detriment of his venture.
(2) Academically: The society is said to be largely protestant and
the spirit of capitalization. The craze for foreign products and
services which can be said to generate from inferiority complex
syndrome, borne out of colonization has a tantamount adverse
on the growth and expansion of small – scale enterprises in
the economy. According to Baumack (1973), primordial
sentimental perspective, superstitious, stereotypes poverty,
illiteracy, taboos, and a host of others are social factors which
becloud the rational vision of many indigenous entrepreneur.
45
2.5 THE IMPACT OF SMALL – SCALE ENTERPRISES IN
NIGERIAN
The existence of those enterprises have made some impact
that are relevant to social life of the people and Nigeria in general.
Fakorede (1988) observed that small-scale enterprises are
relatively labour intensive and provide a means of providing
employment opportunity in the society. Statistics has shown that
small-scale enterprises employ less than 30% of the Nigerian
unemployment growth rate at 29% as estimated by the World Bank.
Olomu (1985) stated that small-scale enterprises have provided
training opportunities for indigenous manpower for local
industries and thus reduces
the nation’s absolute dependency on foreign personnel. This was
supported by Nwachukwu (1986) when he stated that small-scale
enterprise have become resistible tool for training of indigenous
manpower of the open apprenticeship scheme of the national
46
Directorate of Employment. Adding that over 60% of the beneficiary
of this scheme are trained in small-scale enterprises.
One of the negative impacts of small-scale enterprises
according to Aina (1986) the inability of small- scale enterprises to
adhere strictly to the government environmental control regulation.
The waste product constitutes health and social problems to users
of some streets and major highways where those wastes are
dumped. In summary, this chapter has reviewed the concept of
small – scale enterprises and the different criteria employed by
different scholars in classifying small-scale enterprises in Delta
State.
2.6 ECONOMIC IMPORTANCE OF SMALL-SCALE
ENTERPRISES
The importance of small-scale enterprises in Nigeria can be
more appreciated by looking at the prideful place it occupied in
many National Development plans, the government stated that in
47
its policy to give active support to the production and development
of small-scale enterprises in Nigeria. To this end, a lot of policies
and programmes have been initiated by government to enable them
attain their objective culminating in the establishment of the
Nigeria Industrial Development Bank (NIDB). In fact, the fourth
National Development Plan (1980 – 1985) stated that the objective
of mounting special assistance programmes for development of
Small-Scale Enterprises is for them to serve as necessary tools for
the development of the Nigerian entrepreneur (Federal Government
of Nigeria, 1980). Government interest in the sector is suggestive of
the fact that government sees the sector as growth generating. It is
imperative for the course of this research work to review briefly the
relative importance of the small-scale enterprises in Nigeria
economy. Taking into consideration of all economic units in Nigeria,
the small industrial establishment form the largest sector
numerically. There is dominance of all of the small- scale
enterprises over the so called type scale enterprises and this
combine with other identifiable advantages which small- scale
enterprises have makes reasonable justification for government and
bank assistance this competition of schedule in business of the
48
Nigeria enterprises promotion Act 1977 and the most recent
National Directorate of Employment (NDE) programme are cases in
point.
The strength that makes such enterprises more amendable for
assistance includes the following;
� Low initial outlay and requirement.
� Personal commitment of proprietors whose life savings etc
usually form the start up capital.
� Availability of less complex technology which can easily be
managed by Nigerians without dependence on expatriates
technical partner.
� High potential for employment opportunities and dispersal of
enterprises and action.
� Such industries could easily develop in the rural areas with
opening up of the rural areas through bold steps like the rural
banking.
� Small-scale enterprises are more amendable to competition
unlike the near monopoly situation which exist with the
multinationals who are often time accused of pursuing their
corporate capitalist interest.
49
� It provide good training ground for entrepreneur as most of
our industrialist of today started and graduated through the
tutelage reviewed as small- scale enterprises in view of the
preponderant role and place of the small-scale enterprises in
the whole setup and structure of our economic activities and
social live, bank and other formal financial institutions are
being called upon to set up financial assistance to this priority
sub-sector that has been long neglected by banks and other
formal institutions.
REFERENCES
Aina, E. (1986) The Effect of Environmental Pollution in the Development Economy; Lagos Spectrum Publishers, p. 9.
Akinorinade, A (1988), The Development of Small-Scale Industrial
Sector, The Role of The Federal Government; Daily Times, July 14, pp. 13-14.
Aluko, S. (1972), Small-Scale Enterprises in Mid-Western, Kwara
and Lagos States; 1972. Anyanwu, Elements of Commerce; Ibadan Onibonoje Publishers, P.
10. Fokorede, L. (1980), How risky is Small-Scale business; Business
Concord, Friday March 11, 0. 8. Hails and Hubbard (1978), Small Business Management; pp. 211.
50
Ian J. Van, Research Institute for Management Science
Communication; Volume 1, 1978. Imoisili (ded) (1996), Social Research for Nigeria Students; Lagos:
Mathonse Press ltd. Jegede, C. T. (1990) The Development of Small – Scale Industry in
Nigeria; Management in Nigeria. Naume Williams (1978), The Entrepreneurial Manager in the Small
Business, California Addision Wesley Publishes. Niles M. Hanson (1972), Growth Rate in Regional Economic
Development; New York: The Face Press Collier Mac Ltd. Nwachukwu (1986), Economic Policy and Planning in Developing
Countries, Ibadan: Onibonje Publishers. Odife D., Relevance of the Capital Enterprises Business Time;
Monday June 3, 1991. Oguntoye P. A. (1984), Bank and Small – Scale Business, Role of
Small- Scale Enterprises in National Development, Nigeria Experience; Lagos, F. A. Publishers Ltd.
Ojemba G. Agbo, Small – Scale Business Management; First
Published in 2000 P. 173. Olomu, K. A. (1985) Problems of Small – Scale Industry in the past
25 years; Business Concord, Friday October, 11, p. Olunpola A. (1979), The Underdevelopment of Indigenous
Entrepreneurship in Nigeria; Business Time, December 26, pp. 10 -12.
Omoerodion, G. O. (1989), The Role of Small-Scale Industry in the
Industry Development Process Business Time, May 22, p. 8.
51
Osayameh, R.K. (1989), Banks and Small – Scale Enterprises; Paco Presented for a Seminar, Lagos: F. A. Publisher Ltd. pp 8, 45.
Osaze, B. K. (1981), Financing Small-Scale Dapod Growth Firm,
PHD Thesis, University of Bath. Owuala S.I. (1987) The Role of Small-Scale Enterprises in the
Economic Development in Nigeria, Management in Nigeria; November/December, 1984.
William, D, (1985), Small Business Management; New York:
Deirnder Publication, pp. 71-72.
CHAPTER THREE
3.0 RESEARCH DESIGN AND METHODOLOGY
In this chapter, attempt is made by the researcher to present
the method used in this study. More so to give the description of the
study design, instrument and method of data analysis used.
This study is designed to look into the impact of small-scale
enterprises financing improving the socio economic well being of the
Nigerian people.
The various methods used in the collection of data are as
follows: Questionnaire, personal interview, observation and
secondary data.
52
i. QUESTIONNAIRES:
The questionnaires were administered by the researcher
himself. This was done to make sure that the respondents actually
completed the questionnaire without the use of undue influence.
The questionnaire covers the area such as the criteria organisation
used in classifying small-scale enterprises, how enterprises source
for credit facilities from financial institution and the constraints
that small-scale enterprises face. The questionnaires were given to
10 workers which they answered and return to the researcher.
ii. PERSONAL INTERVIEW
Personal interview was also used in the collection of data, the
researcher carried out face – face interview with the owners of small
– scale enterprises financing and their workers. This method was
adopted to enable the research have the needed information.
iii. OBSERVATION
This is perhaps one of the most useful techniques used for
data collection. Operational area such as Soya Milk processing
enterprises and poultry and garri processing enterprises was
personally observed with this method, the researcher was able to
confirm the accuracy of data collected by other two methods. It also
53
helped the researcher to confirm the actual situation of the
enterprises.
iv. SECONDARY DATA
This method comprise mainly of the following;
� Textbooks and journals
� Magazine and Newspaper
3.1 POPULATION OF THE STUDY
Selected Small-Scale Enterprises financing in Aniocha South
Local Government Area of Delta State are the population
understudy.
3.2 RESEARCH INSTRUMENT
The researcher in a bid to carryout effectively, this research
used that technique of observation, personal interview,
questionnaire and secondary data. Since it is impossible to travel
because of limited time and money, the questionnaire technique
was then used.
3.3 METHOD OF DATA COLLECTION
The data used in this research were mainly from primary
sources. The primary sources are through the use of questionnaire
54
which was randomly distributed, and retrieved after being
completed by respondents. The secondary source are textbooks,
journal, magazines and newspapers etc.
3.4 DATA ANALYSIS AND INTERPRETATION
The data collected in this research work was processed
manually. To test the hypothesis formulated, chi-square statistical
test was used.
Chi-square according to Nzelibe (1979) is defined as “the sum
of the ratio of difference between observed and expected value”, it is
represented thus;
X2 ∑(Oi – Ei)2 Ei Where X2 = Chi-Square
Oi = Observed Frequency
Ei = Expected frequency
55
This X2 is a measure of the discrepancy between observed and
expected frequencies. The larger the X2 the less agreement that is
between observed and expected frequency and vice – versa.
When the chi-square has been calculated, a comparison is
then made between the calculated X2 and the critical value of X2
obtained from the critical value of X2 table.
DECISION RULE
The decision rule is to reject the null hypothesis if X2
calculated is greater than or equal to X2 critical values and accept
the null hypothesis if X2 calculated is less than X2 critical values.
Accept Ho if (cal) < X2 (critical value)
Reject Ho if (cal) > X2 (critical value)
56
CHAPTER FOUR
4.0 DATA PRESENTATION AND ANALYSIS
This chapter is used to analyze data collected and to make
interpretation.
Our of the fifty (50) questionnaires distributed to three
selected manufacturing enterprises in Nigeria, only thirty eight (38)
of them were completed and returned while twelve (120 was not
returned. Therefore, the researcher has limited the sample size to
38 to represent the totality of the population.
TABLE 4.1
Name of Enterprises No. of Questionnaire Sample Size
Carpentry 10 7
Tailoring 20 15
Bakery 20 16
57
Total 50 38
Source: Field Work, 2008
4.1 DATA PRESENTATION ANALYSIS
The methodology for the analysis of data as already
highlighted in the preceding chapter will involve the chi-square test.
4.2 TESTING OF HYPOTHESIS
The hypothesis formulated in chapter one will be tested using
the chi-square test. The test will be based on available responses
obtained form the questionnaire.
The process to be followed in testing the hypothesis include;
� Statement of hypothesis
� Identification of test statistics
� Specification of decision rule
� Computation of test statistics
� Comments.
4.3 HYPOTHESIS
HO: That government contribute to the socio-economic well being
of Nigerian people.
58
HI: That government does not contribute to the socio economic
well being of the Nigerian people.
4.3.1 Test Statistics
The Chi-Square test is the statistics used. The formulae is
given as;
X2 = ∑ (Oi – Ei)2 Ei Where X = chi – square
O = Observed frequency
E = Expected frequency
The formulae for expected frequency given as
e = r e x ct gt where rt = how total
ct = column total
gt = grand total
4.3.2 Decision Rule
The test is carried out at a 0.05 level of significance and the
degree of freedom is 2. The rule is that the critical value of chi-
square is less than the computed values of chi-square, the null
59
hypothesis (Ho) should be rejected while the alternative hypothesis
(HI) should be accepted. On the other hand, if the critical value of
chi-square is greater than the computed value of chi-square. The
null hypothesis (Ho) should be accepted while the alternative
hypothesis (HI) should be rejected.
TABLE 4.2: CONTINGENCY (EXPECTED FREQUENCY)
RESPONSE TO QUESTION 12
NAME OF ENTERPRISES
(YES) OBSERVED EXPECTED
(NO) OBSERVED EXPECTED
TOTAL
Carpentry 7 (6.63) 0 (0.37) 7
Tailoring 14 (14.2) 1 (0.79) 15
Bakery 15 (15.16) 1 (0.84) 16
Total 36 2 38
Source: Field Work, 2008
t = r t x ct gt Where rt = Row total
ct = column total
gt = grand total
60
Degree of freedom = r – 1) c – 1)
Where r = the number of rows
c = the number of column
(r – 1) (c – 1)
(2 – 1) (3 – 1)
(1) (2)
Level of significance = 0.05
Critical value of chi-square = 5. 99
4.3 COMPUTED VALUES OF EXPECTED FREQUENCY
e = rt X ct gt e = 7 x 36 e = 15 x 36 e = 16 x 36 38 = 6.63 38 = 14.2 38= 15.16 e = 7 x 2 e = 15 x 2 e = 16 x 2 38 = 0.37 38 = 0.79 38 = 0.84 4.3.5 Computed Value Of Chi – Square X2 = (Oi – Ei)2 Ei X2 = (7 – 6.63)2 6.63 = 0.02 X2 = (14 – 14.2)2 14.2 = 0.003
61
X2 = (15 – 15.16)2 15.16 = 0.002 X2 = (0 – 0.37)2 0.37 = 0.37 X2 = (1.079)2 0.79 = 0.056 X2 = (1 – 0.84)2 0.84 = 0.03 X2 = 0.03 + 0.003 + 0.002 + 0.37 + 0.056 + 0.03 = 0.481 TABLE 4.3
OBSERVED EXPECTED (O – C)2
7 6.63 0.02
14 14.2 0.003
15 15.16 0.002
0 0.37 0.37
1 0.79 0.056
∑∑∑∑ 0.481
X2 Cal (0 – C)2 = Σ 0.981 4.3.6 Comment
62
As evident from the computation the value of chi-square X2 =
0.481 from the chi-square table the table value of chi-square at
0.05 level of significance and 2 degree of freedom is 0.481.
Since the calculated value of chi-square is less than the table
value of chi-square, the null hypothesis (Ho) which government
contribute to the socio-economic well being of the Nigerian people is
accepted while the alternative hypothesis (H1) which states that
government does not contribute to the socio-economic well being of
the Nigerian people is rejected.
4.4 HYPOTHESIS II
STATEMENT OF HYPOTHESIS
HO: That educational level of affects diversification of business
interest.
HI: That educational level does not affect diversification of
business interest.
4.4.1 Test Statistics
X2 = ∑ (Oi – Ci)2 Ci C = rt X ct gt
63
4.4.2 Decision Rule
Accept the null hypothesis (Ho) and reject the alternative
hypothesis (HI) if the table value of chi-square is greater than the
computed value of chi-square.
Reject the null hypothesis (Ho) and accept the alternative (HI)
if the table value of the chi-square is less than computed value of
chi-square.
TABLE 4.4 CONTINGENCY TABLE EXPECTED FREQUENCY
RESPONSES TO QUESTION 9
NAME OF ENTERPRISES
(YES) OBSERVED EXPECTED
(NO) OBSERVED EXPECTED
TOTAL
Carpentry 6 (6.63) 0 (0.37) 7
Tailoring 14 (14.21) 1 (0.79) 15
Bakery 16 (15.16) 1 (0.84) 16
Total 36 2 38
Source: Field Survey, 2008
4.4.3 Computed Value Of Expected Frequency
e = rt x ct gt
e = 7 x 36 e = 15 x 36 e = 16 x 36 38 = 6.63 38 = 14.21 38= 15.16
64
e = 7 x 2 e = 15 x 2 e = 16 x 2 38 = 0.37 38 = 0.78 38 = 0.84 4.43 Computed Value of Expected Frequency
X2 = (01 – C1)2
Ce
X2 = (6 – 6. 63)2 6.63 = 0.060 X2 = (14 – 14.2)2 14.2 = 0.003 X2 = (16 – 15.16)2 15.16 = 0.047 X2 = (1 – 0.37)2 0.37 = 1.07 X2 = (0 – 0.84)2 0.84 = 0.84 X2 = 0.060 + 0.003 + 0.047 +1.07 + 0.056 + 0.84 = 2.078
TABLE 4. 5 Observed Expected (0 – e)2
e
6 6.63 0.060
14 14.21 0.003
16 15.16 0.057
1 0.37 1.07
1 0.79 0.056
65
0 0.84 0.084
∑∑∑∑ 2.08
X2 Cal (0 – e)2 e = ∑ 2.08 Degree of freedom = 2
Level of significance = 0.05
Critical value of chi-square = 599
4.5 COMMENT
As evident from the computation, the value of chi-square x2 =
2.08. From the chi-square table, the table value of chi-square at
0.05 level of significance and 2 degree of freedom is 5.99. Since the
calculated value of chi-square is less than the table of chi-square,
the null hypothesis (Ho) which states that education level effects
diversification of business interests is accepted while the alternative
hypothesis (H1) which states that education level does not affect
diversification of business interest is rejected.
4.6 HYPOTHESIS III
STATEMENT OF HYPOTHESIS
HO: That establishment source for credit facilities from financial
institution.
66
HI: That establishment does not source for facilities from financial
institutions.
4.6.1 Test Statistics
X2 = ∑(Oi – ei) ei e = rt x ct gt 4.6.2 Decision Rule
Accept the null hypothesis (Ho) and reject the alternative
hypothesis (HI). If the value of chi-square is greater than the
computed value of chi-square.
Reject the null hypothesis (Ho) and accept the alternative
hypothesis (HI), if the chi-square is les than the computed value chi
– square.
TABLE 4.6: CONTINGENCY TABLE/EXPECTED FREQUENCY
RESPONSES TO QUESTION 15
NAME OF ENTERPRISES
(YES) OBSERVED EXPECTED
(NO) OBSERVED EXPECTED
TOTAL
Carpentry 7 (6.45) 0 (0.55) 7
Tailoring 15 (13.82) 1 (1.18) 15
Bakery 14 (14.74) 2 (1.28) 16
67
Total 36 2 38
Source: Field Survey, 2008
4.6.3 Computed Value Of Expected Frequency e = rt x ct gt e = 7 x 35 e = 15 x 35 e = 16 x 35 38 = 6.45 38 = 13.81 38= 14.47
e = 7 x 3 e = 15 x 3 e = 16 x 3 38 = 0.55 38 = 1.18 38 = 1.26 4.6.4 Computed Value Of Chi-Square X2 = (O1 - eI)2 ei X2 = (7 -6.45)2 6.45 = 0.05 X2 = (14 – 13.82)2 13.82 = 0.03 X2 = (14 – 14.74)2 14.74 = 0.55 X2 = (0.055)2 0.55 = 0.05 X2 = (1 – 1.18)2 1.18 = 0.03
68
X2 = (2 – 1.26)2 1.26 = 0.43 X2 = 0.05 + 0.03 + 0.55 + 0.05 + 0.03 = 1.102 = 1.10 TABLE 4.7
OBSERVED EXPECTED (O – E)2 E
1 6.45 0.05
19 13.82 0.002
19 14.74 0.09
0 0.55 0.55
1 1.18 0.03
2 1.26 0.43
∑∑∑∑ 1.10
X2 Cal (0 – e)2 e = 1.10 4.6.5 Comment
As evident from the computation, the value of chi-square =
1.10.
69
From the chi-square of significance and 2 degree of freedom is
5.99 since the calculated value of chi-square is less than the table
value of chi-square, that null hypothesis (Ho) which states that
establishments source for credit facilities from financial institution
is accepted while the alternative hypothesis (HI) which states that
establishments does not source for credit facilities from financial
institution rejected.
4.7 HYPOTHESIS IV
STATEMENT OF HYPOTHESIS
HO: That Small – Scale enterprises should employ and retain the
services of accounting officers.
HI: That Small-Scale Enterprises should not employ the services
of accounting officers.
4.7.1 Decision Rule
Accepted null hypothesis (Ho) and reject the alternative
computed value of chi-square.
Reject the null hypothesis (Ho) and accept the alternative
hypothesis (HI) if the value if the chi-square is less than the
computed value of chi – square.
70
TABLE 4.8: CONTINGENCY TABLE/EXPECTED FREQUENCY
NAME OF ENTERPRISES
(YES) OBSERVED EXPECTED
(NO) OBSERVED EXPECTED
TOTAL
Carpentry 7 (6.45) 0 (0.55) 7
Tailoring 14 (13.82) 1 (1.18) 15
Bakery 15 (14.74) 2 (1.28) 16
Total 36 2 38
Source: Field Survey, 2008
4.7.2 Computed Value of Expected Frequency
e = rt x ct gt
e = 7 x 36 e = 15 x 36 e = 16 x 36 38 = 6.66 38 = 14.21 38= 15.16 e = 7 x 2 e = 15 x 2 e = 16 x 2 38 = 0.37 38 = 0.79 38= 0.84 TABLE 4.9: COMPUTED VALUE OF CHI – SQUARE
71
X2 = (01 – e1)2 ei X2 = 7 – 6.63)2 6.63 = 0.02 X2 = (7 – 6.63)2 6.63 = 0.02 X2 = (14 – 14.21)2 14.21 = 0.003 X2 = (15 – 15.16)2 15.16 = 0.37 X2 = (1 – 0.79)2 0.79 = 0.056 X2 = (1 – 0.79)2 0.79 = 0.03 X2 = (1 – 0.84)2 0.84 = 0.03 X2 = 0.02 + 0.003 + 0.002 + 0.37 + 0.0056 + 0.03 = 0.481 TABLE 4.9
OBSERVED EXPECTED (0 – E)2
E
7 6.63 0.02
14 14.21 0.003
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15 15.16 0.002
0 0.37 0.37
1 0.79 0.056
1 0.84 0.03
∑∑∑∑ 0.481
X2 Cal (0 – e)2 e = ∑ 0.481 4.7.3 Comment
As evident from the computation, the value of chi-square X2
1.10. Form the chi-square tables, the value of chi-square are at
0.05 level of significance and 2 degree of freedom is 5.99. Since the
calculated value of chi-square less than the value of chi-square, the
null hypothesis (Ho) which states that Small-Scale Enterprises
should employ and retain the services of accounting officers is
accepted while the alternative hypothesis (HI) which states that
Small – Scale Enterprises should not employ and retain the services
of accounting officers is rejected.
4.8 SUMMARY
In the analysis done, in this chapter, it has been found that
three categories of manufacturing enterprises used carpentry,
73
tailoring, bakery clearly represents good sector of the
manufacturing industry.
The four hypothesis stated in the proceeding chapter were
analysed and proved right. Finally, the major “impact of Small-Scale
Enterprises financing and improving the socio economic well being
of Nigeria people was exhaustively discussed and analysed.
74
CHAPTER FIVE
SUMMARY OF FINDINGS, CONCLUSION AND
RECOMMENDATIONS
Obviously, this chapter is the last one, it is to review the
outline and draw conclusion. There searcher find it most
appropriate to briefly summarize the first chapter which dwell on
the introduction of this work by giving an insight into the topic of
study and delimiting the study to specified scope.
The second chapter concentrated on related literature review
of the various authorities. The third and fourth chapter gives an
insight into the methodology and analysis of the data in this study
respectively.
5.1 SUMMARY
Nigeria government has made several effort to encourage the
participation of indigenes in the industry or manufacturing sector.
This was seen during indigenization exercise carried out by the
Nigerian government in the late 70s as revealed by chapter two of
75
this project. This also served as a motivator of the growth of many
small-scale enterprises. Meanwhile, one suppose that an
entrepreneur should have good management skill with long – term
planning and good corporate strategy to be able to turn their
threats into opportunities but unfortunately, they have been face
with many problems both from government policies.
The major aim of this research is to examine the impact of
small-scale enterprises financing improving the socio-economic well
– being of the Nigeria people.
5.2 FINDINGS
In this course of study, various management problems facing
small-scale enterprises in Nigeria were highlighted and way of
maximizing or completely eradicate them were proffered so as to
increase their efficiency and productive performance. This will bring
the impact of small-scale enterprises financing in improving the
socio-economic well being of Nigeria people. This study also
provides an insight into the attitude of entrepreneurs of small-scale
enterprises. The finding from this study can be summarized briefly
below:
76
- Most Small – Scale Enterprises have made tremendous
contribution in the provision of employment opportunities.
- Small-Scale Enterprises do provide local raw materials thereby
reducing the depending on foreign raw materials in production
of goods and services.
- Another implication is the educational level of Small-Scale
Enterprises operators determine their level of sources. Only an
enlightened entrepreneur will make efficiency and full use of
scare resources. This further implies that trained small – scale
enterprises operators can handle business well.
- Financing policies of government affect the growth positively
not only small-scale enterprises also medium scale business.
- The ability of small – scale entrepreneurs to employ and retain
professional officer on full time basis due to the poor
operation.
- It was discovered that poor managerial capabilities of
entrepreneur is a major cause f the failure of small-scale
enterprises in Nigeria.
- Consequently, one other implication of the finding is the law
made by government to regulate the operations/activities of
77
small – scale enterprises do not hinder the operation and
activities of small-scale enterprises.
- Central investment company provide to entrepreneur on a
medium to long term for an interest a little less than the bank
prevailing interest rate. The loans are sometimes covered into
equity. This also provides technical advice and management to
the entrepreneurs on a very minimal fee.
- Nigeria Industries Development Bank (NIDB) provide medium
and long term finance to industries enterprises ascertained
can be infirm, equity, loan or both. The bank also assist
Nigerians and foreign entrepreneurs to prepare acceptable
industrial proposals and often advice on managerial aspects of
the project.
- Development finance company has flexible policy in financial
assistance to entrepreneurs. It can take the form of medium or
long –term loans, shareholding and convertible determine. It
lays primary emphasis on the establishment of industrial
agriculture and mining enterprise and many also consider
participation in the development of hotel, housing estates,
78
fisheries, land reclamation scheme and other projects operated
on a profit making basis.
- From the finding, the impact of financing small scale
enterprises in improving the socio – economic well being in
Nigeria has relevance to the social life of the people.
5.3 RECOMMENDATION
� Small – Scale in Nigeria should be given support and the
government should invest and explore other area necessary for
small-scale business to grow, with a view to development and
expanding the small – scale business sector.
� Now that the government is emphasizing self-reliance, all
necessary incentives should be provided by the government to
expand enterprises instead of spending millions of naira on
white elephant project.
� Resource should be made available to suit specific needs of
small – scale enterprises sector and the economic environment
in which the sector is operating. in this regard, small-scale
enterprises should be established with the necessary
infrastructural facilities put in place.
79
� Government should give more assistance to the private sector
by giving incentives to those organisations that provide vital
small – scale business in the state. This will act as a
motivation for continued assistance for the continued
enterprises.
� Directorate of Employment and Entrepreneurship
Development programme established in 1988 by the Federal
government and charged with the provision of loan to young
graduates to establish their own choice of business.
� Nigerian Bank for commerce and industry has the function of
providing equity capital and loan to indigenous businessmen.
It can offer loans medium to long-term basis. Its primary
emphasis on the establishment of industrial, agricultural and
service project. The 1989 Federal Budget also stipulates that
scale industrial department with management capabilities to
permit easy access to credit and management advice to small-
scale entrepreneurs.
5.4 CONCLUSION
From the result obtained, the researcher concluded that;
80
� Small-Scale Enterprises have made impact in improving the
socio-economic well being of the Nigerian people.
� The education level of small-scale enterprises operators
determine their level of sources.
� Government/Regulation do not hinder the operation/activities
of small-scale business.
� The impact of small – scale enterprises has relevance on the
socio-economic life of the people and the nation in general.
RESEARCH QUESTIONNAIRES
Kindly indicate correct answers to the following question by
making (x) in the appropriate place.
SECTION A: PERSONAL PROFIT
1. Sex: Male [ ], Female [ ],
2. Age: 16 – 25 [ ], 26 – 35 [ ], 36 – 45 [ ],
3. Marital Status: Single [ ], Married [ ],
4. Name of Enterprises: ………………………………………….....
5. Educational Background
GCE/WAEC [ ], OND [ ], DEGREE/HND [ ],
81
SECTION B
6. Is your enterprises a Small-Scale Enterprises?
Yes [ ], No [ ],
7. Do you think that Small-Scale Enterprises have any impact in
the improvement of the socio-economic well being of the
Nigeria people?
Yes [ ], No [ ],
8. Does government regulation affect the operation activities of
small-scale enterprises?
Yes [ ], No [ ],
9. Does the education level affect your diversification of business
interest?
Yes [ ], No [ ],
10. Does your enterprises have any linage with internet
marketing?
Yes [ ], No [ ],
11. Does your enterprises contribute more than large – scale
enterprise?
Yes [ ], No [ ],
82
12. Does government contribute towards the improvement of the
socio-economic well-being of the Nigerian people?
Yes [ ], No [ ],
13. Does your enterprises have impacts that are relevant to the
socio-economic well being of the Nigerian people?
Yes [ ], No [ ],
14. Should small-scale enterprises employ and retain the services
of accounting officers?
Yes [ ], No [ ],
15. Does your establishment source for credit facilities form
financial institution?
Yes [ ], No [ ],
16. Do the financial institutions collect collateral security before
granting credit facilities?
Yes [ ], No [ ],
17. Does financial institution monitor these credit facilities?
Yes [ ], No [ ],
18. Are the internal activities of employees effectively monitored by
management?
Yes [ ], No [ ],
83
19. If yes, what are the measure used in accessing staff activities?
a. …………………………………………………………………………
b. …………………………………………………………………………
c. …………………………………………………………………………
20. Do the goods and services produced rendered by small-scale
enterprises compete with imported one?
Yes [ ], No [ ].
BIBLIOGRAPHY
Aluko (1972), Small-Scale Industries in Mid-Western Kwara and Lagos State.
Anao, A. R. (1975), The Identity of the Indigenous Entrepreneur and
solution to his financial management in Nigeria. Anosike, B. (1978), Accounting in Small-Scale Industries
Management in Nigeria – Magazine. Efeni (July 6, 1992), Buck – Passing Over Industrial Performance;
The Guardian. Jegede, C.T. (1990), The Development of small and medium scale
industry in Nigeria; management in Nigeria. JOURNALS
84
Kasimu, S. Y. (July 27, 1992), Alternative Source of Small Medium Scale Enterprises Financing Business Time. Seminar on Nigeria Banker and Small – Scale Business.
Neck, P. A. (1996), The Practices of Entrepreneurship Nwokoye, Ahiazu (1987), The Information to Business Management;
(Macmillan Publishers Ltd). Osaze, B. E (1993), Strategic Management in Nigeria. Small Business Act (1953) of the United States of America (Section
203). Tijani in Yeasufu (1991), The Nigeria Economic Growth without
development; Convocation lecture note. DOCUMENTS American Accounting Association (AAA) (1996), A statement of Basic
Accounting Theory; Evanston. Central Bank of Nigeria Publication (1979), pp. 153 – 168. Central Bank of Nigeria Publication (1979), pp. 153 – 168. Federal Republic of Nigeria, First National Development Plan (1962
– 1968). Inegbeabor, A. U. (1991) Entrepreneurial Development in Nigeria
Lecture Note. Kaypode, M. O. (1998), Structural Adjustment Programme and the
industrial Sector (NISER Publication).
85
Olumo, I. A. (March 1986), Survival of Small – Scale Business under SAP being a paper presented at the Nigeria Institutes of Bankers.
