IMPACT OF SMALL SCALE BUSINESS ON THE ECONOMIC DEVELOPMENT OF ANAMBRA STATE

IMPACT OF SMALL SCALE BUSINESS ON THE ECONOMIC DEVELOPMENT OF ANAMBRA STATE (A CASE STUDY OF AWKA NORTH).

Abstract

Small scale business play significance impact in the growth and development of any nation both developed and developing country like Nigeria. These contribution has led to employment generation, increase use of local resources, stimulation of indigenous entrepreneurs, narrow market share, and conferment

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After payment, text the name of the project, email address and your names to 08064502337 to local community e.t.c. the researcher put more light on small scale business help in the diversification of an economy, their problem and important. The researcher also highlight the impact of small scale business in building up an economy and their significance for an effective and efficient economy with special reference to Awka north local government area of Anambra state. Small scale businesses continue to grapple with some problems which is amplified by the unstable economic and political environment. This research work will evaluate the impact played by small scale business in economic growth and development of a nation and also determine the factors which affect effective development of small scale business. Secondary, it ascertain the cause of small scale business failure. Finally, the researcher make some recommendations with its perceives that will alleviate the factors which affect development of small business. For the purpose of easy understanding this study will be divided into five chapters and are enumerated below: The first chapter deals with the introduction of subject matter with emphasis on the statement of the problem, objective, importance, scope and delimitation and definition of terms. The second chapter is devoted to the study of relevant literature. It embrace articles from authors of text books, newspaper and journals. Chapter three deals with research methodology. The methods and procedure of conducting the research and sources of information. Chapter four deals with the presentation and analysis of data through the questionnaire is done. Finally, chapter five which deals with discussion of findings, summary, conclusion and recommendations made based on the findings, limitation of study and suggestion for further study.

  CHAPTER 1

                                 INTRODUCTION

• BACKGROUND OF THE STUDY

The meaning of the term small scale business varies from one country to another and from one industry to another even within the same country.

The United Nations Industrial Development Organization (UNIDO) has located about fifty (50) different definitions of small scale business in seventy five (75) different  countries (Akinrinade, 1989:28). Accordingly, such various definitions were based on parameters such as installed capacity utilization, output, employment, capital, type of industry or other criteria which have more relevance to the industrial policies of the specified country.

Accordingly, some people would undoubtedly consider all business that had no more than a specified number of employees (5 or 10) to be small others would classify business as small by the kind of firm such as the local drug store, dress shop, neighbourhood store or shoe-makers, recharge card sellers at corner of the street.

Most people would agree that the neighbouring beer parlors and provision stores at corner of a residential area are small businesses while the Nigeria Breweries plc and UAC group of companies are big businesses. One would probably generate little argument about what is “big” or “small” between these two extremes since size is a relative concept. What appears small in the establishment in term of  employees or sales may be big in another establishment in distinguishing between big and small business, some criteria that are used are relative size, type of customers, financial strength and the number of employees.

Controversy arises then as to where to draw the line between big and small, or put in another way or expression, how big or small. The small business act of 1953 (USA) provides that a small business concern in “one which is independently owned and operated and not dominant in its field of operation (Broom and Longnecker 1986:11). Again the Committee on Economic Development (CED) of the United States of America offers a definition which states that a business will be classified as small if it meets two or more of the following criteria (Broom and Longnecker 1986:12).

1. Management is independent usually the managers are also owners.
2. Capital is supplied and ownership is held by an individual or a small group.

• The area of operation is mainly local, workers and owners are in one home or community, markets need not be local.

1. The size of the firm is small relative to the industry.

But in Britain, an attempt was made to define small business by adopting a payroll approach by looking at the number of workers on the payroll. By this definition those firms employing up to two hundred (200) workers may be regarded as small.

The 1986 industrial policy of Nigeria defined small scale businesses as those with total investment of between #100,000 and 2million exclusive of land but including working capital (Jegede, 1990:9)

Also, the Central Bank of Nigeria credit policy currently defines a small scale enterprise for the purpose of commercial and merchant banks loans as one whose total cost excluding cost of land but including working capital is above #1million but does not exceed #10million.

The small scale industries division of the federal ministry of industries defines small scale business as enterprises having investment capital (investment in land building, machinery and equipment and working capital of up to #60,000 and employing not more than fifty (50) employees. This definition was later revised to embrace all manufacturing units with a total capital investment (excluding cost of land) up to #750,000 but including working capital, and paid employment of up to 50 persons (Ayuba, 1989:7).

This such, an establishment must be wholly Nigerian owned (all companies inn schedule of the 1977 Nigerian enterprises promotion Decree (NEPO).

In addition, manufacturing unit exceeding the limit of investment and employment stated above may still be considered a small business of the sizes of output is relatively small compared to prevalent sizes of plants and technology is fairly labour- intensive.

The industrial research unit of Obafemi Awolowo University, Ife, defined small scale business as one whose total assets in capital, equipment, plant and working capital are less than #250,000 and employing fewer than fifty (50) full time workers (Oresotu 1985).

However, the Center for Management Development (CMD) has recommended to federal government of Nigeria that the official definition of small scale business is any manufacturing processing or service industry whose investment in plant and machinery, land and building does not exceed #500,000, utilize power, plant and machinery in its operations and employs up to fifty (50) full time workers.

Furthermore, Isemin (1988:19), states that the National Directorate of Employment (NDE) defined small scale businesses to accommodate project with capital investment as low as #5,000 and employing as few as three (3) persons.

What we have so far examined are operational definitions of small scale business in practice, many definitions of small scale business have been applied at various times to fit a particular operational guide line or legislation or study.

Nevertheless, there has been a widespread clamour over the years for one definition or a national definition of small scale business in Nigeria (Oresotu, 1985:17). He (Oresotu) suggested a definition of small scale business which incorporates a labour force of ten (10) as a lower limit to delimit a small scale business. This then suggest that any business employing less than ten (10) persons would not qualify for the appellation of small scale business. The figure of ten (10) according to him (Oresotu) is not sacro sanit since it would be subject to review, say every five (5) years in the hight of the development in the economy. According to him, this figure is the same as that of the National provident fund (NPF).

Firms which qualify to contribute to NPF for the benefit is their employees, are limited to those which employ a labour force of not less than ten (10).

1.2    PURPOSE OF THE STUDY

The primary purpose of carrying out this study is based on the following findings which are:

1. To identify the factors influencing micro and small enterprises in Nigeria.
2. To access the role of micro and small enterprises in employing generation and entrepreneur development.

• To access the to which poor financing affect small and medium business operation in Nigeria.

1. To recommend appropriate measure through which micro and small businesses can be effectively developed in Nigeria.

1.3   RESEARCH QUESTIONS

1. What are the factors that influence micro and small enterprise in Nigeria?
2. What is the role of micro and small enterprise in entrepreneur development?
3. How does poor financing affect small and medium business operation in Nigeria?
4. What are the appropriate measures effectively developing micro and small business in the Nigeria economy?

  1.4   SIGNIFICANCE OF THE STUDY

The small scale business can improve on the levels of living which includes; income generation, employment opportunities and provision of social amenities and service, it can lead to people learning on how to establish their own mini business or enterprises. It can bring about acquiring of sections from having to work in different sections of the business so that rural-urban drift of individual will be reduced.

• SCOPE OF THE STUDY

The study is limited to Awka north local government area. It is expected to cover the impact of small scale business on the economic development of Anambra state.

• DEFINITION OF TERMS

1. INDUSTRY: This is a productive and profit making enterprises and engaging in rendering of services.
2. SMALL SCALE BUSINESS: This is any business or enterprises which is independently owned and operated and not dominant in its area of operation
3. ECONOMIC DEVELOPMENT: This involves improvement of income as well as medical transformation of institution social and administrative structure. It is used in this research in order to improve on the life of the masses.
4. ECONOMY: The means by which a society answers the economic questions, what, How, and For Whom.

From the foregoing therefore, we roose that small scale business should be defined as any business whose investment capital or total cost of assets range from one naira (#1.00) and employing not more than one hundred (100) employees. This definition if adopted as a universally accepted definition of small scale business in Nigeria would help to encourage the growth of small scale business in particular and the Nigeria economy.

The above definitions of small scale business or enterprise not withstanding, it must be pointed out that it is often difficult to ascertain the amount of capital invested in the business because of absence of appropriate records and suspicious on the part of the owners.

Because a generally accepted definition of small scale business or enterprise is not yet possible in Nigeria or in the world due to variation in socio-cultural and economic development in parts of the same country or some countries of the world and difference in industrial organization of countries, it is therefore difficult to understand clearly what is meant by small scale business.

Awka north refers to the Nigerian communities of Igbo land with agricultural production in the present day Anambra state of Nigeria who generally sited the geographic area around Awka capital territory and beyond. The location extends to north ward bordered of Ukwulu and Okpuno communities respectively. The Awka north local government headquarter is located at Achala. Originally, the communities that make up Awka north includes; Isu-Aniocha, Mgbakwu, Urumu, Amanuke, Ebenebe, Ugbene, Ugbe-Enu, Orba, Achala and Amansi. Finally some of the small scale business in Awka north includes; F.M.C block industries, Palkcorn lodge and suit,Fimco oil Nig plc, Isu- garri processing union, Lekmor table water, Mgbakwu agricultural-b Cassava producers, Fesycp oil Nig plc, Nelson and sons bread factory, Smart fast foods livestock and fields e.t.c.

• STATEMENT OF THE PROBLEM

Despite the large number of small scale business or enterprises in Anambra state in general Awka north local government area in particular which employ hundreds of thousands if not million of people there is still high rate of unemployment in the state.

One of the problems that continue to agitate on mind of the researcher is why it seems that the impact or effect of these small scale businesses is not felt in the area of employment. Ie it that there is too much population that is beyond the employment capacity of these small businesses or that the available ones should increase with the rate of population growth so as to keep people especially youth busy.

Furthermore, despite the facts that many small scale businesses provide a number of goods and services, prices of those goods and services are beyond the reach of the average person in the state. The problem arises as to whether the high prices are as a result of high cost of production or the high rate of inflation. Generally these are some of the question and problem for which this work will try to provide solutions.

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