AN INVESTIGATION ON THE IMPACT OF GOVERNMENT GRANT ON THE GROWTH OF SMES IN NIGERIA

CHAPTER ONE

INTRODUCTION

1.1 Background of the Study

In Nigeria's economy, Small and Medium-sized Enterprises (SMEs) are very significant. They serve as the backbone of the private sector and aid in the growth of the economy, the creation of jobs, and the eradication of poverty. Ekpeyong and Nyong (2016) stated that there isn't really a single, widely agreed definition of SMEs. However, the definitions of SMEs differ between nations and continents, according to Egbuogu (2018). Different nations and agencies have different definitions of SMEs. The majority of definitions presented are based on numerical elements like sales, assets, and employee count, sometimes distinguished by industrial sector.Similarly, governments choose a definition based on a variety of factors, including business culture, population size, industry level of international economic integration, and even political considerations.

Beyond that, Small and medium-sized businesses (SMEs) are widely acknowledged as the foundation of contemporary economies because of the significant contributions they make to economic growth, poverty eradication, wealth creation, and food security. The increased focus and education on the strategy to establish and sustain a successful SMEs sector is a result of the realization of the significant responsibilities played by SMEs. Further more, government grant is a financial award provided by a government agency to an individual, organization, or business for a specific project or purpose. These grants are typically non-repayable, which means that the recipient does not have to return the funds as long as they adhere to the terms and conditions of the grant(Omojola, 2019).

However, these grants are often used to support a wide range of activities and initiatives that align with government priorities and public policy objectives. Also, government grants come with specific eligibility criteria that applicants must meet. These criteria may include factors such as the type of organization, the purpose of the grant, geographic location, and more. Without proper government assistance for the growth of small and medium-sized businesses, Bubou, Siyanbola, Ekperiware, and Gumus (2016) underlined that any effort oriented toward improving any economy is unlikely to deliver positive results over the long run. This is due to the fact that government support programs help to establish crucial contextual factors that make it easier for SMEs to contribute to development by producing goods and services and creating jobs.

Further more, Eniola and Entebang (2015) believed that SMEs in developing economy such as Nigeria are plaques with high rate of failure and under performance due to inadequate financial support. Hence, government consciousness needs to be stirred to align with the reality undermining the actualization of the full economic potentials of this sector. Programs created by the government are intended to facilitate and boost the success of SMEs' commercial endeavors (Shamsuddoha & Ali, 2016; Awojide, 2015). It is significant to highlight that different governments' venture support strategies and programs account for varying degrees of success in different nations around the world. However, fostering growth and improving SMEs' performance is one of the main aims of government support programs.Therefore, a survey will be conducted in order to investigate on the impact of government grant on the growth of SMES in Nigeria.

1.2 Statement of the Problem

The increasing failure rate of SMEs has, however, pointed to a different outcome. Research has shown that in Nigeria, just 5% of newly founded enterprises survive their first five years (Fatoki, 2014). Similar to this, Gbandi & Amissah (2014) emphasized that despite the fact that SMEs account for more than 90% of Nigerian enterprises, their role and GDP contribution is just 10%. Between the introduction of a government grant program and the ultimate realization of its planned objective, there may be a gap.  Additionally, with over 140million people, productive farmland, rich variety of mineral deposits, Nigeria should be a haven for SMEs. However like most developing countries, the country is witnessing high population growth, poverty and unemployment; and this contrasts with the less than average rate of development in communication, technology and social infrastructure (Udechukwu, 2016).

Further more, economic and socio-political instability and high turnover have impacted negatively on the performance of primary institutions responsible for policy monitoring and implementation, resulting in distortion in the Macroeconomic structure and low productivity. These issues obstruct the establishment of SMEs, an important business that will increase the contribution of the private sector and offer the essential building blocks for industrialization and long-term economic expansion.Thus,it is in the light of these that the study seeks to investigate on the impact of government grant on the growth of SMES in Nigeria.

1.3  Objectives of the Study

The main purpose of this study is to investigate on the impact of government grant on the growth of SMES in Nigeria. Specifically, the study will;

1.        Determine whether there is an adequate availability of government grants for SMEs in Nigeria.

2.        Determine whether there is a significant relationship between government grant sufficiency and the expansion of SMEs in Nigeria.

3.        Identify the factors affecting the accessibility of government grants among SMEs in Nigeria

1.4 Research Questions

The following questions have been prepared for the study:

1.        Is there an adequate availability of government grants for Small and Medium-sized Enterprises (SMEs) in Nigeria?

2.        Is there a significant relationship between the adequacy of government grants and the growth of SMEs in Nigeria?

3.        What are the factors that influence the accessibility of government grants for SMEs in Nigeria?

1.5 Research Hypothesis

Ho: Government grants are not easily accessible to small and medium scale enterprises in Nigeria

Ha: Government grants are easily accessible to small and medium scale enterprises in Nigeria

1.6  Significant of the Study

 An investigation on the impact of government grant on the growth of SMES in Nigeria will be revealed to the government at various levels, policy makers, and business owners in this study. It will additionally enlighten the government on how they can support and distribute grants to SMEs.

Additionally, subsequent researchers will use it as a literature review. This means that other students who may decide to conduct studies in this area will have the opportunity to use this study as available literature that can be subjected to critical review. Invariably, the result of the study contributes immensely to the body of academic knowledge with regard to an investigation on the impact of government grant on the growth of SMES in Nigeria.

1.7 Scope of the study

The scope of this study is boarded on  an investigation on the impact of government grant on the growth of SMES in Nigeria. Empirically, this study will elaborate on whether there is an adequate availability of government grants for SMEs in Nigeria, whether there is a significant relationship between government grant sufficiency and the expansion of SMEs in Nigeria and  identify the factors affecting the accessibility of government grants among SMEs in Nigeria

Geographically, the study will be delimited to business owners in Nigeria.

1.8 Limitation of the study

In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents.

In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.

More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.

 1.9 Definition of Terms

Grant: a sum of money given by a government or other organization for a particular purpose.

Government: group of people with the authority to govern a country or state; a particular ministry in office.

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