CHAPTER ONE 1.0 INTRODUCTION 1.1 BACKGROUND OF THE STUDY The small scale industries (SSIs) form the bedrock of the economic growth in every nation. No country achieves a viable economic growth and development without the establishment of small scale business firms. They have always been in the forefront of development strategies. Nigeria’s quest for development must be hinged on industrialization. This is because of the great role industries play in terms of production activities, employment generation and the overall improvement in the quality of life.
Small scale industries are seen as veritable instruments for the industrial development of a nation. Industrial development involves the development of a technical arrangement that moves an economy from traditional method of production to a more complex system of mass manufacture of variety of goods and services involving technology and management techniques (Anyanwu, C. M. 2001).
Industrialization propels growth and quickens the achievement of structural transformation and diversification of economies. It enables a country to utilize fully its factor endowments and depend less on the external sector for its, growth and sustenance.
Beyene (2002), avers that SSIs have been important economic catalysts in the industrialized countries. The industry provides employment and earning opportunities, which contribute to economic growth and increase in the standard of living of the populace. Davis et al (1996) views small scale industries as the engine of development strategies in the promotion of economic growth and development. The Nigerian industrial promotion council, NIPC, confirms this by stating that “the Advent of small and medium scale enterprises in Nigeria was necessitated by the need to stimulate the establishment and growth of industries in order to launch the country’s industrial development. Small scale industries perform vital roles in economic development of any nation. They are the bedrock upon which industrial development could be achieved. This is because SSIs promote stable industrial base and ensure a balanced distribution of industrial development of any nation.
Anyanwu (2001) sees the failure of part industrial policies, which were anchored on the establishment of large industries, the flexibility, adaptability and regenerative tendencies as SSIs to propel economic development and the fact that growing and dynamic small businesses elsewhere have grown into large ones and have contributed substantially to national development objectives as the reasons for adopting small scale industries as a strategy for industrial development. Great Britain and Japan, owe their early industrial and economic expansion to their broad based small business establishment (Ojo A T, 2006).
The establishment of large industries involves heavy outlays and is essentially capital intensive, which does very little in solving unemployment problems. It also requires that manufacturing industries be designed and set up by foreign producers who also supply most of the raw materials and machinery spare parts needed for an uninterrupted production of industrial output. Consequently, foreign exchange requirements by local producers become critical and the inability to produce such foreign exchange can lead to \severe disruption in the production activities. Thus, it behooves developing countries to devote vigorous energy to the development of local manufacturing industries. To obtain economic self reliance and sufficiency, Nigeria needs to pursue small scale industries as a strategy for growth and development. Given the paramount role of SSIs to the growth and development of the country, it becomes imperative to assess their contribution to the development of Imo State, the “Eastern heart land”.
1.2 STATEMENT OF THE PROBLEM The problem of unemployment in Nigeria has become a dilapidating and problematic issue in Nigeria. The problem does not only affect the life of the people but facilitate the downfall of the economy. The problem of this study also involves the shortcoming and inability of the government to create employment through the generation and supporting of small-scale industries. These problems have justified the fact that the small scale industries sub sector is now characterized by low productivity and high rate of business failure. The sector bears most of the brunt of the existing gap in the Nigeria management system. Despite the vital role of small scale industries play in economic development, their impact is not adequately assessed. An adequate assessment of their contribution to the economy would be a yardstick to ease their procurement of finance.
This project seeks to determine the contribution of small scale industries to employment creation in Imo State specifically and, by extension, to Nigeria. It also determines how small scale industries have enhanced the revenue base of the state through the income generated from taxes paid by them and assesses the extent to which SSIs) have contributed to the development of the state. 1.3 OBJECTIVE OF THE STUDY The main objective of this study is to assess the contribution of small scale industries to the development of Imo State. Within this framework, the study seeks specifically to determine the extent to which small scale industries have provided job opportunities on state to identify the various ways small scale industries generated needed development in the state and to uncover the fundamental problems that confront small scale industries in their effort to develop the state.
1.4 SCOPE OF THE STUDY Using small scale industries to solve the problem of unemployment in Imo State was the jurisdiction of this study with a major focus on Aboh Mbaise local government of Imo State. Other areas of focus by the study are critical examination of the role of small scale industries on national economic development of Nigeria. Problems of small scale industries in Imo state, history of small scale industries in Imo State among others.
1.5 SIGNIFICANCE OF THE STUDY Owing to the problems that unemployment has caused to the life of the people and the nation, this study will be of great importance, in the sense that it: 1. Enlighten the masses to harness their creative nature by establishing small scale industries in order to get themselves employed. 2. Will be an eye opener to the government to recognize their failures in contributing their own quota in the aspect of improving and encouraging small – scale industries within the nation. 3. Will unveil the effect of unemployment to the Nigeria economic, pinpointing the fact that the issue of unemployment in Nigeria have coursed more harm than good. 4. it also provide possible solution to the problem of unemployment and the creation of small 5. It will act as a reference work for future researchers who in one way or the other will be propelled to investigate into the concept of small scale industries and its relation to employment generation.
1.6 RESEARCH QUESTION In the course of the research, the following research questions were answered, thus; 1. Can small scale industries solve the problem of unemployment in Imo State? 2. Should the Nigerian populace especially the youth be encouraged to develop and sustain entrepreneurial spirit? 3. Can small scale industries contribute to economic development of Nigeria? 4. Does a relationship exist between unemployment problem and economic growth and development? 5. Can small scale industry reduce the risk of unemployment? 6. Has the employment provision resulting from the establishment of small scale actually affect the standard of living of the people?
1.7 RESEARCH HYPOTHESIS. A hypothesis is a proposition that is stated in testable form and prediction of particular relationship between two or more variables. In the course of this research effort, the hypotheses stated below were tested. Thus Hypothesis I H0: There is no significant relationship between small-scale industries and the resolution of unemployment problem in Imo State H1: There is significant relationship between small-scale industries and the resolution of unemployment problem in Imo State
1.8 LIMITATION OF THE STUDY There were a lot of constraints in the gathering of information for this research work: the major constraints are as follows: Time: In respect to the theoretical and practical work, the time allowed for this project was limited Finance: Due to problem of financing, and high transport rate, I could not meet up with all the intended interviews and research ventures as I intended to.
1.9 DEFINITION OF TERMS • Small –Scale Industry: Richard Flora Gustafson, demand media (2012) defined small-scale business or industry as a business that employs a small number of workers and does not have a high volume of sales. In pre-colonial Nigeria, according to Ejiofor P. it is a relative turn, because what is regarded as small scale industry by a person means large scale business to another. • Unemployment: this is defined by Bureau of Labour statistics (BLS) as people who do not have a job, have actively looked for work in the past four weeks, and are currently available for work. Also people who were temporarily laid off and waiting to be called back to that job are included in the unemployment. • Industrialization: This is the social and economic change that transforms a human group from an agrarian society into an industrial one