CHAPTER ONE

INTRODUCTION

BACKGROUND OF THE STUDY

Many advanced countries of the world that have attained or are attaining the peak of their industries development and of course economic growth began with the minimal industries set-ups called cottage industries especially in manufacturing sector.

The declining or near static annual rate of growth of the industrial sector in many developed, developing countries has led to a re-examination of the structure of this sector in many countries.

With about 140million Nigerians, it is known that governments and their agencies can no longer provide all the jobs or produce all the products that we need.

This means that all of us must be thinking about new ways of doing things, new ways of making more money, new ways of producing some of the things that we need and most importantly, how to get the money, support and business ideas to achieve the dream.

Every day and in every part of the country, many people are really ready to start something on their own but want to be encouraged. Encouragement is the major thing one needs to start a small and medium scale business because many people are afraid of failure.

The thinking towards small and medium scale enterprise (SME) objectives today is gradually changing. Nowadays, the issue of small and medium enterprise development is getting more popular.

The new emphasis on small and medium scale industrial development seems to be the ready road into wealth creation. There is no doubt whatever that small scale or medium enterprises constitutes real fabric of a nation’s economy. And to say that the present and future economic advancement of this our great country Nigeria lies in the dynamism and growth of small and medium scale enterprises (SMEs).

In the decades of the 1970’s, most of the high income industries in Anambra state recorded negative average rates growth in their industrial sector. Industries in Anambra state declined at an annual average rate of 2.3 percent from 1970 – 1980 establishing small and medium scale industries in Anambra state with the main study of ibeto group limited NNEWI.

STATEMENT OF THE PROBLEM

The benefits that a nation can derive from the development of small and medium scale industries are quite invaluable. The economic history of developed countries points to the obvious fact that the surest way to industrial revolution is through small and medium scale industries. But this fact has been put into practices.

At this time, workers are not well paid, some will stay for months without payment, some were being sacked without notice and some retrenched when their organizations fold. These make the people to engage on small and medium scale industries which they manage on their own. But with this, only few individuals in the final analysis succeed in establishing their own small and medium scale industries.

This therefore shows that dynamic role of small and medium scale industries in our national economic progress are not being realized at all and to the great disadvantages of the whole economy.

These are many problems facing these small and medium scale industries in Nigeria and Nnewi in particular which includes; lack of basic infrastructure, business environment, access to financing, government bureaucracy, policy inconsistency, low investment in research and development, limited and unreliability data, lack of experience, poor management of resources, irregular supple of raw-materials, poor transportation and communication, low technological base, and increasing rate of corruption in the country.

OBJECTIVE OF THE STUDY

The folding up of some small and medium scale industries in Nigeria and all these problems of small and medium scale industries mentioned above motivated the researcher into this work.

The objective of this study is to identify the cause of   these problems of small and medium scale industries and to find out possible remedial actions that can be used to ameliorate the problem.

Furthermore, realizing the prospects of small and medium scale industrial development to any upcoming or developing economy like Nigeria, the researcher wants to find solutions on how this dynamic role of this sub- sector can be more effectively and economically enhanced.

RESEARCH QUESTIONS

What are the problems and possible chances of success as to the development of small and medium scale industries in Nigeria?

What are the roles of government and financial institutions in the development of small and medium scale industries and how far they responded this task?

What are the sources of finance and its influence to the development, growth and expansion of small and medium scale industries?

To what extent have lack of experience, poor administration and other infrastructural deficiencies affected the operation on small and medium scale industries?

Do the owners and managers of these small and medium scale industries have the full knowledge and experience as they ought to, before setting up or going into the business?

What are the importance of small and medium scale industries in the economic growth and development of Nigeria?

SCOPE OF THE STUDY

SCOPE:

 The study area of coverage is Anambra state, however, due to some constraint factors, the scope had to be limited to Nnewi, with a view to understanding the operations of Ibeto Industries at Nnewi, Anambra State, Nigeria.

The study covers such industrial establishment known as small and medium scale industry. The researcher therefore covered many problems that inhabit the continuous existence or survival of small scale industrial development and their future prospects.

SIGNIFICANCE OF THE STUDY

This study will be of immense benefit in many ways: it will reveal to investors and entrepreneurs who wants to establish small and medium scale industries in Nigeria, the possible problems encountered in the area.

It will also be of great importance to business men / women who wants to flourish or expand their business. Nigerians march to industrialization can only be attained through the establishment of small and medium scale cottage industries.

Furthermore, it is invaluable to government because, based on these identified problems, the government will now know how and means to take in alleviating them in their efforts towards rural development.

The findings of the study on the problems and prospects of small and medium scale industries in Nigeria will go a long way in solving the problems of ibeto group limited Nnewi.

1.7   DEFINITION OF TERMS

Some of the words used in the context of this research work are hereby explained to clarify their meaning and implication.

SMALL SCALE INDUSTRIES:

This is an industry with a total capital employed of over N1.5 million but not more than N50 million including working capital but excluding cost of land and/or workforce of 10 – 100 workers. (Julius onah, 2004)

MEDIUM SCALE INDUSTRIES:

This is an industry with a total capital employed of over N50 million but not more than N200 million including cost of land and/or a workforce of 101 – 300 workers. (Onyema ocheoma, 2004)

BUSINESS:

Any organization established for economic purposes. (Encarta premium, 2007)

INDUSTRY:

It is any specific branch of productive machine distinguished from labour. (Encyclopedia dictionary).

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