CONTRIBUTION OF SMALL-SCALE BUSINESS TO NATIONAL ECONOMIC GROWTH AND DEVELOPMENT

CHAPTER ONE

INTRODUCITION

BACKGROND TO THE STUDY

The contribution of small –scale business in fostering economic growth and development has been well articulated in different areas of this study .the specific attention on them based on their expected impact and potential contribution on broad and diversified production base, as well as their accelerative effect in achieving macro objectives pertaining to full employment, income distribution and the development of local technology.  They are particularly most conducive for diffusion of management skills and emulation of indigenous entrepreneurship overtime.

Small business provides financial opportunity and a chance to develop wealth.  It is a place where creative, motivated individuals can use their talents and expertise to the fullest, because it provides satisfying carecrs  and job opportunities and its also the back bone of the market economy of the word.  Every big business starts as a small business, and it started with an entrepreneur (small business), who at first, earns little or no profit.  It was the new ideas of small business that brought about Ekene Dili Chwkwu Transport, the FAN Milk, Nnewi “Tokumbo” parts, and even the many commercial banks in Nigeria.  Untried ideas become annulations that become concepts that changed the business world. And so it goes.  Small business is the basis for the economic well being many developed nations including USA/Japan.

Entrepreneurship is what makes a small business successful.  Entrepreneurship occurs when an individual develops a new venture, a new approach to an old business or idea, or a unique way of giving the market place a product or service by using resources in a new way under conditions of risk.  Small business triumphs and entrepreneurship are closely related to it.  It is difficult to separate them.

The unemployment situation in the country coupled with the new government instinctive towards easing social tensions among unemployed youths, through the programme of the National Directorate of Employment (NDE), were intended to lure a lot of unemployed Nigerians, including graduates into self determination through self employment.  Graduates and school leavers are now realizing that government and the established private companies are not ready to come to their aid directly, through paid employment due to the dividing state of the economy.  Short of the alternatives, Nigerians including our graduates are therefore launching themselves into various small-scale business ventures, such as cottage soap and cosmetics production, fairing, restaurants, fast food, publishing, writing, block making, garri processing, food processing, refuse disposal, taxi driving, cleaning services, weaving, baking tailoring, advertising and other sam business venture which depends mostly on local raw materials.  The determination to succeed is also fast becoming the order of the day.

Government has been playing appreciative tole in promoting the survival and growth of small-scale enterprise in recognition of them flexible and adaptive nature as well as their re-generative power in promoting economic growth and development. Government also encourage people to establish their own small business so as to reduce the problem of unemployment in the country and also reduce the problem of importation of goods, moreso, to produce exportation products.

Government in believing that a dynamic and growing small manufacturing sub-sector can contribute significantly to the implementation of a wide range development effectives, has thus enunciated various policies to encourage their proliferation and make them veritable engines of growth and development.  In the third and for the development plans and the on-going three years rolling plan, priority has been accorded industrialization with greater emphasis on small-scale enterprises.  The basic activities of government policies as maintained in the monetary and fiscal policy measures, are to improve the financing and other supportive services of small-scale business by expanding and improving access to credit and infrastructural facilities, reducing their production costs, boosting their profitability, enhancing their survival and growth capacities as well as expanding their contributions to non-oil exports by making their products competitive in the export markets.

Hardly could any major industry succeed without the services of small-business enterprise. The major goals of any profit oriented business is to make profit.  A company will make more profit if statistics it’s customers need better them the competitors. There fore in the contribution of small-scale business, bakeries would produce what the customers want and by sodoing they maximize profit and only bakeries that are effective and efficient can satisfy customers needs.  In reality, it is possible to run a business without profit for a time, but it is not possible for to survive for one day without customers.  Customers are the central theme of any business.  Without a total commitment to them, contribution to economic growth and development will have limited and brief effects.

1.2 STATEMENT OF PROBLEM

Bakery is in the production industry the quality of products rendered by our Bakeries have been attracting criticisms from people in all works of life.  The civil servants, business men and the general public are all very critical of production of cookies like bread, chi-chin, cake, meat pie, bons etc.  the  complaints ranges from those of poor quality of products, poor packages, high prices, poor delivery, shortage of skilled manpower which affects productivity and restrain expansivion the use of potassium bromated which National Agency for food and Drug Administration Commission (NAFDAC) banned for health purpose.

Most bakeries do not put their customers in the prime place as they supposed to be.  There is now keen competition and to compete means to contribute to economic growth and development.  Dickson (1971:4), agreed with this view when he said that small scale enterprises are ploughed by inadequacies and serious mis-uses of business records and business information. The problem of poor or wrong location of an industry affects its production.  Such as nearness to raw materials, market, sources of power and access to supply of labour and transport facilities etc.

Government incentive in industries has previously directed to public investment neglecting private initiative.  But a diversified and self-sufficient economy must take into consideration the importance of private sector in capital formation.

1.3 NEED FOR THE STUDY

There have been criticisms about the bakery industries in the way they render services to their customers. i.e.  they do not see the customers as king lot in terms of national output and employment.  Moreover, Nigeria has various policies on small-scale enterprises in recent National development plan and also in the structural Adjustment programme (SAP).  The researcher wants to carryout a research on what bakeries do and the role they play in economic growth and development the resucher also wants to have an idea base either to support all the sources about the poor impression people have on how to improve their production so as to contribute effectively in national economic growth and development.

Bakeries can do a more individualized jobs for customers and thereby attract them on the basis of specialty product quality and personal services rather than on the impersonal of price or mass production of largely identical business.  Based on the above, the need for studying this topic is to show the effectiveness of small-scale business in national economic growth and development.

1.4 PURPOSE OF THE STUDY

The importance of small scale business in the promotion of economic growth and development has always been at the forefront of development strategies.  However, many developing countries have failed to adopt this strategy owing to their belief that it is a relatively show process of industrialization which may not be very compatible with their desire to “catch up” with the industrial countries.   This along with the relative availability of foreign exchange (particularly through foreing grants and export of basic commodities) in the early days of independence has encourage many of those countries to follow a different mode of industrialization for transition from a largely gravision society to a modern industrial sector including Nigeria, adopted import substitution strategy of industrialization aimed mainly at producing domestically consumer goods that were erstwhile imported.  These strategy of industrialization often requires continuous dependence on major suppliers over-seas for the provision raw materials and spare parts needed for uninterrupted production in these industries.

Therefore, the aim of this study is to know:

1. Whether or not small scale business provides opportunities for individual freedom and economic growth and development.

2. To know if small business community makes a significant contribution to our total economic system as suggested earlier

3. To find out whether or not bakery industry contribute to the economic growth and development of the country.

4. If customers are satisfied by the services tendered by bakeries

5. To formulate business strategies and make recommendations that would be more effective in bakery industries.

1.5 SCOPE OF THE STUDY

The scope of this study i.e small scale enter pries is very wide it had to be carried out in all small-scale industries in Nigeria.  The study is therefore limited to bakeries industries in Enugu Urban because of time and material resources to see to the whole nation.

1.6 LIMITATION OF THE STUDY

The researcher is faced with numerous limitation on the study especially in the collection of data for the study.

Firstly, lots of problems were an countered from financial experts, managers and entrepreneur of small business particularly bakery industries as the were unable to finish all the information required for fear of taxation. Secondly, some of the workers and owners of the enterprise are mainly illiterates and as a result are unable to fill the questionnaires correctly.  This oral interview (face to face) were conducted to elicit information from them.

Lastly, there is financial constraints on the part of the researcher while executing the project.  The researcher limits his study due to lack of money.

1.7 HYPOTHESIS

To guide the investigation of the issue raised in the problem definition.  It is hypothesized that:

Hypothesis 1

Ho: Small-scale industry does not contribute to economic growth & development

Hi: Small-scale industry contribute to economic growth development.

hypothesis 2.

Ho: Lack of finance is the major problem facing small-scale business

Hi: Small-scale business does not have any problem in terms of finance.

Hypothesis 3.

Ho: Small-scale business does not have any expectation for future development in Nigeria

Hi: Small-scale business have great expectation for future development

Hypothesis 4.

Ho: Bakeries does not encourage the use of local resources in larger scale in Nigeria

Hi: Bakeries encourage the use of local resources in larger scale in Nigeria

1.8 DEFINITION OF TERMS

The following terms used in this study should be taken to mean these:

SMALL-SCALE BUSINESS

The meaning of small-scale business varies from one country to another and from one industry to another even within the same industry.  The United Nations Industrial Development Organization (UNIDO) has located about (50) fifty different definition of small-scale business in seventy five (75) countries.

In Nigeria for instance, the third National Development plan, 1975-1980 (vol.1:353) describes a small business as any manufacturing establishment employing less than ten people or whose investment in equipment and machinery do not exceed N600,00.

According to the credit guide line of the central bank of Nigeria (CBN), small-scale business are classified as those business within an annual turnover of less than half a million. The Nigerian Bank for commerce and industry (NBCL) 1985-1990 defined small-scale business as an industry with capital not exceeding N750, 000 including working capital but excluding cost of land.

In Enugu state fund for small scale industry (EUSSI) established by the state government defined “small-scale industry as a manufacturing processing and servicing industry with a capital investment of N150,000 in machinery and equipment alone”.  This exclude working capital and cost of land.

The committee for Economic Development (CED) of the united states has given a valuable list of characteristics of the small business which state that a small business will have at least two of the following:

a. Managers are also owners

b. Area of operation is mainly local

c. Small supplied capital

d. Small in size within the industry.

Therefore there is no generally accepted definition of small-scale business.

ENTREPRENEUR

Entrepreneur is an individual who has the ability to see and evaluate business opportunities, gather the necessary resources to take advantage of them, and initiate appropriate action to ensure success.

BAKERY

Bakery is a place where cookies like cake, bread, meat-pie, is baked for sale.

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