ABSTRACT
The
main objective of this study is to identify the problems and prospects of
managing small and medium businesses in Nigeria using God is Good Motors as
case study. The research tries to find solution to the problem in which small
and medium enterprise experiences difficulties in raising equity capital from
the finance houses or individuals. To do this, data were collected from both
primary and secondary sources. The main instrument of data collection was the
questionnaire. The data were presented in tables as frequency, distribution in
the data analysis; the techniques of percentages frequencies were used. Having
analyzed the data the following were the major findings; Most of the operators
of small and medium enterprise in Nigeria make an average daily turnover of N15,000 and profit of about N15,000
daily. There has been a phenomenal growth in the dimensions and nature
of small and medium enterprise in Nigeria, The growth is mainly on account of
people’s desire to be self employed. The problems of establishing and managing
small and medium business in Nigeria include lack of capital, lack of
managerial skills, lack of business ideas, high cost of operational facilities,
scarcity of accommodation, lack of efficient preservation, system and poor
environmental and sanitation. The research therefore recommend
that the government should seek the assistance of World Bank in providing long
term loans to business investors in Nigeria because success in business will
lead to economic development the country.
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
In recent years,
particularly since the adoption of the economic reform programme in Nigeria in
1986, there has been a decisive switch of emphasis from the grandiose, capital
intensive, large scale industrial project based on the philosophy of import
substitution to small scale industries with immense potentials for developing
domestic linkages for rapid, sustainable industrial development. Apart from
their potential for ensuring a self reliant industrialization, in terms of
ability to rely largely on local raw materials, small scale are also in a
better position to boost employment, guarantee a more even distribution of
industrial development in the country, including the rural areas, and
facilitate the growth of non-oil exports.
In Nigeria, the definition of small
and medium enterprises also varies from time to time and according to
institutions, for instance, the Central Bank of Nigeria’s (CBN) monetary policy
circular No: 27 of 1988 define small scale enterprises (excluding general
commerce) as enterprises in which total investment (including land and working
capital) did not exceed #500,000 and or the annual turn-over did not exceed
#5.0 million.
Medium enterprise (excluding general
commerce) as enterprises in which total investment and not exceed #1,000,0000
(1 million) and the annual turnover did not exceed #1.2 million. Small scale
enterprises are one of the modern strategies underdeveloped countries are
employing to break into the “league” of developed countries. Fasua (2006)
categorized business that fall under small scale as follows firewood supply,
plantain production, restaurant services, small scale poultry raising,
operating a nursery for children, home laundry services and host of others.
Business grouped under medium scale according to Fasusa are; soap production,
hair/body cream production, chemical production, commercial poultry, profession
approaches (law, accountancy, education) food and beverage production among
others.
Consequently, both the federal and
state governments and recently, local governments, have stepped up efforts to
promote the development of small scale enterprises through increased incentive
scheme, including enhanced budgetary allocations for technical, assistance
programmes. New lending schemes and credits institutions for technical
assistance programme New lending schemes and credit institutions such as the
National Economic Reconstruction Fund (NERFUND), World Bank-assisted
small-scale enterprises loan scheme (SMES), Nigeria Export and Import Bank
(NEXIM), the people’s Bank of Nigeria (PBN) and the Community Bank have also
emerged at both the national and local levels to boost the flow of development
finance of small scale enterprises which have so far depended largely on
personal funds and credit. From informal sources for both their investments and
working capital.
1.2
STATEMENT OF THE PROBLEM
Small and medium
enterprises are mostly managed by owners and relations. The financing in most
cases in normally provided by the owners. The owners fail to realize the
importance of external source of capital in order affect expansion in the
business.
In another
development, small and medium enterprise experiences difficulties in raising
equity capital from the finance houses or individuals. Even when the finance
house agrees to provide equity capital, the conditions are always
dreadful. All the result to inadequate
capital available to the sector and thus lead to poor financing. This is the bane
of most cottage industries in Nigeria. About 80% of small and medium
enterprises are stifled because of this problem of poor financing and other
problems associated with it (Chukwuemeka, 2006). The problems that emanated
from poor financing include:
a)
Lack
of competent management which is the consequence of inability of owners to
employ the services of experts.
b)
Use
of obsolete equipment and methods of production because of owner’s inability to
access new technology.
c)
Excessive
competition which resulted from sales which is a consequence of poor finance to
cope with increased competition in the industry.
In spite of the different
measures since 1960 to increase industrialization, small medium enterprises are
still facing hard conditions. It is against the background that I examine
managing small and medium business I Nigeria: prospects and challenges.
1.3 OBJECTIVES OF THE STUDY
The specific objectives of the study are:-
1)
To
determine if high cost of raw materials affects the prices of goods and
services
2)
To
determine the extent finance house strict conditions have affected the
development of small and medium enterprise in Nigeria
3)
To
assess the extent poor financing has affected small and medium business
operation in Nigeria.
1.4 RESEARCH QUESTIONS
1)
Does
high cost of available raw materials affects the prices of goods and services
in business?
2)
To
what extent has the finance house strict conditions affected the development of
small scale?
3)
Does
poor financing actually affect small and medium business operation?
1.5 SIGNIFICANCE OF THE STUDY
This study is aimed at explaining the problems and
prospects involved in doing business in Nigeria, what business management is
all about, how to set up business in Nigeria, how to raise funds for setting up
small and medium scale enterprises, etc.
The study could serve as a useful
insight to business consultants, entrepreneurs, and the government. The study
will also serve as references material to management scholars and practitioners.
1.7 SCOPE OF THE STUDY
This study generally covers every
area regarding the problems and prospects involve in managing a business in
Nigeria. The researcher covered a small
scale business enterprise such as God is Good Motors, Benin City.
1.8 LIMITATION OF THE STUDY
During the conduct of
this research work, some factors posed constraints to the determined efforts of
the researcher to carryout the research study with ease. Such factors include:
a. Management Restriction:
management refuse to allow access to information that is considered very
confidential like detail information of the organizational corporate profile.
As a result of the restrictions, I was able to work with only the information
that was accessible.
b. Time Constraint: Time is
also another limiting factor that acts as hindrances in carrying out this
research study. This is as a result of the fact that other academic activities
were still being attended to in the course of carrying out this research work.
c. Financial Constraint:
money also acts as a problem in the conduct of the research work. Traveling
expenses were incurred in getting the materials for the research work other
expenses incurred generally during this research project work.
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