MANAGEMENT OF SMALL BUSINESS IN NIGERIA PROBLEMS AND PROSPECTS (A STUDY OF SIX SELECTED SMALL BUSINESSES IN ONITSHA)

ABSTRACT

The topic of dissertation in management of small business in Nigeria. Problems  and  prospects; A  study  of  six  selected  small  businesses in Onitsha. The objective of the study is to identify the problems hindering the growth of small scale business and highlight the prospects of small scale business on the economy. This research was based on historical survey. The  source  of  data  for  the  research  was  primary  which  included questionnaires and  secondary which  included text  books, journals  and newspapers. The method of analysis was the use of tables, percentages and hypothesis. The main findings of the study were that finance is the major problem facing small Business. However, there is a bright prospect for small business, the problem facing it for now are not insurmountable. With  its  clear  identification  the  solution  is  not  farfetched.  The  major recommendation based on the findings was that the government should support small business both financially and morally to enable them achieve their  bright  prospect.  The  study  concludes  that  development  of  small business is vital for the economic development of any country, therefore if government  does  not  play  lip  service  to  the  policies  on  small  scale business this sector would gave way for the economic development of Nigeria.

CHAPTER ONE

INTRODUCTION

The Nigeria business environment offers many entrepreneurship opportunities. In responses to these opportunities, many Nigerians have rushed to register business.

It is currently estimated that there are  approximately five million business firms of all sizes in Nigeria. Studies of these statistics show that at  least  ninety percent  of  these  firms  are small, regardless of which measure of smallness is applied.

There has been a lack of agreement in Nigeria and other part of the world as to what contributes a small business. According to the third National development  Plan (vol. 1,  353), manufacturing establishments employing less than ten people or whose investment in machinery and equipment do not exceed N600,000.00 (when money had value) are referred to as “small scale industries”. In the credit guidelines of the Central Bank of Nigeria (CBN) small scale enterprises are classified as those business with an annual turnover for less than half a million Naira. Presently, as stated by the government, small scale industry development program me, the definition of small scale industries in Nigeria is any manufacturing, processing or service industry with   a   capital   investment   not  exceeding  N150,   000.00   in machinery and equipment alone. Many authors have recognized the  difficulty  of  defining  precisely  a  small  business,  for  the purpose of this research work. It may be regarded as one whose scale of operations is less than the average for the industry.

Despite their difference, all these definitions share the common idea  that small  scale  industries  are  generally  low in terms of persons employed and in the amount of investment and annual business turnover.

An excellent definition of small scale business is contained in the small Business act passed by the United States Congress in

1953. That definition states that a small business is one which is independently owned, operated and not dominant in its field of operations. The feature of dominance in most attempts to specifically define a small business.

1.1   AN OVERVIEW OF SMALL BUSINESS IN NIGERIA

One of the significant trends in business in Nigeria is the increasing number of small business firms. This is consequent upon the rise in the unemployment rate which has necessitated the urge in many people to own and manage their own business. As a result of this high unemployment rate among school leavers and the hardship in the entire society, both Federal and State Government in Nigeria formulate certain policies and embark on some schemes aimed at encouraging both school leavers and other unemployed persons to be self employed. This is done by providing them  with essential but  available  infrastructures  and loans to effectively carry out the small scale business of their choice. This trend of events stated Chima Onuoha, suggests that an increasing number of both educated and uneducated entrepreneurs in the near future, (Onuoha, 1991).

It is pertinent to note that small business in the dominant form of business enterprise in any economy, whether developed or developing. This implies that small business can and do play an active role in the economic development of most countries.

In recent times government policies in Nigeria emphasize small scale business expansion and setting up of new ones by private individuals through the establishment of people’s banks, community banks, Nigeria bank for commerce credit and industry, export promotion through many incentives to discourage import and encourage local industries, small scale industries scheme, Industrial Development Centre (IDC) National Economic Reconstruction Fund (NERFUND) etc. All these are geared towards encouraging the growth of small business.

1.2   BACKGROUND OF THE RESEARCH AREA

The small scale business enterprise is nearly as old as man. Man graduated from the wandering life he had led to a more settled life and engaged in fruit gathering and agriculture for his subsistence  from  hence  he  progressively  engaged  in  varying types of small businesses such as wood carving, black smiting and hunting.

At  this  early  stages in  Nigerian  specialization,  that  is  an individual concentrating on producing only the goods he knew how best to make and relying on exchange to obtain other things he needed was nonexistent.

Following the advent of the British Colonization of Nigeria, the use of money was introduced. Specialization began and thus caused a drift from the traditional occupations to the more modern forms of businesses, such as petty trading, wood carving and blacksmithing, poultry, cloth weaving and dying. All of these on small scale and geared towards self subsistence. In addition a good portion of the population who had had some level of education  joined  large  government  and  multinational organizations.

The small scale business permeates several areas of human endeavor and share a number of features which mark them out from the larger enterprises; such features are many and varied. Olesegun Oni (1988) in the paper he presented at the second National workshop on small scale industries gave a list of features that mark the small scale industries out. Also Stephen Ekpenyong (1989) gave another list of distinguishing features of the small scale businesses.

From the foregoing, small scale business is understandably not a new concept. It has experienced some changes in its nature with the passage of time. Herbert G. Hicks et al (1987) opined that the principal changes that have occurred in them since their primitive beginnings are efficiency, sophistication and complexity in their roles and nature.

It is generally held in all countries that the small scale businesses is the heart beat of any economy. Its contributions stand out in the area of employment generation, serving as a link

between  various  sectors  of  the  economy,  contributing  to  the Gross   National   Product   (GNP),   utilizing   locally   available resources, serving as a training ground for the acquisition of entrepreneurial and technical skills. The relevance of small scale business cannot therefore go unnoticed by any government.

This is rightly observed by Edet A.P. (1983) who stated that any government that neglects the development of small scale business subsector is not talking seriously of industrialization of the economy whether at state or national level  for the sector provides the crucial foundation for real and sustained industrial take off.

Unfortunately, a close look at the Nigerian economy reveals that   the   aforementioned   potentialities   of   the   small   scale businesses are not being realized at a good volume and speed.

It is therefore against this background that this paper set out to investigate what could be responsible for the observable low performance of the small scale businesses in Nigeria with special emphasis  on  the  some  selected  small  scale  businesses  in Onitsha, Anambra State.

1.3   BACKGROUND OF THE STUDY AREA.

The study has been carried out at Onitsha, Anambra

State of Nigeria on six selected small business.

Onitsha is a commercial city with different markets where different types of goods are sold; also it has the largest market in

West  Africa.  Some  countries  in  West  Africa  always  come  to

Onitsha to buy and to sell goods.

Among  the markets  in  Onitsha are  Onitsha main  market which is the biggest market in Onitsha. In the early days of the market, textile products are the major goods one can found in it. Later tobacco and article products came, in those days British men do brought some goods through Atlantic Ocean, down to River Niger because the market is beside the river Niger.

Other markets in Onitsha are Bridge Road Market, Ochanja and Oseh Okwodu markets.

Manufacturing companies like Lever Brother, Patterson Zochonis (PZ) and John Holt have their depots in Onitsha. Some small scale industries in Onitsha are Markson Chemical Industry, Osy Group Industry, United Daily Bread, Ginpat Aluminum, Eziafakego Traditional wears and Remef Industry.

1.4   STATEMENT OF PROBLEM

On the attainment of political independence, the government of Nigeria desired to transform the economy quickly in order that economic independence may also be achieved. Nigeria has vast mineral, agricultural and human resources, most of which are yet to be tapped. Her market potential is larger than those of most developing countries in Africa and elsewhere. The direction of

public policy has been the creation of a suitable economic and social environment for the establishment and operations of business.

Under these favourable conditions, theories of economic development suggest that a rapid economic growth would occur given that the available exploited and utilized for the production of goods and services.

The achievements of the desired speedily economic development in the Nigeria society as in others depend to a large extent on the successful operation of the small business.

The small scale business in Nigeria is sub optimized.  These problems have reduced remarkably the volume and variety of production and employment possible for the small scale business in the Nigerian economy. Consequently the effect of the small scale business on the Gross Domestic product is yet very low resulting in reduced rate of economic growth. What is more they die   more   quickly,   have   more   frequent   job   turnovers   and sometimes non-business considerations loan large in their operations.

1.5   OBJECTIVES OF THE STUDY

This study has the following objectives.

1. To investigate into the management of small business in

Nigeria.

2. To examine the objectives, strategies and responsibilities of small scale business in Nigeria.

3. To identify the problems hindering the growth of small scale business.

4. To highlight the prospects of small sale business in Nigeria economy.

5. To make suggestions, recommendations based on the data generated from the study.

1.6   RESEARCH QUESTIONS

The critical appraisal hopes to give answers to the following:

1. To  what  extent  does  the  management  of  small  scale businesses in Nigeria contribute to their efficiency?

2. What are the objectives, strategies and responsibilities of small scale business in Nigeria?

3. What  problems  are  hindering  the  growth  of  small  scale business?

4. What  are  the  prospects  of  small  scale  business  in  the

Nigeria economy?

1.7   STATEMENT OF HYPOTHESIS

For the purpose of giving this study a proper perspective and direction, the following research hypotheses have been posited.

HYPOTHESIS 1

NULL HYPOTHESIS (HO)

Inadequacy of capital does not hinder the growth of small scale business in Nigeria.

ALTERNATIVE HYPOTHESIS (HA)

Inadequacy of capital hindered the growth of small scale businesses in Nigeria.

HYPOTHESIS 2

NULL HYPOTHESIS (HO)

Non-availability of highly skilled man power does not hinder the growth of small scale businesses in Nigeria.

ALTERNATIVE HYPOTHESIS (HA)

Non-availability  of  highly  skilled  man  power  hindered  the growth of small scale businesses in Nigeria.

HYPOTHESIS 3

NULL HYPOTHESIS (HO)

The establishment of small scale businesses in Nigeria does not create employment.

ALTERNATIVE HYPOTHESIS (HA)

The establishment of small scale businesses in Nigeria has created employment.

HYPOTHESIS 4

NULL HYPOTHESIS (HO)

Small  scale  business  in  Nigeria  does  not  have  good prospects given the size of the Nigerian market.

ALTERNATIVE HYPOTHESIS (HA)

Small scale business in Nigeria has good prospects given the size of the Nigerian market.

1.8   THE SIGNIFICANCE OF THE STUDY

The small scale business is a major sector of the Nigerian economy. Its contribution to the economy is increasing with time. Small scale businesses play a vital role in the provision of employment when the bigger companies and government parastatals are embarking on the massive retrenchment of their workers.

The existence of small scale business sector is of immense importance to the three main areas in the national economy:-

The Government

The Society; and

The business organization

This vital roles play by small scale business emanates from the economic realities of those developing countries where low income per capital limits the savings capacity of the people (Nwocha; 1985 18).

Without savings the developing counties are faced with the problem of very low capitalization that cannot guarantee the development of large scale business enterprises.

Again, the small scale businesses established in the country side would prevent the rural urban migration which has become a feature of the rural areas. The viability of small scale businesses is  achieved through a good knowledge of  their problems  and finding appropriate solution to them. This is the purpose of this study.

1.9   THE SCOPE AND LIMITATIONS OF THE STUDY.

SCOPE

The study extends its interest to the discovery of the problems militating against small scale businesses in the Nigeria economy as a whole with a particular emphasis on six selected small scale businesses in Onitsha, Anambra state.

LIMITATIONS

The study is not entirely exhaustive because, it is subject to the following limitations which are posed by the Nigeria environment

The researcher was faced with the problem of ensuring that the limited financial resources available to her meet the demands of the research. This is evident in the number of small businesses studied in this work.

In gathering the needed information for the analyses, the researcher faced resistance from entrepreneurs (some) who were afraid to give out information about their business, feeling that any information revealed will be used against them while some rather felt bored to entertain question or answer questionnaires contending that they were too busy. This does not however affect the validity of the findings of the research.

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