THE ROLE OF SMALL SCALE INDUSTRY IN ECONOMIC DEVELOPMENT OF STATE. (SELECTED STUDIES)

ABSTRACT

This  project  concentrated  on  the  role  of  small  scale industry in economic development of state (selected studies).

This  researcher  set  off  by  identifying  some  objectives which include:

–          Identify the kind of employment small scale industry offers to citizens

–         Examine     the     contributions     small-scale

industry has made to the economic and social development of this great nation as a whole.

–          To  support  and  recommend  ways  to  ensure small-scale business growth, survival and sustainability.

In the course of achieving the above, a structured questionnaire was prepared and administered on a population comprising the management/relevant staff of three selected Companies in Enugu metropolis.  The three companies are: Ranco Table Water, Olisa Supermarket and Family Joy Bread.

The data collected were analyzed using percentages, frequencies  while  the  two  hypotheses  formulated  were tested using chi-square.

The analyzed data and tested hypotheses show the following:

–          There      is      significance      difference      in employment level since concentration of small scale industry in the State

–          There is significance difference in the basic amenities  since  the  concentration  of  small scale industry in the State.

–          The   government   does   not   give   adequate support and encouragement to small scale industries.

–          That the small scale industries will perform better if managed properly and protected by government policies.

Based on the above findings, the researcher recommends the following

–          The   government   should   provide   adequate incentives and as well as make policies that will  encourage,  support  and  protect  small scale industries.

–          There is a need to look into other factors such as, lack of experience, economic problems, poor location, quality of their products, adequate planning, book-keeping, advertising, etc for the survival and rapid growth of small scale firms.

The researcher from her findings, concluded that government needs to organize workshop, seminars, public lectures periodically to help small scale entrepreneurs so as to build a vibrant economy for their businesses.

CHAPTER ONE

1.1     INTRODUCTION

More than 1.3 billion people in the world live in extreme poverty, that is, one in every five person.  (United Nations Report, 1997).1       It is even more amazing to realize that three  quarters  of  the  world  is  poor,  about  900  million people live in the under developed world who depend on Agriculture  and  related  activities  for  livelihood.     The World  Bank’s  new  strategy  launched  in  2002,  called

‘Reaching  the  Rural  focuses  on  improving  the  lives  of those living in the rural areas.  This strategy is believed to have increased productivity in developing economies.

With the world paying close attention to wealth creation with the view of improving lives, Nigeria has not been left behind as in the past, various agencies such as DEFRI    (Directorate    of    Foods,    Roads    and    Rural

Infrastructure), SAP (Structural Adjustment Programme) to mention but a few have been created by the then President.

Recently, the Nigerian past President, Olusegun Obasanjo set an ambiguous goal.  He wants the country to become one of the world’s top 20 economies during the next two deeds.  In an interview, Peter Bamkole, General Manager of Enterprise Development Services at Lagos Business School when asked how he thought Nigeria could achieve this had this to say:

Entrepreneurship is an must now, judging by figures that are coming out of Education Ministry.  In the last few years, at least 60% of graduates are not able to get employment immediately.  Because of that, people go into one entrepreneurial venture or another…

Furthermore, in the same vein, both State and Local Government’s are not left out in the struggle as there are a lot  of  programmes  approved  by  the  State  to  alleviate poverty especially through rural development.   There are also a lot of Non-profit Organization working hand in hand

with the authorities to teach crafts, training in local trade with a view of crating independence for fresh graduates.

1.2     BACKGROUND TO THE STUDY

The twist in the nation’s economy brought much disruption in the labour force as maintained in the mass retrenchment and retirement of workers both in public and private establishments.   The unreliable nature of the Nigerian work force has made individuals try their hands in the creation of their business.  The fact that you cannot be sure of your pension or gratuity when you retire helped fuel the need for independence.

Consequently, this had led to the establishment of small – scale business all over the country.  This is so obvious as they can be found in any nook and cranny of Nigerian streets one may be in, due to the lack of funds by those intending to own their own business, most common forms are the one man business that employ less than 10 people. According to Eze (1999:23-25) “small scale include, all centres, tailoring, barbing,  hair-dressing,  laundry and dry cleaning,  soap  and

comestic   production,   farming,   restaurants,   fast   foods, publishing, advertising, retail, wholesale trade and others.

What is more damaging than the lack of funds is the lack  for  support  for  small business  which  is  negatively complemented   by   misplaced   government   intervention. This is seen in the concentration of government efforts and resources on large, wasteful and white elephant public projects and enterprises.   Such projects and their woeful ends are so common to the Nigerian citizen.  The projects include   the   Iwopin   Paper   Mill,   The   Ajaokuta   Steel Complex, and the Bachita Sugar Factory, etc.

The   proportion   of   Nigerian   SME   (Small   and Medium Enterprises) and their impact to the economy is pretty much similar to those in other countries of the world. The difference, lies on the importance attached to SME sector by the government of each country and the role they play in the national economic development.

If our government would form policies and regulations   that   encourage   SME,   in   such   way   as availability of funds, tax reduction, one would observe that most of the small business ventures that start up as a garage business would have grown into big organizations creating jobs  for  millions of  citizens.    This  is  true  of  so  many organizations in other countries.  Such company’s include Yahoo, Elizabeth Arden’s designer line, Fedex, Microsoft, etc., most of the known large scale businesses, outside this country   initially   started   as   a   small   scale   industry. According to Eze “small business is the basis for economic well  being of many developed  nations including United

States and Japan”.2

Now having considered the effect of government policies on small business growth, it is necessary that the role of small scale industry in economic development do not go unnoticed.   It involves more than just increasing the per capital output and income, it also involves initiating and constitution changes in

the structure of business and society.  These are followed by growth; increased output and development in areas like technology,  company  formation,  education  training  etc., one need look too far to see the marvels the introduction of GSM (Global Systems for Mobile Communications) has done to the economy not mention the creation of jobs opportunities.  People now own call centres, sell recharge cards, are employers of labour etc such endless opportunities.

In the area of education, small business in not left out.     Many  small  scale  industries  established  private schools to give children of this country better opportunity for qualitative education.  It will be recalled that due to the incessant strikes in this country by government employed teachers, the private schools have taken over the service of rendering qualitative education to our children.  Now, even private Universities can be counted among the top ten Universities of our nation.   This is possible because according to Petrin “A particular strength

for small business is their ability  to  respond quickly to changing economic conditions.

Having seen some of the impacts of small scale industry has on the nation’s economy; it is therefore necessary to highlight the impact it has in the development of a State.  However, the question is, does small business really have any impact in the development of a State?   If so, what are the results of that impact?

It is as a result of the above questions that this work intends  to  critically  examine  the  “role  of  small  scale industry in the economic development of a State”.

1.3     STATEMENT OF PROBLEM

The  neglect  of  the  nation’s  rural  areas  especially their   small   scale   industries   has   lead   to   the   stunted economic development and progress of the country.  This gap has resulted to lack of essential goods and services with a spiral effect of high price level and unequal distribution of income.   Lack of rural areas to the urban centres and cities in search for better standards of living.

Most of the traditional skills possessed by our people such as wood carving, cloth weaving, mat making, iron

casting and others which our ancestors relied to improve their economy has been deserted in search for the ‘pot of gold at the end of the rainbow’.  Subsequently, most of the native skills that could have been improved upon through encouragement and assistance to individuals to set up modern small scale industries have been left to die away. One needs only to examine the agricultural sector of our economy to understand.

Besides,  large  scale  industry  which  we  thought formed the bed rock of economic development has become white elephant projects that do not serve what they were established to serve.  With some of them producing under capacity, some have been shut down due to lack of raw materials; others have become breeding ground for embezzlement of funds by various Boards of Directors and top government officials.

The inclusion of small-scale industrial policy in our economy plan will therefore, serve as a matter

of  fact  encourage  the  spirit  of  entrepreneurship which is the hinge of a free market economy and capitalization.

1.4     OBJECTIVES OF THE STUDY

This research work is concerned with the issues of the role of small scale industry in economic development in Enugu State.   The study therefore aims to:-

     Identify the kind of employment small scale industry offers to citizens.

     ]Identify  infrastructure  and  social  amenities  small  scale industry has attracted.

     Examine the contributions small scale industry has made to the economic and social development of this great nation as a whole.

     Identify sources of initial capital and nature of capital used by small scale industrialist in their business.

     Finally,  suggest  measure  of  improving  the  small  scale industry for it to make a positive contribution towards the development of the nation’s economy.

1.5     RESEARCH QUESTIONS

In the course of carrying out this research, some research questions emerged.  These questions are based on the objectives of the study.

Following the above reasons, these questions became inevitable.

     What kind of employment does small scale industry offer to people of Enugu Area?

     Has small-scale industry attracted  any infrastructure and social amenities to the state?

     What are the contributions of small scale industries to our nation?

     What are the available sources of funds for small scale industries?

     What are the nature of materials used by these industries and how do they market their goods and services?

1.6     SIGNIFICANCE OF STUDY

It is necessary to state that this study deals on the issue of the role of small scale industry in the economic development with a view to ascertaining the benefits of encouraging small scale industries.

The study is therefore significant because it will be useful to the government, public and private corporate organizations, individuals, students, etc.

This study would encourage our yound graduates to take action by going into small business because without waiting for government or any other organization to offer them the scarce employment.

1.7     SCOPE OF STUDY

According to Osuala “an adequate statement of problem also defines it very carefully the terms of its score and it is obvious for a researcher to set forth bounds of the topic being researched on’.  Based on this, the score of this study is limited on to the employment   role   and   the   attraction   of   basic amenities and infrastructures that small scale industries play in economic development.  The area covered in this research is Enugu State vis-à-vis a few selected studies.

1.8     LIMITATIONS OF STUDY

In   the   course   of   this   study,   the   researcher experienced some constraints.  These include:-

a)       TIME CONSTRAINTS:-

A lot of time was required by the researcher to conduct an extensive survey of activities of small scale industries in the State within the time given for the research work.

b)      LACK OF FINANCE:-

A  study  of this type  requires sufficient  money to enable the researcher travel the nooks and cranny of Enugu State in order to ascertain the effect of industries in all parts.

c)       ATTITUDES OF INTERVIEWERS:-

There was also a problem of non-compliance in the form of uncooperative and unconcerned attitude from some of the interviewers.   While some decline to answer questions, others demanded financial gratification before answering any questions, some simply thought their answers would be used by government to increase tax.

1.9     FORMULATION OF HYPOTHESES

The following null and alternative hypotheses have been formulated for the purposes of this research.

HYPOTHESIS ONE

Ho1:  There is no significance difference in employment level since concentration of small scale industry in the state.

H1:    There is significance difference in employment level since concentration of small scale industry in the state.

HYPOTHESIS TWO

Ho2:   There is no significance difference in the basic amenities since the concentration of small scale industry in the state.

H2:    There is significance difference in the basic amenities since the concentration of small scale industry in the State.

1.10   DEFINITION OF TERMS SMALL SCALE INDUSTRY:

Small scale industry is product tense in small quantities as a result, control small share   of     the     market. They employ not

More than fifty workers and in which management; marketing and entrepreneurial functions are vested in the proprietor.

ORGANIZATION:       Is  a  formal  structure  of  position  to achieve a state purpose.

MANAGEMENT:         When an individual is charged with the responsibility of running the affairs of an organization and adopts a process for discharging such responsibility, this is known as management.

RURAL:     Relating to an undeveloped area.

DEVELOPMENT:                  This means a change towards the better; a new stage which is as a result of growing larger, fuller or more matured.   An organized and gradual unfolding from one stage to another.

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