1.1 Background To The Study
The role of Small and Medium-Scale Enterprise (SMEs) in the national economy cannot be underestimated. These enterprises are being given increasing policy attention in recent years, particularly in third world countries partly because of growing disappointment with results of development strategies focusing on large scale capital intensive and high import dependent industrial plants. The impact of SMEs is felt in the following ways: Greater utilization of local raw materials, employment generation, encouragement of rural development, development of entrepreneurship, mobilization of local savings, linkages with bigger industries, provision of regional balance by spreading investments more evenly, provision of avenue for self-employment and provision of opportunity for training managers and semi-skilled workers. The vast majority of developed and developing countries rely on dynamism, resourcefulness and risk tasking of small and medium enterprises to trigger and sustain process of economic growth. In overall economic development, a critically important role is played by the small and medium enterprises. Small and medium enterprises advocates, firstly, it endurance competition and entrepreneurship and hence have external benefits on economy wide efficient, and productivity growth. At this level, perspectives are directed towards government support and involvement in exploiting countries social benefits from greater completion and entrepreneurship. Secondly, proponents of SME support frequent claim that SMEs are generally more productive than large firms but financial market and other institutional improvements, direct government financial support to SMEs can boost economic growth and development. Some argued that SMEs expansion boosts employment more than large firm growth because SMEs are more labour intensive thereby subsidizing SMEs may represent a poverty alleviation tools, by promoting SMEs and individual countries and the international community at large can make progress towards the main goal of halving poverty level by year 2020 i.e to reduce poverty by half and becoming among 20 largest World Economies (Nigeria Vision 20:2020). Entrepreneurial development is therefore important in the Nigeria economy which is characterized by the following heavy dependence on oil, low agricultural production, and high unemployment, low utilization of industrial capacity, high inflation rate, and lack of industrial infrastructural base. These constraints limit the rate of growth of entrepreneurial activities in Nigeria. Hence, this paper seeks to investigate Small and Medium Enterprises as a veritable tool in Economic Growth and Development.
1.2 Statement Of Problem
The Nigerian economy since the attainment of political independence in 1960 has undergone fundamental structural changes resulting to structural shifts which have however not resulted in any significant sustainable economic growth and development to ensure adequate employment opportunity for her youths. Recently, available data show that the Nigerian economy grew relatively in the greater parts of the 1970s, with respect to the oil boom of the 1970s whose extreme profits resulted to wasteful expenditures in the public sector leading to dislocation of the employment factors and also distorted the revenue bases for policy planning. This among many other crises resulted in the introduction of the structural adjustment programme (SAP) in 1986 and the recent economic reforms. The core objective of the economic structural reform is a total restructuring of the Nigerian economy in the face of population explosion (Douglason et al, 2006).
This paper seeks to explore the relationship between small as a platform toward reducing youth unemployment and the promotion of socio-economic growth and development in Nigeria. Specifically, it assesses past government efforts aimed at reducing unemployment, as well as examine the major factors/constraints that hinder entrepreneurship. It concludes by proposing some strategies that can promote effective entrepreneurship culture.
1.3 Objectives Of The Study
The objective of this study can be stated as follows:
- To evaluate the role of small scale in economic development
- To justify the contribution of small scale business to economic development
- To identify the relationship between small scale and unemployment rate in Nigeria
- To evaluate the social responsibility of small scale business on economic development
- To establish the federal stance of small scale business to Nigeria economy
1.4 Research Questions
The questions for this research are
- Is there any role played by small scale business to economic development ?
- Is there any significant effect of small scale business in Nigeria economy ?
- Does small scale business contribute to economy development ?
1.5 Statement Of Hypotheses
Formulation of hypothesis
- H0: there is no role played by small scale business to economic development
H1: there is a role played by small scale business to economic development
- H0: There is no significant effect of small scale business on Nigeria economy
H1: There is a significant effect of small scale business on Nigeria economy
- H0: That small scale business does not contribute to economic development
H1: That small scale business contribute to economic development.
1.6 Significance Of The Study
The significance of this research work is to evaluate and analysis the role of small scale business in the economic development of ogun state. It is hoped that it would contribute to the promotion of the existing frontier or boundary between human knowledge.
1.7 Limitation To The Study
The limitations of this research work were time constraints and financial assistance inability to reach poor rural households (Robinson, 2001).
1.9 Operation Definition Of Terms
- MICRO ENTERPRISE: Micro enterprise is the informally organized business activity undertaken by entrepreneurs.
- SMALL ENTERPRISES: Small enterprises is any enterprise that employs between ten (10) to forty – nine (49) people and has asset worth (excluding land and building) between N 5million and N 50 million
- MEDIUM ENTERPRISE: Medium enterprise is any enterprise that employs between fifty (50) and one hundred and ninety – nine (199) people and has assets worth (excluding land and building) between N 50 million and 500 million
- MICROFINANCE INSTITUTION: Microfinance institution are organization whose activities consist wholly or in significant part of the provision of financial services to micro entrepreneurs.
- MICRO CREDIT: Micro credit is commonly defined in terms of loan amount as a percentage of average per capital income in the context o Nigeria.
- MICRO SAVING: Micro saving are defined as saving account with a balance of less than N 8, 400 (about & 50), that is less than 20% of the average annual income per capital
- SMALL-SCALE: A small firm is defined in terms of various combinations of factors like number of persons employed, value of assets, turnover and or output etc
- ENTREPRENEUR: According to Olutunla (2001) the word entrepreneurship is derived from the French word ‘’entreprende’’ meaning to ‘’undertake’’. To this end, an entrepreneur is someone that creates a business.
- ENTREPRENEURSHIP: The word entrepreneurship is derived from the French word ‘’entreprende’’ meaning to ‘’undertake’’. To this end, entrepreneurship is commonly defined as the process of creating a business.
- INDUSTRY: Collection of undertaking’s generally not under one control but connected with same economic activity or similar ones.
- FIRM: Refers to individual factors, shops mine etc or a number of them grouped together
- DEVELOPMENT: – The action or processes where new industries are encouraged in order to create jobs for the unemployed. The process of being developing or developed.
- PROFIT: – Additional money gained in business that is the different between the amount spent and the amount earned.
BUSINESS: – According to R.F Abban (1989:2) designed business as on institution or organization established to supply. The aim of the organization may be either to make profit or to provide certain services to the people. Also, business is exchange of goods, money or services for mutual benefit.