ABSTRACT
The economy of any nation is driven by the
level of industrialization, while the level of industrialization is determined
by a number of other factors. In a developing economy like Nigeria, Small and
Medium scale enterprises play a vital role in economic development.
Unfortunately, these categories of industries are bedeviled with many problems
ranging from lack of infrastructural facilities, low technological know how,
lack of technical skills to financing problems. This research is centered on
financing small and medium scale enterprises for economic development. It
explored the present pattern of financing, the alternative sources of financing
SMEs as well as government effort past and present geared towards improving the
financial status of such categories of industries. It also examined the
problems faced by SMEs in raising the needed capital. The overall objective of
the study is to seek for improved or new methods of financing SMEs for improved
performance which will in turn lead to economic growth and development of the
nation. To carry out the study; data were collected from both primary and
secondary sources. The main data collection instruments were a structured
questionnaire and personal interview. The data collected were presented in
tables as frequency distribution and analyzed with percentages and frequencies.
The sign test and person product moment correlation coefficient were used to
test the hypothesis. The end result of the research shows that small and medium
scale enterprises were underfinanced and various measures were suggested to
improve the funding status including direct government intervention in
financing.
CHAPTER 1
INTRODUCTION
BACKGROUND TO THE STUDY
The Nigerian Economy has been unstable. It has witnessed a
lot of downturn over the years. Since the oil boom of the 80’s, the state of
the economy has deteriorated and Nigeria has continued to be ranked among the
least developed nation. So many reasons can be adduced for the slow pace of
economic growth. Such reasons include; mono-cultural economy, low
industrialization, high import dependency and corruption. Various regimes in
the past had come up with one initiative or the other in a bid to turnaround
the economic fortunes of this country. Also some bodies or agencies have been
established to oversee and solve the problem of poverty and promote economic
advancement. In this regard, bodies like the National Poverty Alleviation
Programme (NAPEP), Family Economic Advancement Programme (FEAP), Small and
Medium Scale Enterprises Development Agency (SMEDAN) etc were established.
Past governments have been involved in different development
plans all geared towards uplifting the nation’s economy. The government of Gen
Sanni Abacha lunched a development plan tagged vision 2010. It was a plan that
was drawn to put to achieve certain level of development of Nigerian economy by
the year 2010. The government of President Olusegun Obasanjo in effort to
turnaround the economy, embarked on so many reforms in different sectors of the
economy including; education, energy, solid minerals, works, transport etc. He
also established the Due Process Office that brought a lot of positive changes
in the contract award process and execution.
The present government of Alhaji Yar’adua has come up with
its own agenda popularly known as the seven point agenda. Through the seven
point agenda his government intends to focus on key sectors of the economy that
will speed up economic development of the nation. He has also launched a
development plan titled vision 2020.Through this plan he intends to speed up
economic development that will put Nigeria among 20 topmost economies by the
year 2020. This he has already started pursuing with greatest emphasis on the
power sector.
Despite these laudable programmes and plans, the pace of
economic development seems to be at a standstill. In fact with the global
financial meltdown leading to world economic recession, the economy seems to be
deteriorating further. One problem that has been identified as a clog in the
wheel of economic advancement is the neglect of small and medium scale
enterprises or what some call micro-entrepreneurs. It has been established in
both advanced and emerging economies that the growth of most economies has been
anchored on the growth of small and medium scale enterprises Muhammad.Y( 2003)
Countries like Bangladesh, India, Indonesia etc are doing
well today because they have gotten it right in developing the middle level
manpower that accounts for more than half of the productive sector.
In Nigeria, despite the fact that government has in one way
or the other tried to recognize the sector and accord it a sort of priority,
there are still many challenges restraining the small and medium scale
enterprises from realizing their objectives. Some of the challenges that are
teething to small and medium scale enterprises range from lack of
infrastructural facilities, low technological advancement in terms of machinery, absence of experts and technical skills
to lack of fund and inability to access credit facility from banks.
STATEMENT OF THE PROBLEM
The most critical among the challenges faced by small and
medium scale enterprises is lack of adequate capital and inability to access
bank credit. An economy can only grow through support from the financial sector
in availing credits to different sectors. One of the agenda of banking reforms
or recapitalization was to enable banks support the real sector of the economy
by availing credits to firms in these critical sectors. If credit is made available
to the formal sector while neglecting the informal sector where the medium and
small scale enterprises fall in, there will still be gap in the growth of the
economy.
While the large scale enterprises have access to bank credit,
the small and medium scale enterprises find it difficult to obtain bank credit.
It is in the bid to resolve this problem that the Federal Government in
conjunction with Central Bank of Nigeria carried out reforms in the lower side
of the finance industry. Among the reforms is liberalizing the licensing of micro-finance banks and conversion of community
banks to micro-finance banks.
Micro-finance banks are expected to provide micro-credits to
small unstructured businesses, salary earners, artisans, food vendors, small
farmers and traders. It is in pursuit of this objective as well as the drive to
reduce unemployment that the Central Bank established skill acquisition centers
located in three geopolitical zones in the country. The essence of establishing
the centers is to empower the youth through relevant skills training and
subsequently increase their access to fund (credits) with which to start up
business.
The main issue now is whether government has realized or
failed to realize its objective of enabling the informal sector of the economy
to have easy access to credit and whether or not the sector has contributed
meaningfully to the economic development of the nation.
This research will focus on micro-credits and its
accessibility by medium and small scale enterprises and individuals
entrepreneurs and other modes of financing them.
The research will be tailored to provide answers to the
following questions.
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Item Type: Project Material | Size: 174 pages | Chapters: 1-5
Format: MS Word | Delivery: Within 30Mins.
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