Abstract
This
project work is diametrically concerned with the role of financial institutions
in the development of small scale enterprise. The Nigeria economy is dominated
by small scale business units. In spite of the major role played by small scale
business in the transforming of the economy into a developing one such as have
been seen from history of the developed nations like USA, Japan, Britain and
Germany etc, small scale business still encounter a lot of difficulties in
getting access to loanable funds. The loan could be from the government bank or
other financial institutions for the purpose of starting a business of working
capital and expansion. The problem of sourcing funds from government and banks
became acute with the present state of Nigeria economy period of recession and
liquidity squeeze. The need to ensure the survival of small scale business in
an unstable economic development gave rise to this research work. This work was
carried out by reviewing theoretically several books enterprise and financing
small scale business. This study will enhance the government assistance to
small scale business and also the banks and other financial institutions
willingness to assist them, potential investors to enable them to discuss their
financial problems with the relevant authorities that are present. Above all,
there is the need to have in Etsako West and Nigeria as a whole, a complete
reformation of out entire system of financing small scale business.
TABLE OF CONTENTS
Title
Page i
Certification
ii
Dedication
iii
Acknowledgements
iv
Abstract
v
Table
of Contents vi
Chapter One:
Introduction 1
1.1
Background to the Study 1
1.2
Statement of Problem 2
1.3
Research Questions 3
1.4
Objective of the Study 4
1.5
Statement of Hypothesis 4
1.6
Significance of the Study 5
1.7
Scope of the Study 6
1.8
Limitations of the Study 7
1.9
Definition of Terms 8
Chapter Two: Literature
Review 10
2.1
Introduction 10
2.2
Definition of Small Scale Business 10
2.3
Small Scale Business Planning 12
2.4
The Role of Small Scale Enterprise 13
2.5
The Sources of Financing Small Scale
Business 15
2.6
Importance of Small Scale
Enterprise 16
2.7
Advantages of Small Scale Enterprise 17
2.8
Disadvantages of Small Scale Enterprise 18
2.9
The Role of Financial Institutions to
Small Scale Enterprise 19
2.10 Problems
of Small Scale Business Enterprise 20
2.11 Possible
Solutions to the Problems of Small Scale Enterprise 21
Chapter Three: Research
Methodology 22
3.1
Introduction 22
3.2
Research Design 22
3.3
Population of the Study 23
3.4
Sampling Procedure 23
3.5
Research Instrument 23
3.6
Method of Data Collection 24
3.7
Data Analysis 27
Chapter Four: Data
Presentation and Analysis 28
4.1
Introduction 28
4.2
Data Presentation and Analysis 29
4.3
Hypothesis Testing 38
Chapter Five: Summary of Findings,
Conclusion and Recommendations 43
5.1
Introduction 43
5.2
Summary of Findings 43
5.3
Conclusion 44
5.4
Recommendations 45
References
49
Appendices 50
CHAPTER ONE
INTRODUCTION
1.1 Background
to the Study
In years, development economist and
policy makers have become increasingly troubled by too many problems found
commonly in less developed and developing countries.
These are slow growth and a lack in the
rural development. Therefore it is often suggested that small scale business
would help promote rural development as well as generated urban employment
growth and development.
It is however remarkable to note that in
spite of this high hope, little success has been achieved in Nigeria unlike
countries like India, Japan, South Korea etc who have achieved so much in
social-economic development by way of small scale business and no much could be
said of Nigeria who is still underdeveloped.
A closer look at the classification of
this industry will offer explanation to the important of the small scale
enterprise. The classification could be based on the following composition. How
small scale business are compared in terms of size and structure source.
The tropical features of a small scale
could be classified in terms of seeking out challenges, setting goods and
objectives control and setting feedback for the purpose of assessing
performances.
1.2 Statement
of Problem
The research study intend to bring to
mind the accounting problems of small scale business unit which include poor
financial support and financial control system, which give rise to inadequate
financial, ineffective budgeting control and suggested ways of controlling
these ill in the small scale business.
The area which the problem lies
therefore are as follows;
·
When the role of the financial
institution in the life of small scale business is weak.
·
One major problem in Nigeria business
environment is inadequate power supply.
These and other factors are responsible
for the problem of low performance of small scale enterprise and these problem
seems to have to define all effort by government to address them.
1.3 Research
Questions
In the course of this study, research
questions were raised as follows;
i.
What role does financial institution
play in the life of small scale business?
ii.
What problem are likely to be faced by
small scale business unit for not keeping proper financial records?
iii.
Why is it that small scale business in
semi urban centres do not keep proper financial records?
iv.
What impact does knowledge of
accountancy have on the operation of small scale enterprise?
v.
Inability to determine profit accruing to
a small business unit is a problem that has stunted their growth.
1.4 Objectives
of the Study
The aim and objective of this research
are as follows;
i.
To find out the financial institution
level of commitment to allocation of credit facilities to small business.
ii.
To critically appraise the financing of
small scale business in Nigeria, Edo State in particular.
iii.
To examine how government policies
affect or promote the financing of small scale enterprise.
iv.
To find out the problem militating
against small scale business financing.
v.
To know other source of financing small
scale business other than financial institution.
vi.
To find out pattern of ownership and
management of small scale business in Nigeria.
vii.
To suggest solution to problems and make
recommendation on how, where and when to enhance successful operation and
financing small scale business in Nigeria.
1.5 Statement
of Hypothesis
In the course of this study, the
following hypotheses were formulated;
1. HO: The null hypothesis
2. HI: The alternative hypothesis
Hypothesis One
HO: Financial institution do not play any
important role in making good business decision in small scale business unit.
HI: Financial institution do play an important
role in making good decision in small scale business unit.
Hypothesis
Two
HO: Inability to determine
the profit accruing to small scale business unit is not a problem that have
started their growth.
HI: Inability to determine
profit accruing small scale business unit is a problem that has started their
growth.
1.6 Significance
of the Study
The significance of the study is to
examine the likely problems being faced by small scale business unit as a
result of not financing the business towards development and to suggest
possible solution to these problems.
Another significance of the study in
view of the objective is that the findings and recommendations will be of
valuable benefit to existing and intending investors, in that they will become
aware of the problems fighting against the development as a result of not
financing small scale business units. The value of good accounting will then be
better appreciated.
1.7 Scope
of the Study
The study is intended to cover small
scale business unit is semi urban centre in Nigeria.
However, due to time, finance, mobility
and inadequate materials, it is therefore restructured to select small scale
business unit in Etsako West, Edo State. Etsako West remains my main interest
area because it represents a tropical semi urban centre in Nigeria where
business activities are mainly dominated.
The research will try to define the
various terms as it is related to the studies, the pattern of ownership
management, finance, control and environment that contributed to the development
of Nigeria economy. The source of capital and above all these will be a though
examination of business prospects.
Finally, there will also be a
recommendation.
1.8 Limitations
of the Study
In a project like this, the research cannot
but faced with some internal and external force which can hinder having a
perfect study of the topic. The major limitation of this study is its scope,
which is only limited to Etsako West. It could have been desired if the survey
had across the state, but due to time and financial constraints, it has been
restricted to selected small scale business unit, Etsako West, Edo State.
On the other hand, lack of relevant
textbooks on the topic covered remained other constraint. Most of the
literature consulted are written essays in journals, periodicals, newspapers
and magazines where there is little or no analysis of questionnaire.
Another limitation of this study is the
low levels of a business of most small scale business owners in Etsako West
Local Government Area on their business to enhance their performance and as a
result of this, they usually decline comments on questions asked by the
researcher.
1.9 Definition
of Terms
1. Business: According to
Harish (2009), a business is an organization that is formed to produce and
supply goods and services to satisfy the needs of the people and the society at
large.
2. Small
Scale Business: There is no general or international accepted definition in
term. Its definition varies with time and place. A small scale business is a
privately owned and operated business with a small number of employees and
relatively low volume of sales/outputs. Examples of small scale business are
namely; privately owned cooperation, partnership or sole proprietorship.
3. Accountant:
This is a professional person who maintains and checks the business records of
a person or an organization and prepares forms and reports for financial
purposes.
4. Accounting:
According to Abohi (2001), accounting is the process of explaining or
detailing in money terms, transaction undertaken or the creation of financial
records, which facilitates the reckoning of the transaction undertaken.
5. Book
Keeping/Book Keeper: The activity profession of recording the money
received and spent by an individual, business or organization, while a book
keepers is a person who is responsible for maintaining the financial record of
the business.
6. Financial Institution:
Is an institution that provides financial services for its clients or members.
7. Enterprise: This
is the term applied to any type of company or firm that geared towards
generating revenue by selling product of any type.
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