The main purpose of this study is to identify the problems and prospects of small and medium enterprise in Akoko-Edo LGA. To do this, data were collected from both primary and secondary sources. The main instrument of data collection was the questionnaire. The data were presented in tables as frequency, distribution in the data analysis, the techniques of percentages frequencies were used. The hypothesis were tested with z-test technique at 5% significance level. Having analysed the data the following were the major findings; Most of the operators of small and medium enterprise in Akoko-Edo LGA make an average daily turnover of N15,000 and profit of about N15,000  daily. There has been a phenomenal growth in the dimensions and nature of small and medium enterprise in Akoko-Edo LGA. The growth is mainly on account of people’s desire to be self employed. The problems of establishing and managing small and medium enterprise include lack of capital, lack of managerial skills, lack of business ideas, high cost of operational facilities, scarcity of accommodation, lack of efficient preservation, system and poor environmental and sanitation.











Title Page                                                                               




Table of Contents

CHAPTER ONE: Introduction

1.1      Background to Study                                               1

1.2      Statement of research Problem                                        2

1.3   Research Questions                                                         3

1.4   Objectives of the Study                                            4

1.5   Statement of Hypothesis(es)                                     4

1.6   Significance of the Study                                         4

1.7   Scope of the Study                                                   5

1.8   Limitations of the Study                                          6

1.9   Definitions of Terms                                                7

CHAPTER TWO: Literature Review                                                                 7

2.1     Introduction                                                         7

2.2     Concept of Small and Medium Enterprse                                                            11

2.2.1  Types of Small and Medium Enterprise                                  15

2.2.2  Roles of Small and Medium Enterprise in Edo State

          Metropolis in Job Creation and Poverty Eradication              16

2.2.3  Importance of Small and Medium Enterprise in Nigeria         18

2.2.4  Problems of Small and Medium Enterprise Akoko-Edo LGA 22


2.2.5  Prospect of Small and Medium Enterprise Akoko-Edo LGA                                                                   23

2.2.6    Challenges in Facing Small and Medium Enterprise in

Akoko-Edo LGA                                                  25

2.2.7    Small and Medium Enterprise Credit Scheme: Case Study

Of Akoko-Edo LGA                                             26

2.3     Empirical Framework                                                             30

2.3.1  Ways of Encouraging Small and Medium Enterprise to

          Enhance National Development in Akoko-Edo LGA                                                                                           35

2.3.2    Government Refund on Small and Medium Scale and

Means of Administration                                                        37

2.3.3  Limitation of the Study                                                           38


Research Methodology                                                            40

3.1     Research Design                                                                      40

3.2     Area of Study                                                                          40

3.3     Source of Data                                                                        40

3.4     Sample Size Determination and Sampling Techniques 41

3.5     Instrument                                                                               41

3.6     Data Collection Procedure               

.7       Method of Data Analysis                                                        42


Data Presentation of Analysis                                                          44

4.1     Analysis and Interpretation of Data                              44

4.2     Test Hypothesis                                                                      59


Summary, Recommendation and Conclusion                                   63

5.1     Summary of Findings                                                              63

5.2     Conclusion                                                                     64

5.3     Recommendation                                                           64

Bibliography                                                                                     66

Questionnaire                                                                                    67











In recent years, particularly since the adoption of the economic reform programme in Nigeria in 1986, there has been a decisive switch of emphasis from the grandiose, capital intensive, large scale industrial project based on the philosphy of import substitution to small scale industries with immense potentials for developing domestic linkages for rapid, sustainable industrial development. Apart from their potential for ensuring a self reliant industrialization, in terms of ability to rely largely on local raw materials, small scale enterprises are also in a better position to boost employ raw materials, small and medium enterprise, are also in a better position to boost employment, guarantee a more even distribution of industrial development in the country, including the rural areas, and facilitate the growth of non-oil exports.

In Nigeria, the definition of small and medium enterprises also varies from time to time and according to institutions, for instance, the Central Bank of Nigeria’s (CBN) monetary policy circular No:27 of 1988 define small scale enterprises (excluding general commerce) as enterprises in which total investment (including land and working capital) did not exceed #500,000 and or the annual turn-over did not exceed #5.0 million.

Medium enterprise (excluding general commerce) as enterprises in which total investment and not exceed #1,000,0000 (1 million) and the annual turnover did not exceed #1.2 million. Small scale enterprises is one of the modern strategies underdevelop countries are employing to break into the “league” of developed countries. Fasua (2006:85) categorized business that fall under small scale as follows firewood supply, plantain production, restaurant services, small scale poultry raising, operating a nursery for children, home laundry services and host of others. Business grouped under medium scale according to fasusa are ; soap production, hair/body cream production, chemical production, commercial poultry, profession appractes (law, accountancy, education) food and beverage production among others.

Consequently, both the federal and state governments and recently, local governments, have stepped up efforts to promote the development of small scale enterprises through increased incentive scheme, including enhanced budgetary allocations for technical, assistance programmes. New lending schemes and credits institutions for technical assistance programme New lending schemes and credit institutions such as the National Economic Reconstruction found (NERFOUND), World Bank-assisted small-scale enterprises loan scheme (SMES), Nigeria Export and Import Bank (NEXIM), the people’s Bank of Nigeria (PBN) and the Community Bank have also emerged at both the national and local levels to boost the flow of development finance of small scale enterprises which have so far depended largely on personal funds and credit. From informal sources for both their investments and working capital.

Unfortunately, all these formal credit scheme have not been able to adequately redress the fundamental problems which have constrained small scale enterprises access to credit. The low credit rating of this class  of enterprises, is attributable largely to their weak capital, base, high mortality rate, low productivity and shortage of managerial skills. Indeed, the problem of weak capital base, high mortality rate, low productivity and shortage of managerial skills. Indeed, the problems, of weak capital base, and poor access to finance appear to have developed into some vicious circle, leading to slow growth, stagnation and even rapid demise of the small scale enterprises. The impact of all existing credit scheme interms of providing funds for meaningful and sustained development among the small scale enterprise, had medium enterprise to serve the expected  role of catalyst for rapid industrial development, there is need for a more innovative strategy for improved access to development finance for the small and medium enterprise that would address their inability to provide collateral securities for loans formal credit institutions.

1.2            Statement of the problem

Small and medium enterprise are mostly in managed by owners  and relations. The financing in most cases in normally provided by the owners. The owners fail to realize the importance of external source of capital in order affect expansion in the business. In most cases, the by the owner, members of the family and friends in most cases.

In another development, small and medium enterprise experiences difficulties in raising equity capital from the finance houses or individuals. Even when the finance house agrees to provide  equity  capital, the conditions are always dreadful.  All the result to inadequate capital available to the sector and thus lead to poor financing. This is the bane of most cottage industries in Nigeria. About 80% of small and medium enterprises are stifled because of this problem of poor financing and other problems associated with it (Chukwuemeka, 2006). The problems that emanated from poor financing include:

a)                 Lack  of competent management which is the consequence of inability of owners to employ the services  of experts.

b)                Use of obsolete equipment and methods of production because of owner’s inability to access new technology.

c)                 Excessive competition which resulted from sales which is a consequence of poor finance to cope with increased  competition in the industry.

Inspite of the different measures since 1960 to increase industrialization, small medium enterprises are still facing hard conditions. This is as a result of some constraining factors.

1)                The high cost of available raw materials affects the prices of good food. This only has adverse affect on the turnover of the enterprise but also on the profitability.

2)                To what extent has the finance house strict conditions affected the development of small scale.

3)                Does poor financing actually affect small and medium business operation.

1.3     Research Questions

1)                What are the factors influencing small and medium enterprise in Nigeria?

2)                To what extent does finance house strict conditions have affected the development of small and medium enterprise in Nigeria?

3)                To what extent does poor financing has affect on small and medium business operation in Nigeria?

1.4     Objectives of the Study

The specific objectives of the study are:-

       i.            To determine factors influencing small and medium enterprise in Nigeria

     ii.            To determine the extent finance house strict conditions have affected the development of small and medium enterprise in Nigeria

  iii.            To assess the extent poor financing has affected small and medium business operation in Nigeria.

1.5     Statement of Hypothesis

The following hypothesis are formulated to provide the lead for this study:           

Hypothesis One

Ho:    The phenomenal growth in the number of small and medium enterprise is not due to quest for self employment.

HI:     The phenomenal growth in the number of small and medium enterprise is due to quest for self employment.


Hypothesis Two

Ho:    The profitability of the business has not encouraged people involved in the business.

HI:     The profitability of the business has encouraged people involved in the business.


At this time of the nation, questions for economic recovery and self-reliance, the role of small-scale business in this regard can not be overemphasized. There is no doubt that the result of this research will be useful to prospective and existing small-scale firms in Nigeria by equipping them survival strategies in a period of economic hardship.

Both public and private sector hopefully find this work useful in all areas of financial management.  Moreover, potential investors and other individual wishing to establish small-scale business will also see this work as a useful guide.

Furthermore, the study shall be beneficial to the commercial banks and other financial institution as a reference frame in the formulation of credit policy guide-lines towards the financing of small-scale business. Commercial bank and government will also benefit from this work since it will help them to review their existing criteria for granting loan.

Finally, if they are properly applied, small-scale investors would have a significant step towards self-reliance in industrial drive.

1.7            SCOPE OF THE STUDY

The scope of this study includes; Objectives, sources of finance and problems of encounter



The limitations to this study are;

Finance was in fact the most limited factor and this constitute a major problem in carrying out effective and efficient research, for this reason, the job is limited.

Time is another problem of the researcher, because the time short for the completion of the project work was not sufficient. This was done to the facts that with in this short time Limit, others academic work were carried out side by side with the project.

Finally, the school system has make it difficult for student to go out in search for information by granting exert for student. 


The following terms are gotten from published materials and journals. 

a.                 Loan Credit: A sum of money lends to somebody to be repaid with interest.

b.                Scale:  A set of numbers or standard for measuring or comparing.

c.                  Profit: This is the money gained from trade

d.                Occupation: Business, trade which any human done to either living, it could be permanently or temporally.

e.                  Problems: These are difficulties in business that needs attention.

f.                  Finance: It is the provision and management of money in a business enterprise.

g.                 Capital: money needed to start a business

h.                Bank: This is a place where money are kept for the purpose of transaction.

i.                   Asset: The property of a company owned by the company e.g building.

j.                   Liabilities: This is the amount of debt, which a business owes e.g loan.

Order Complete Project