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.        








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   



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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