The study is aimed at examining the importance of small scale business enterprises to national development in Nigeria. The broad objective of this study is to identify if capital storage and lack of adequate financial record keeping are the major problems of financing small scale businesses and also to ascertain the contributions of small scale industries to infrastructural development. The primary and secondary source of data collection was used in this study and the simple random sampling technique was used to select 30 respondents which served as the sample size of the study. The chi-square statistical tool was used to test the slated hypotheses and the findings revealed that small scale enterprise reduces and remove regional economic imbalance by so doing, they assist not only in eliminating the source of social and political conflict but also in reducing the movement of people to the few developed centers of the country. It was concluded that countries that are developing like Nigeria can accelerate their economic development through the encouragement of small-scale industries. It was recommended among others that Government should formulate some financial policies that would encourage the commercial and merchant bankers as well as insurance companies to participate in projects requires high risk capital, especially in the agro-allied industrial sectors.



Title Page                                                                                 i

Certification                                                                            ii

Dedication                                                                              iii

Acknowledgments                                                                  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    Objectives of the Study                                                          3

1.5    Statement of Hypotheses                                                       4

1.6    Significance of the Study                                                       5

1.7    Scope of the Study                                                                 7

1.8    Limitations of the Study                                                         7

1.9    Definition of Terms                                                               8

Chapter Two: Review of Related Literature

2.1   Introduction                                                             10

2.2   Characteristics of Small Scale Business                  14

2.3   Forms of Business Organizations                            16

2.4   Sources of Funds for Small-Scale Business             18

2.5   Economic Importance of Small-Scale Organizations        19

2.6   Possible Role of Small Scale Industries in Economic Development                                                         21

2.7   Government Policies                                                        24


Chapter Three: Research Method and Design             28

3.1    Introduction                                                                           28

3.2    Research design                                                                     28

3.3    Description of the Population of the Study                          28

3.4    Sample Size                                                                            29

3.5    Sampling Techniques                                                            29

3.6    Sources of Data Collection                                                    29

3.7    Method of Data Presentation                                                32

3.8    Method of Data Analysis                                                       32

Chapter Four: Data Presentation, Analysis and Interpretation                                                            34

4.1    Introduction                                                                           34

4.2    Presentation of Data                                                              34

4.3    Data Analysis                                                                         35

4.4    Hypothesis Testing                                                                 48               Chapter Five: Summary of Findings, Conclusion

and Recommendations                                                 56

5.1    Introduction                                                                           56

5.2    Summary of Findings                                                            58    

5.3    Conclusion                                                                             58

5.4    Recommendations                                                                 59

References                                                                    61

Appendices                                                                             62




1.1   Background to the Study

Small-scale enterprises as an instrument of economic and national development are a topical issue of great concern not only to the government but also to business community, bankers and the society at large. Development in the Nigeria economy, these days indicates that the survival and growth rate of small scale business are very vital to the success of the new culture of self-reliance, the cornerstone of other development programme.

These enterprises are not only capable of expanding production possibilities of the economy, they equally pose relative of large potential for creating employment opportunities and transfer of skills. Indeed, like the small industries of today, some of these establishments will in future come into large scale industries.

However, we cannot shy away from the fact that in spite of government continued effort to stimulate the growth of small scale business activities, their performance is still hampered by executive capacity, as well as technical and financial institution should be mutually supportive. If the desired objective of pursuing small scale business as instrument of development is to be achieved. It is on this note that this research work is being carried out.

1.2   Statement of Problem

No one opens a business with the intention of failure. Yet each year many new businesses that go into bankruptcy are forced to close down. This is due to some of the following reasons. Poor management due to the fact that most of the proprietors have little or no educational knowledge and so do not appreciate the business entity concept of accounting which implies that the owner of the business and the business are two different entities and that the business is a legal person as distinct from the proprietor. Business neglect due to either lack of time in it organization, operation and improvement. The unwillingness of banks to grant loans on liberal terms to prospective lenders has made the establishment of small-scale enterprises almost impossible.

1.3   Research Questions

The following are the research questions of the study;

1.     Are capital storage and lack of adequate financial record keeping are the major problems of financing small scale businesses?

2.     Do small scale industries contribute to infrastructural development?

3.     Do small scale enterprise contribute to the creation of employment opportunities?

4.     Do small scale industries contribute capital formation for development?

1.4   Objective of the Study

The research on small-scale industries have witnessed a lot of problems, to address these problems, some relevant questions that must be answered are raised below;

1.     To identify if capital storage and lack of adequate financial record keeping are the major problems of financing small scale businesses. 

2.     To ascertain the contributions of small scale industries to infrastructural development.

3.     To examine the contributions of small scale to the creation of employment opportunities.

4.     To ascertain the contributions of small scale to capital formation for development?

1.5   Statement of Hypothesis

Hypothesis One

HO:   Capital storage and lack of adequate financial record keeping are not the major problems of financing small scale businesses. 

HI:    Capital storage and lack of adequate financial record keeping are the major problems of financing small scale businesses. 

Hypothesis Two

HO:   Small scale industries do not contribute to infrastructural development.

HI:    Small scale industries contribute to infrastructural development.

Hypothesis Three

HO:   Small scale businesses do not promote the creation of employment opportunities.

HI:    Small scale businesses promote the creation of employment opportunities.

Hypothesis Four

HO:   Small scale enterprises do not promote capital formation for development.

HI:    Small scale enterprises promote capital formation for development.

1.6   Significance of the Study

The relevance or significance of this research is the importance of small-scale business. Small-scale business is important to the newly industrialized developing countries. In most countries of the world particularly in the loss developed countries, the respective government
policy and programmes to accelerate industrial development particularly through the promotion of small-scale 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

This research work is designed to study small-scale business as an instrument of national development and it relative importance in an economy. The information collected in this research work are limited, current and adequate in scope for the use of this study a research table will be conducted which embraces the over-view of small-scale businesses, possible role of small-scale business in economic development, problems of small-scale business and management guide tackling these problems. The research work also covers government policies and incentives to small-scale industries. This and other important information are the area of forms which this research scope is limited to. A sample size of 30 was used for effective survey.

1.8   Limitations of the Study

Considering the fact that the project is a group work makes it difficult for the work to move smoothly because there may be a time we need the attention of everybody, you will fine out that is only some persons are present and apart from that, money or financial aspect is also a factor in our research.

Owning to the geographical vastness of Etsako West Local Government Area of Edo State, time and financial limitation, it was impossible to have data collection from all parts of the local government. There were also constraints such as the uncompressing attitude of many respondents, some of them frowhed at some questions which they felt contained details that appears to probe into their private financial and business affairs. Some of the interview achieved that the exercise was in connection with tax purpose.

1.9   Definition of Terms

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.

k.          Investment: To put money to a particular business in order to make profit e.g buying of share.

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