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ABSTRACT
Government has identified the need for the promotion of small and medium scale enterprises (SMEs) in the Nigeria agricultural sector. One of such sectoral strategies is the introduction and pursuit of policies such as concessionary financing to encourage and promote the growth of SMEs in Nigeria. We found that financing options for SMEs are numerous but access to these funds has been different in spite of several government initiatives. We also found out the small and medium industries equity investments schemes (SMEIS) fund lacks standard guideline for fund disbursement, the unregulated informed finance institutions finance the SMEs much more than the formal sources and the informal sources make up more than half of the SMEs mix of funds. It is recommended that the informal source of financing is a potentially important source of macro financing. Savings in them should be further encouraging through regulation, government intervention by way of active participation of community and development banks in local business associations. SMEs should consider all financing options that maximize the value of the business enterprises.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria with a population estimated at over 150 million is rapidly urbanizing, but the majority of Nigerians still live in rural areas where agriculture. Forms the basis of their livelihood. Though the economy is more driven by oil revenues; agriculture is still seen as the pivot of economic development and rural transformation. The era of agricultural commodities and marketing boards are over. This is because the Nigerian agriculture regional or international markets.
For an economy that wants to be listed as a leading economy in the next ten (10) years. It therefore, becomes imperative that food security, income diversification, increased national productivity as well as job creation should be given the necessary attention they deserve. Agriculture offers all of these possibilities. This however has not been the case due to the seemingly poor performance of the agricultural sector due to a number of reasons. Factors notable amongst them are; poor technologies, high post harvest losses; poor value adding policies; lack of access to market and market information; lack of access to financial services and generality poor enabling environment to stimulate the growth of the Nigerian market. Nigerian farmers and entrepreneurs need assistance to increase productively and diversity their output as a risk-management strategy.
According to Stalèy and Nurse (1965) Modern Small Scale Business Industry for developing countries interest in the development of small and medium-sized enterprises (SMEs) and their contribution in the development process continue to be in the forefront of policy debates in developing countries. The advantage claimed for SMES are various, including; the encouragement of entrepreneurship, the greater likehood that SMEs will utilize labour intensive technologies and thus have an immediate impact on employment generation; they can usually be established rapidly and pat into operation to produce quick returns. SME development can encourage the process of both inter-and intra regional decentralization and they may well become a countervailing force against the economic power of largest enterprises. More generally the development of SMES is seen accelerating the achievement of wider economic and social-economic objective, including poverty alleviation.
Statey and Morse (1965) identify a developmental approach to SME promotion which has his objectives the creation of economically viable enterprises which can stand on their own feet without perpetual subsidy and can make a positive contribution to the growth in new SMEs. Small producers must be encouraged to adapt new methods, move into new lines of production and in the long-run wherever feasible, they should be encouraged to become medium-or-even large-scale producers.
1.2 STATEMENT OF THE PROBLEM
The small scale industry is acknowledged to have huge potential for employment generation and wealth creation in any economy. Yet in Nigeria, particular in Nigeria the sector has stagnated and remains relatively small in terms of its contribution to GDP or gainful employment. Activity mixes in the sector also. Quick limited dominated by import dependent processes and factors. Although there is no reliable data, impresses indicators shows that capacity utilization in the sector has is still faced with a number of constraints with lack of credit availability as the principal constraint. Credit is the largest element of risk in the books of most banks and failure in the management of credit risk have led to the weakening individual banks and in some cases the banking system as a whole have contributed to many episodes of financial instability Saito, K.A. and Delano P.V. (1981).
1.3 PURPOSE/OBJECTIVE OF THE STUDY
The main purpose of this research is to carry out an analysis an assessment of potential value in the promotion of agricultural and agro-based sector of Nigeria economy. This would creates a platform for development of a blue-print and references material for potential investors in the agro-allied sector as well as a guide to the government in the formulation of policies that would facilitate the springing up of viable agro-based SMEs in the country.
The main purpose of this study is to identify and consequently analyze the most effective and efficient way through which small scale enterprise could be financed and promoted, thereby taking into consideration various conditions such as economic political, social, psychological etc. under which small scale enterprises are encouraged to operate with particular reference to the cassava processing industry in Nigeria Oyelaran O. (2003. In so doing, the researcher intends giving an in-depth information and analysis on the various strategies through which small scale enterprises can be developed and encourage Levy, B. (1997).
In view of the above, the researcher intends to find out the following;
- The role played by government towards promotion and development of small-scale enterprises in Nigeria.
- To identify the economic potential of small scale enterprises in the cassava processing industry.
iii. To identify the constraints confronting the development of small-scale enterprise in the cassava processing industry in Nigeria.
- To examine the financial support given to SMES in Nigeria.
1.4 SIGNIFICANCE OF THE STUDY
This study is significant because it would help to evaluate the operations of a vital segment of the industrial sector small scale industries, which have been identified as having very high potential in promoting economic growth and development. The evaluation shall be done with special focus on the small and medium operators in the cassava processing industry in Nigeria thereby adding to the existing literature on the subject matter.
1.5 DELIMITATION (SCOPE) OF THE STUDY
This research covers the area of promoting small and medium scale enterprises in the agricultural sector in Nigeria cassava processing industry/plantain paying attention to the role of the government and other external factors that can affects positively the development of small and medium scale enterprises in Nigeria.
The research intends to study the essential problems encountered by small and medium sale operators in the cassava processing industry and suggest ways by which they can be adequately and efficiently financed and promotes.
1.6 LIMITATION OF THE STUDY
The researcher encountered some difficulties while carrying out this study. These affected the study in one way or the other.
- Financial constraints: The study could have been more extensive if the researcher has move, because off limited finance, the study was concentrated.
- Time constraint: The researcher conducted this study within a limited period of time. This is because did not afford him much time to carry out study.
1.7 DEFINITION OF TERMS
PROMOTING: Is the movement or increase of an business organization from a lower level to a higher level of moving forward.
AGRICULTURE: It is the cultivation of the soil, growing and harvesting crops, breeding and raising livestock, dairying and forestry.
ENTERPRISES: This is an organized business activities aimed specifically at growth and profit.
SMALL BUSINESS: It is assumes the responsibility and the risk for a business operation with the expectation of making a profit Obi E.C. (2005) Small Scale Business Management.
Scale: Is define as a level of business operation. Scale is the total enlargement of a business extension either small or large.
SALES PROMOTION: This is element of the marketing process that can close the sale of goods or services to a potential customer by providing the incentive to make a positive purchase decision.