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Abstract
The study has examined the relationship between Small and Medium Scale Businesses and economic development of small business firms in Port Harcourt. In this study the survey research design that is cross sectional was employed. The population is made up of 80 employees selected from three operating small scale manufacturing firms in Port Harcourt. The Taro Yemen’s formula was used to determine the sample size of 64. Self-designed questionnaire on Small/Medium Scale Business and economic development was used and administered for the collection of data from the respondents in Aqua Dana and Zina Polythene in Port Harcourt, Rivers State. The structured questionnaire is adopted. The simple percentage was used form data analysis. Findings amongst others revealed that small capital outlay is associated with Economic development and fewer employee associate with Economic development. Based on the finding of the study, we recommended that the accessibility to relative low interest rate finances should be provided to small and medium enterprises in Nigeria in order enhance economic development and government should step up support to small businesses and create greater awareness for more people to take to small businesses in Rivers State.
Table of Contents
Title Page i
Declaration iii
Certification iv
Dedication v
Acknowledgments vi
Abstract vii
Table of Contents viii
CHAPTER 1 1
INTRODUCTION 1
1.1 Background of the Study 1
1.2 Statement of the Problem 3
1.3 Objectives of the Study 3
1.4 Research Questions 4
1.5 Statement of Hypotheses 4
1.6 Significance of the Study 4
1.7 Scope/Delimitation of the Study 5
1.8 Limitation of the Study 5
1.9 Definition of Terms 6
CHAPTER 2 8
LITERATURE REVIEW 8
2.1.1 Concept of Small/Medium Scale Businesses 8
2.1.2 Dimensions of Small/Medium Scale Businesses 9
2.1.3 Concept of Economic Development 10
2.1.4 Measures of Economic Development 11
2.1.5 Small/Medium Scale Business and Economic Development 11
2.2 Theoretical Framework 12
2.3 Empirical Review 13
CHAPTER 3 16
RESEARCH METHODOLOGY 16
3.1 Research Design 16
3.2 Population of the Study 17
3.3 Sample and Sampling Technique 18
3.4 Questionnaire Design 19
3.5 Method of Data Collection 19
3.6 Method of Data Analysis 20
3.7 Reliability and Validity 20
CHAPTER 4 22
DATA PRESENTATION AND ANALYSIS 22
4.1 Questionnaire Administration and Retrieval 22
4.2 Data Analysis 23
4.3 Hypotheses Hypotheses 27
4.4 Discussion of Findings 29
CHAPTER 5 32
SUMMARY, CONCLUION AND RECOMMENDATIONS 32
5.1 Summary 32
5.2 Conclusion 32
5.3 Recommendations 33
Reference 34
Appendix I 35
Appendix II 36
CHAPTER 1
INTRODUCTION
1.1 Background of the Study
Economic development is a broader concept than economic growth. Development reflects social and economic progress and requires economic growth. Growth is a vital and necessary condition for development, but it is not a sufficient condition as it cannot guarantee development (Grasjo and Arvemo, 2011). Economic growth is defined as the percentage output increase in an economy, e.g. a nation, a region or a municipality. The economic growth is closely related to the industrial structure, health, demography and income distribution of the economy. The most used measure for national economic growth is the change in Gross Domestic Product (GDP). GDP measures the value added of all goods and services produced in the economy. The production of goods and services generates primary incomes for households and another method of measuring GDP is therefore to add up all incomes. One part of this income consists of the sum of all wages paid to households. When regional growth studies are conducted, a common measure of economic growth is the wage sum. One reason for this may be the limited access to GDP data on regional level (Grasjo and Arvemo, 2011). Small and medium scale businesses is one construct that can enhance economic development.
The concept of small businesses cannot be completely isolated from the operational environment. Thus, the perception and definition is highly dependent on the economy that provides the environment of operation. In Nigeria, there seems to be no clear cut, definition or scope for determining small business enterprise. However varied definition and scope were made by some agencies as follows: the national directorate of employment defined it as being able to accommodate project with capital investment as loan asN5, 000 and employing as few as three persons. The Central Bank of Nigeria in its monetary policy guidelines 1980 defined small scale business as an enterprise whose annual turnover rangers between N25,000 and N50,000, also the Federal Ministry of Industries before the Structural Adjustment Programme (SAP) and Foreign Exchange Market, defined small scale business as any manufacturing, processing or service industry with capital investment of not more than N150,000 in plant and machinery. In the same vein the Nigeria Bank for Commerce and Industry also defines the small scale enterprise as firms’ or companies with assets (including working capital but excluding land) not exceeding N750,000 and paid employment of up to 50 persons an such an establishment be wholly owned by Nigerians. Measuring the appropriateness of some of these definition, Nwakobi (1985) criticized most of the definition describing them as merely “institutional” Nwakobi holds the views that the definitions do not pain a health picture of the growth of small scale business enterprise, considering the difficulties involved in capital formation and other discrimination of attitudes of the banks towards the owners of small scale business enterprise. In July, 2001, the national council on industries at the 13th meeting in Markurdi, Benue State, reviewed and adopted the following classification of industrial enterprises and came up with the definition that “A small scale industry is an industry with total capital employed of over N1.5 million but not more than N50 million including working capital but excluding cost of land and of a labour size of 11-100 workers.
However, comparatively, most develop countries seems to have agreed on a maximum unit of 500 employees as a small firm (Feldman 1989). However, a review of the performance induct of small scale business can be best anchored on the United Nations industrial development organization definition of small scale business as “an economic venture” that is characterized by Ownership and management being vested in the same Individual, Capital being made available by an owner on whom the policy Decisions rest, Having a unified operational area, A situation of a venture controlling a small share of the market there by constituting a little quota in the large sized market and the owner participating very actively in all decision making Processes on a day to day operation basis with a high degree Of rigid control.
Reflecting the characteristics, small scale business enterprises have emerged, especially in the developing world, with roles of employment generation, encouragement of rural development, assisting substantially in lifting gross domestic product, developing entrepreneurship and proving avenue for self-employment. From the foregoing therefore, the study seeks to examine the relationship between Small and Medium Scale Businesses and Economic Development in some selected small scale manufacturing firms in Port Harcourt Metropolis.
1.2 Statement of the Problem
Nigeria’s current alarming rate of unemployment rate is growing exponentially. The over dependence on oil as the major GDP provider and the reliance on the federal government to meet economic needs is an issue that requires redress. The economy is finding it increasingly difficult to cope as Nigerian economy is waning. A lot of experts have called for the creation of an enabling environment for small –scale enterprise to thrive. Issues such as poor technology, poor infrastructure and a weight of activities borne by the federal government has peaked causing a downturn that can only be over turned by support inwardly. The federal government at this stage cannot manage the increasing needs of the populace.
1.3 Objectives of the Study
The main purpose of the study is to examine the relationship between Small and Medium Scale Businesses and economic development. The specific objectives are as follows:
1. To examine the relationship between small capital outlay and economic development of small business firms in Port Harcourt.
2. To examine the relationship between fewer employee associate and economic development of small business firms in Port Harcourt.
3. To examine the relationship between localized operation and economic development of small business firms in Port Harcourt.
1.4 Research Questions
The following research questions are posed to guide the study:
1. To what extent does small capital outlay associate with economic development of small business firms in Port Harcourt?
2. To what extent does fewer employee associate with economic development of small business firms in Port Harcourt?
3. To what extent does localized operation associate with economic development of small business firms in Port Harcourt?
1.5 Statement of Hypotheses
HA: There is a significant relationship between small scale business and economic development of small business firms in Port Harcourt.
HO: There is no significant relationship between small scale business and economic development of small business firms in Port Harcourt.
1.6 Significance of the Study
The study is thus important because of its potentiality in the development of the small business sector which has been characterized as the “man carrier of development and the engine of social and economic growth” in Nigeria. The study will also help in identifying why people don’t go into small–scale enterprise despite its numerous advantages. It will also find our problems encountered while running the business. The study will help government identify areas requiring attention, thus stimulating government into proper directing of loans and incentives to improve upon existing ventures. It will also provide useful guide for prospective entrepreneur that wish to choose self-employment as a career. And finally, it will serve as secondary data for subsequent studies by a prospective researcher.
1.7 Scope/Delimitation of the Study
The study is delimited under the following heading: content scope, geographical scope and unit of analysis.
Content Scope: The content scope of this study involves an investigation to ascertain the relationship between small and medium scale businesses and economic development. The dependent variable is economic development measured by small capital outlay, fewer employees and localized operation. While dependent variable is small and medium scale businesses, measures by infrastructural development, employment generation and wealth creation.
Geographical Scope: This study is delimited in Port Harcourt Metropolis with special reference to selected small-scale manufacturing firms in Port Harcourt Metropolis.
Unit of Analysis: The unit of analysis in this research involves the individuals at the time of carrying out the study.
This study involves an investigation of career management in relation to employee performance. Hence it is a micro level study.
1.8 Limitation of the Study
The major limitation of the study is the short time frame the research lasted, coupled with the tight academic time table, which prevented a very comprehensive study. The fund available to the researcher was also limited and therefore the study was limited to a small portion of the survey population.
Another limitation is the difficulties, encountered by the researcher in obtaining all needed information and materials from the right source and compilation of data for the project.
1.9 Definition of Terms
The following terms are operationally defined as below:
ECONOMIC DEVELOPMENT
Economic Development reflects social and economic progress and requires economic growth.
EMPLOYMENT GENERATION
Creating jobs is a keystone of any economic recovery program. Many activities can fall under the rubric of job creation, including immediate short-term opportunities that yield quick impact, or the development of more enduring livelihoods in the civil service or private sector.
INFRASTRUCTURE DEVELOPMENT
“Infrastructure” has been defined as “the basic structures and facilities necessary for a country or an organization to function efficiently, e.g. buildings, transport, water and energy resources, and administrative systems.”
LOCALIZED OPERATION
When we describe the businesses we have tailored Near-user Marketing to serve, we use the term “localized” instead of “local.” “Local” is sometimes used to denote small, single-location businesses, and many local businesses do not primarily target nearby customers.
SMALL CAPITAL OUTLAY
Money spent to acquire, maintain, repair, or upgrade capital assets. Capital assets, also known as fixed assets, may include machinery, land, facilities, or other business necessities that are not expended during normal use.
SMALL SCALE BUSINESSES
It is a firm firms’ or companies with assets (including working capital but excluding land) not exceeding N750,000 and paid employment of up to 50 persons an such an establishment be wholly owned by Nigerians.
WEALTH CREATION
Wealth creation is a process described by a few essential laws of money. If you live by these rules your chance of financial success is very good.