Thesis Abstract

<p> The study investigates the impact of small and medium scale industries on<br>the Nigerian economy, spanning from 1986 to 2010. The study adopted<br>Ordinary Least Square (OLS) Linear Specification model. Using unit root<br>test, the work shows that small scale industries significantly contributed to<br>the economic growth in Nigeria despite poor funding by commercial banks.<br>The work recommends among others that government should improve its<br>monetary policies so as to reduce to an acceptable level, the rate of<br>interests charged by commercial banks as well as encouraging rural based<br>industrialization, whereby investors are encouraged to establish small and<br>medium scale industries that would be based entirely on local raw<br>materials, machines and equipments. <br></p>

Thesis Overview

<p> 1.0 INTRODUCTION<br>1.1 BACKGROUND OF THE STUDY.<br>In recent time, the fortune of small scale and medium scale<br>Industries attracted the attention of government world-wide and thus has<br>been the focus of general interest and research, especially in developing<br>Countries due to the importance of small scale and medium scale<br>Industries.<br>Their importance cannot be over emphasized as they constitute a<br>whole virile vehicle for the generation of vast production of outputs and job<br>creation. They are also act as catalyst for restructuring and diversifying the<br>productive base of an economy and for the Industrial economy and for the<br>Industrial economy take-off and growth of such an economy. The small<br>and medium scale Industries are seen to hold the key to future expansion<br>of the Industrial sector.<br>xi<br>In Nigeria, evidence has shown that in 1986, small scale and medium<br>scale Industries accounted for 70% of all firms, employing millions of<br>Nigerians (first Bank of Nigeria report, 1987). By the end of 1979, over<br>80% of all establishments licensed under the factory act were small and<br>medium scale Industries (Onwuala, 1987). This made the importance of<br>this economic unit to be unelectable.<br>Small scale and medium scale Industry in its widest sense implies the<br>urgent response to the challenges of developing countries, of which Nigeria<br>is not an exception. Small and medium scale Industries should be practiced<br>with due regards to the importance of available local raw materials in its<br>environs because the challenges facing small and medium scale<br>Industrialist are enormous.<br>The importance of small and medium scale Industries to the<br>economic development of any country, whether developing or developed,<br>have been widely acknowledged and acclaimed. They are considered as<br>there stimulate to private ownership and entrepreneurial skills, generate<br>employment, promote industrial dispersal and rural- urban migration.<br>Clive carpenter (2001), said that across the world, small businesses<br>are crucial for economic growth, poverty alleviation and wealth creation.<br>Uayatudeen (2001) said that across the world, small businesses have<br>such a crucial role to play in the development of an economy and that<br>cannot be ignored. According to William and David, most firms and<br>small and medium scale Industries are compared with companies that<br>economist usually study. But economists have concentrated on large scale<br>Industries. The leading textbooks in economics have title discussions on<br>small and medium scale business or entrepreneurs.<br>The partial combinations of small and medium scale Industries on the<br>Nigerian economy are; creation of wealth, poverty eradication and<br>employment generation as encapsulated in the national economic<br>empowerment development strategies (NEEDS)<br>However small and medium scale Industries are bedeviled by<br>numerous challenges which have hampered its development and growth<br>and also its combination to national development. To this end, government<br>has instituted various programs to address the challenges and constraints<br>xiii<br>facing small and medium scale industries growth. The programs and<br>institutions Include:<br>a. Setting up and founding of industrial estates.<br>b. Establishment of national directorate of employment (NSE)<br>c. Establishment of the Nigerian bank of commerce and industry (NBC),<br>the national economic re-construction fund (NERFUND),the Nigerian<br>Industrial bank (NIDB) which has merged in to one agency in the<br>bank of industry, the world assisted small scale enterprises loan<br>scheme (SNEX), the Nigerian export and import bank (NEXIN) etc.<br>d. Setting up a small and medium scale enterprises development agency<br>of Nigerian (SMEDAN); an agency which Co. ordinates development<br>in small business sector.<br>Unfortunately, all these formal credit schemes have not been able to<br>adequately address the fundamental problems which have constrained<br>small scale enterprises access to credit; and any other enterprise<br>establishing a small and medium scale industry requires capital to take off<br>survive and eventually expand.<br>xiv<br>Nigeria’s major manufacturers produce food and beverages,<br>cigarettes, textiles and clothing, soaps and detergents, footwear, wood<br>products, motor vehicle parts, chemical products and metals while small<br>and medium scale manufacturing engage in leather making, poultry making<br>and wood carving. The smaller industries are often organized in craft<br>guides involving particular families who pass the skill from generation to<br>generation.<br>People have lived in what is now known as Nigeria since at least<br>9000BC, evidence indicated that since at least 5000BC, some of them have<br>practiced settled agriculture. In the early (centuries (AD), kingdoms<br>emerged in the drier northern savanna, prospering from trade with north<br>Africa. At roughly the same time, the western and southern forested areas<br>yielded city- state and looser federations sustained by agriculture and<br>coastal trade. These systems changed radically with the arrival of the<br>Europeans in the late 15th century, the rise of the slave era in the 16th<br>Century through the 19th Century. Nigeria achieved independence in the<br>xv<br>1960, but has since been plagued by an unequal distribution of wealth and<br>inflation.<br>The first well documented kingdom was the Yoruba kingdom, which<br>was observed between the 11th<br>-12th centuries. Over the next few<br>centuries, they spread their political and spiritual influence beyond the<br>borders of its small city states. Its artisans were highly skilled, producing<br>among other things, bronze castings of heads in a very naturalistic style.<br>Terra- cotta, wood and Ivory were the common media instruments used.<br>Shortly after the 12th century, the kingdom of Benin emerged in the<br>mid-western south region. Although it was separate from the Yoruba<br>kingdoms; Benin legends claim that the kingdoms first rulers were<br>descendant from an Ife prince. By the 15th century, the Benin kingdom was<br>large, wood designing was what sustained the city’s trade (both within the<br>region and later with Europe). Its legacy includes a wealth of elaborate<br>bronze plagues and statues recording the nation’s history and glorifying its<br>rulers.<br>xvi<br>From the above paragraphs, it can be noted that small and medium<br>scale industries are indeed necessary for the development of any economy.<br>Small and medium scale industries act as the major stepping stone to<br>economic growth. In Nigeria today, small and medium scale industries are<br>common but have no efficiently achieved or attained her goals.<br>Therefore, to encourage local businessmen and institutions in buying<br>small and medium sized businesses, the government established the<br>Nigerian bank for industry and commerce, which had an initial operating<br>capital of 50 million naira. There was some concern in Nigeria that<br>Nigerians might not be able to raise enough capital to take over the foreign<br>owned businesses affected by the decree and that there might not be<br>enough Nigerians with the technical and managerial skills necessary to<br>replace extricate personnel.<br>1.2 STATEMENT OF THE PROBLEM<br>The small and medium scale Industries survey conducted in 2005 by<br>the central Bank of Nigeria (CBN) provides some evidence that apart from<br>the acute short of technology, managerial skills, poor management,<br>xvii<br>adverse environment, and change in policy, capital is a source of great<br>concern to the entrepreneur in the sector. Since one of the microeconomic<br>goals of the Nigerian government is economic growth, we can assume that<br>the government aims at the expansion of small firms.<br>In a continent where finance is a major constraint on development,<br>the problem confronting the private sector in Nigeria above all small and<br>medium scales Industries standout. <br></p>