THE PROBLEMS OF SMALL SCALE BUSINESS ON THE NIGERIAN ECONOMY (A CASE STUDY OF OLA-OLU VENTURES TAIWO, ILORIN)
TABLE OF CONTENTS
TABLE OF CONTENTS
1.1 Statement of the problem
1.2 Aims and objectives of the study
1.3 Scope of the study
1.4 Limitation of the study
1.5 Definition of terms
1.6 Plan of the study
2.0 Literature Review
2.1 Definition of Small - Scale Business
2.2 Characteristics of Small - scale Business
2.3 Roles of small - Scale Business
2.4 Problems of Small - Scale Business
2.5 Government Contribution Towards the Development of Small–Scale Business
2.6Prospects for the Development of Small-Scale Industry in Nigeria
3.0 Research Methodology
3.1 Research Design
3.2 Sampling Procedure
3.3 Mode of Data Collection
3.4 Method of Data Analysis
3.5 Sources of Data
HISTORICAL BACKGROUND AND ANALYSIS
4.0 Historical Background of Ola-Olu Venture Taiwo, Ilorin
4.1 Analysis and Interpretation of Data
4.2 Information about the industry from data collected
4.3 Organizational structure of Global soap
4.4 Findings (An overview)
SUMMARY, RECOMMENDATIONS AND CONCLUSION
A business, either small or big, simple or complex, private or public is created to provide employment opportunity and self dependence business in Nigeria has been classified as small medium and large. However a small scale industry can be defined by such criteria as to projects cost, capital cost turnover by the employee etc. the federal and state ministries of industry and commerce have adopts the criterion of value of installed fixed capital to determine what a small scale industry is.
In this respect the value has been varied from #60,000 in 1972, #159,000 in 1975, #250,000 in 1979, #500,000 in 1986, to fixed investment of not more than #2,000,000 (two million naira) in 1992. This figure is exclusive of the. building and subject to government determination and prevailing objectives of public policy.
In the wake of SFEM, this value have been reviewed and subsequently increased to #5,000,000(five million naira). If that is the case, there may be a need to classify the small scale industry into MICRO and MACRO business with a view of providing adequate incentives and protection for the former.
In the main time, any business or enterprises below the upper limit of #250,000 and whose annual turnover exceeds that of cottage industry currently put at #5,000 per annum is a small scale industry. The National Directorate of Employment INDE] concepts of a small scale industry has fixed to a maximum of #35.000.
In addition the state has defined a small scale business as one that has basic capital value of less than #500.00- as at September 2010.
Small scale industry orientation is part and parcel of Nigeria industry orientation is part and parcel of Nigeria. Evidence abounds in over respective communities of what successes our great grandparents made of their respective trading concerning yam — burn, iron smelting, farming, cottage industries and the likes. So that secret behind their success of self reliant strategy does not like in any particular political philosophy, so much as in the people’s attitude to enterprises and in the right to which the right incentive is adequate enough to make risk worth taking are provided.
Back home in Nigeria, the respective government policies accorded and gave priority to the country’s small scale enterprises. This has been in recognition that they constitute the fountain head of vitality for the variational
economy and consequently their problems have been viewed as those of the nation, by virtue of their number, diversity, penetration in all sectors of production and marketing contribution to employment and to the prosperity of the particular areas in which they operate.
In concrete terms, small scale industries constitute a greater percentage of all registered companies in Nigeria, and they have been in existence for a quite long time. Majority of the small scale industries developed from cottage industries to small enterprises and from small scale to medium and large scale enterprises.
To understand the problems, we have to look at the mutual relationship of all the parts in the industry. The functional problems are buying of raw materials, processing of finished goods, financial inequalities and secures rendered to the local community by the industries. To understand this, we have to understand the validity of functionalism theory; finally, the study seeks to know lf the element of industries structures are functioning.
1.1 STATEMENT OF THE PROBLEMS
The study seeks to answer the following questions regarding the problems of small- scale businesses on the Nigerian economy.
(1) Personnel: Who are the individuals working in global soaps and detergent industries limited, Ilorin. What are the problems encountered in recruiting the employee? What are the problems encountered in the fracturing of the workers? What are the problems faced in rewarding worker?
(2) Organization: How is the industry organized to perform it’s functions? What are the problems encountered in buying and allocating raw materials and processing of raw materials.
(3) Finance: How does the industry source of find? What are the method used for financial record? What are the forms of working relationship between the employees themselves? What forms of working relationship between the employer and the employee?
(4) What are the services rendered to the local community by the industry? What are the reactions of the people in the local community? What is the benefit of the product to the people in the local community or in the society.
1.2 AIMS AND OBJECTIVES OF THE STUDY
The fundamental aim of this project is to identify and proper solutions to the problems of small- scale business on the Nigeria economy, how they are organized and how they function.
Like any other organization, small- scale industries are faced with many problems such as capital racing, numbers of employees to be employed. Much has been written on it, as well as various ideas expressed by scholars of different ideological orientations. Different scholars industries depending on their case study and time.
Since changes in technological level and policy of Nigeria is affecting the small- scale businesses, the study sees to the characteristics of small scale industries which can help improve our definition.
The basic objectives of the research work is as follow:
A. To look into the operations of small- scale enterprises and identity those areas which poses threat to investors
B. To examine the causes of their problems encountered by the small- scale industries.
C. To determine the extent to which the problems have eaten deep into the fabrics of business in general.
D. To suggest ways by which those problems could be alleviated or eliminated.
1.3 SCOPE OF THE STUDY
The researcher will focus attention on the production and servicing in global soaps and detergent.
The study will cover the mode of operation of each economy know their problems and prospects in their respective place of work.
In the light of this generalization will be restricted to some extent due to variants in the level of operation of smallsca1e economy.
1.4 LIMITATIONS OF THE STUDY
This study could not touch all problems affecting the small scale enterprises because some industries are so small to the extend that they do not have most of the various department or sections into which research could be made. Such as marketing department, accountancy, purchasing department etc.
There is problem of getting the required information as most economic or businesses make such thing confidential.
In terms of appointment to the industry, the time might not be favorable for the researcher to see more information about the industry because the manager of that company or industry may not want to leak out their secret out to the people in the society.
1.5 DEFINITION OF TERMS
For the purpose of clarity and understanding of the study, the researcher well Endeavour to defined some key terms and concepts. Such terms are defined below.
MANAGEMENT: It can be simply defined as the process of planning, organizing, leading, and controlling the effort of organizing members and using all other organizational resources to achieve stated goals and objectives.
BANK: It can be defined as a financial institution where money and other valuable document are kept for safe custody until they are needed.
ENTERPRISES: It can be regarded as an organization endeavour by persons, individual or organization producing goods and services with a view of making profits.
SMALL-SCALE: Is one that can easily adapt to changing situation same characterized by small capital requirement. And it can be said to be one that requires a small amount to establish it, this kind of businesses usually have a small number of employees or in most cases personally handled by the owner, and are referred to as micro businesses (this is a term used by internationals organizations such as the world bank and the international finance corporations.)
HAWKING: Hawking is the cheapest and most popular means of trading goods in Nigeria.
CAPITAL: Can be defined as wealth especially when used to produce more wealth especially fixed capital and circulating capital as a business.
PROFIT: Is the difference between the price at which a community is sold and the cost of the labour and raw materials used in its production.
ENTERPRENEUR: is the person (or group) ultimately responsible for production policy decision and bearing the uncertainty inherent the process of producing in advance of demand.
1.6 PLAN OF THE STUDY
This project work has been divided into five main chapters:
The first chapter of this project work is the introduction chapter and it’s discussed the problems or investigated the problems of small- scale business on the Nigerian economy, objective of the study, scope of the study, and the limitation of the study will be discussed.
Chapter two, which is the literature review, divides into the definitions of small- scale business, the roles of small- scale business and government contributions towards small- scale business development.
Where as chapter three, explains the research methodology, sampling procedure and mode of data collection.
More so, chapter four presents the historical background of Global Soap and Detergent, analysis and interpretation of data including the organization structure of Global Soaps and Detergent.
Chapter five, contains the suggestions and conclusion, as well as the summary, recommendation and reference
2.0 LITERATURE REVIEW
This chapter is to examine and review the works of various authors who have endeavored to - write on what constitutes small- scale enterprises. There will be a vivid examination of what authors have said as to the definitions and the characteristics, the roles of small- scale business, the advantages and disadvantage, the problems and prospected for a small-scale business.
The definition adopted for a small- scale business in any country or state at any point in time is a sign of the level of that country or states industrial development. The definition of small- scale enterprises is therefore subjective, it depends on circumstances. Thus, what is small in Ondo state may be regarded as being big in Kwara state, like wise what is small in Kwara state may be regarded as large scale in Lagos state. The comparisons go on endlessly, as a result, there as no consensus as to the result definition of small- scale enterprises.
In view of the factor enumerated above, it should be stressed that the roof of difference in the conceptual grasp of what constitute small-scale lies in the future to recognize that what constitute small — scale business does not depend on various size measures which may range from floor (such as turnover, income measures and profit) to stock concepts (such as assets, employment). Fortunately, it does not matter which size measure one chooses, provided that it is reasonably accurately calculated, has some relevance to the problem under discussion and is used consistently during an investigation.
2.1 DEFINITION OF SMALL SCALE BUSINESS
There is no single criterion of classifying a business unit a small. The definition of varies from country or country and from industry to industry. Thus there is no unique or universally accepted definition for small scale business.
This however means that definition change over a period of time and depends to a large extent on a country level of development. What was large scale in the 1980s and 90s may now be regarded as small scale today.
More so, due to difference in policy focus, different government agencies in Nigeria apply various definitions which include the following.
The government definitions have been changing depending on the fore going or changing economic environment for instance, small — scale industry way defined in the Third National Development Plan (1975 to 1980) as “manufacturing establishment employing less than ten (10) people or whose investment in machinery and equipment do not exceed #500,000”.
Central bank from the own point of view, stat that, in the case of commercial banks, small scale business are those with annual turnover not exceeding 2 million (excluding cost of land) or with maximum turnover of not more than five million naira.
In the same vein, the federal ministry of industry’s guideline to Nigeria Bank for Commerce and Industry (NBCI), small scale business are define as those with total cost not more than five hundred thousand naira (excluding cost of land but including working capital). The NBCI, in its regular operations has adopted the definitions of small scale as those with cost of capital not exceeding seven hundred and fifty thousand naira (excluding cost of land but including working capital).
Small — scale enterprises accordingly to industrial development and research unit of the Obafemi Awolowo University (O.A.U), Ile-ife defines small scale as those business with total asset in capital equipment, plant and working capital not exceeding two hundred and fifty thousand naira (250,000) and employing of more the 50 full time workers Aluko (1973).
The United Nation Industrial Development Organization (UNIDO), defines small scale business enterprises in term of employment opportunity thus, classifying as any small enterprises having less than 150 employees in its pay roll.
From the various definition of small scale business it is clear that, all the definitions are based on manpower, amount of capital and management structure. More so that main criteria used all over the world to describe the small scale industries includes:
i. Number of employees
ii. Sales volume
iii. Financial strength and ability to raised fund
iv. Relative size of industry
v. Initial capital outlay
vi. Comparison with it’s past standard
vii. Independent ownership
viii. Composition of ownership
ix. Type of industry
x. Nature of the business.
Conclusively, it can be seen that the definition of small scale industries varies with nature and type of the establishment.
A business that is regarded as a large scale industry, the required capital might be for a small scale industry on the face of another establishment. For instance, a bakery industry may be regarded as a large scale industry due to the nature of production or output and the working capital.
However, all this has brought about the variation in the definition of small scale industries and that is why we have not got a universally acceptable definition..