This project investigated the Factors Affecting Small and Medium Scale Business in Uyo LGA. Textbooks and journals were reviewed in order to establish the theoretical base for the study. Five research questions were postulated to guide the study. Out of which questionnaire items were developed.

A sample size of 72 was adopted from the four small and medium scale business enterprises in Uyo LGA. These questionnaires were administered and analyzed using the frequency distribution and mean score.

The study revealed among other things that government does not really support the small and medium scale business enterprises to grow as it was expected and most business enterprises find it difficult to obtain capital either from the government or the banks. The study has drawn the conclusion that what is really affecting the small and medium scale business enterprises is the lack of capital for expansion. Recommendations are made that government and banks should give loans to businesses and reduce the interest rates.


Title page                                                                                 i

Declaration                                                                              ii

Approval page                                                                          iii

Dedication                                                                               iv

Acknowledgment v

Abstract                                                                                   vi

Table of Contents                                                                     vii


1.0   Introduction                                                                     1

1.1   Statement of Problem                                                      5

1.2   Aims and Objectives of Study                                          8

1.3   Research Questions                                                         9

1.4   Significance of the Study                                                 10

1.5   Scope of the Study                                                           11

1.6   Limitation of the Study                                                    11

1.7   Definition of Terms                                                          12


Literature Review

2.0   Introduction                                                                     15

2.1   Definition of Small Scale Business                                  15

2.2   The Role and Characteristics of Small Scale Business

in Kaduna Metropolis                                                      16

2.3   Analysis of Factors Affecting Small Scale Business Enterprises                                                                      21

2.4   Policies for Promotion of Small Scale Business

in Kaduna                                                                                37

2.5   Summary                                                                         42


Research Methodology  

3.0   Introduction                                                                     43

3.1   Area of Study                                                                   43

3.2   Population of the Study                                                   44

3.3   Sample Size/Sampling Techniques                                 45

3.4   Method of Data Collection                                                       45

3.5   Instrument of Data Collection                                          45

3.6   Validation of the Instrument                                            46

3.7   Administration of the Instrument                                    46


Data Presentation and Analysis

4.0   Introduction                                                                     47

4.1   Major Findings                                                                57


Summary, Conclusions and Recommendations

5.0   Introduction                                                                     61

5.1   Summary                                                                         61

5.2   Conclusion                                                                      62

5.3   Recommendations                                                           64

5.4   Areas for Further Studies                                                 65

Bibliography                                                                    66



Small and medium scale business constitutes the highest percentage of business establishments in the country both at the national, state and local levels. Since they are of great importance to the nation’s economy and industrial development, one, therefore, wonders why such businesses are prone to poor management. However, the poor management of the rise and fall of these businesses daily are not of major concern to most of us. This according to Omlekwusi, (1995) is that people tend to sing success and hide failure.

Basically, the aim of any businessman is to maximize profit and achieve success.  However, the achievement of his objectives depends on this managerial skill and the quality of those employed. Madu, Nwaogwugu, and Ohiri (1988) noted that incompetence on the part of entrepreneurs accounts for over 35% of failure in business.

This, therefore, is traceable to their inability to employ the right caliber of people, with relevant experience and personal qualifications.

To underscore this point, Frame (1975), Iwuoha, (1993) and Onvekwusis, (1995) believed that most businesses collapse within a short period as a result of poor management t by entrepreneurs and lack of qualified officer workers.

Since these people lack certain qualifications, they sometimes believe that businesses are only run by capital.

According to Nolan, (1967) and Pophan, (1971), the knowledge of business education makes one not only a good business manager but also a better sales manager. Similarly, Jackson (1975) stressed the need for developing competency in payroll procedures, he believed that any community that has many small businesses needs to have knowledge of accounting (payrolling) in order to survive. Since the majority of those who run small and medium scale businesses are people who are unable to complete their education or those who could not go beyond the JSS 3 and are prepared for self-reliance, it is important that they understand that business education is for business and about business. To what extent the operators of small-scale businesses have the knowledge of business education or education for business is still unknown. This project, therefore, determines the extent to which the operators of small and medium scale businesses are knowledgeable in their areas o operation, examines the factors responsible for this, and suggestions where necessary.

Therefore, Yewande (1991) quoting the Federal Ministry of Industries and others defined a small-scale business as one that has a total capital investment of up to 50 persons.

The World Bank defines it as an enterprise whose total fixed assets (excluding land) push cost of investment does not exceed N10 million in the constant 1998 price index. While the Third National Development plan puts the capital investment of small and medium scale industry at N150,00. Some years ago the Central Bank of Uyo LGA further defines small and medium scale industry/business as one with Annual turnover not exceeding N500,000. It is, therefore, clear that there is no universally acceptable definition of small and medium scale business for the purpose of this project, a working definition of small and medium scale business enterprise will be one with working capital of N100, 000 to N150,000.

Small and medium scale business enterprises have greater flexibilities which allow this survival of economics as compared to the large scale enterprises.

Moreover; the decision-making and renovation process in large-scale enterprises is inhabited by rigid bureaucracy. Therefore, small and medium scale business enterprises development is important and needed by the nation.

The role of the government and support institutions in the development and growth of small and medium-scale business enterprises cannot be over-emphasized. The government’s role in encouraging entrepreneurship is not just limited to providing an economic environment conducive for business and a stable political scene. To stimulate economic growth entrepreneurship, must be able to provide the right combination of political and incentives to attract individuals to become entrepreneurs. Since government resources are limited, it is then the role of the support institutions to fill the gap between the resources needed by entrepreneurs and what the government can provide. This can be in the form of financial assistance or non-financial services to both enterprises and would-be entrepreneurs. To ensure. With the continued effectiveness of the small and medium scale business enterprises, it is imperative that an analysis of this be made from the perspective of the entrepreneurs themselves.  


Despite the widespread economic reforms by the state government, small and medium scale business enterprises, seem to face a variety of constraints owing to the difficulty of absorbing large fixed costs, the absence of economies of scale and scope is key factors of production, improper monitoring mechanisms by the government, and lack of management knowledge.

From the preliminary discussion with some enterprise, the government supporting institutions do not have formal feedback mechanisms to check whether the assistance given to small and medium scale business enterprises are adequate and effective.

 Small and medium scale business enterprises are unable to introduce modern equipment machinery to improve their product due to financial constraints. It seems that access to finance remained a dominant constraint to small and medium scale business enterprises in Uyo LGA, credit pertaining to working capital is of permanent concern to small and medium scale business enterprises.

Lack of managerial know-how places a significant constraint on small and medium scale business enterprise seem to attract most people, they can hardly compete with larger firms.

Association providing a voice for the interest of small and medium scale business enterprises in the policy role compared to those of larger firms.

One major problem in Uyo LGA’s business environment is an adequate power supply. This and other factors are responsible for the problems and low performance of small and medium scale business enterprises and these problems seem to defy all efforts by the government to address them.

The problems over the years have equally kept foreign investors on the run despite Uyo LGA’s efforts to lure them to invest in the country.

It’s difficult to make it in business under this environment “the rate at which power supply is being rationed these days cannot help any businessman. And by so doing, you will discover that the rate of turnover becomes so low that one keeps losing customers at the end of the day. The power supply is nothing to write home about.

The business operation here is being starved to the extreme. At a time like this, the government should put more effort to salvage business operations in this country. Power. Supply has not improved even after the so-called privatization this is killing business       


In the context of the above-mentioned problems, the main purpose of this study is to analyze the factors affecting small and medium-scale business enterprises in Uyo LGA. The following are the specific objectives.  

1.    To identify what the government and support institutions are doing to facilitate and encourage entrepreneurship

2.    To find out whether small-scale business enterprises in Uyo LGA have any association that projects their interest.

3.    To investigate whether lack of managerial know-how has affected small – scale business enterprises Uyo LGA

4.    To find out whether small–scale business enterprises in Uyo LGA actually have access to finance in the area of working capital.

5.    To study the links between the government and non-governmental agencies that support small and medium-scale business enterprises.


The following research question was formulated to guide the study  

(1)    What is the government and support institution doing to facilitate and encourage small–scale business enterprises?

(2)    Does the inability of small and medium scale business enterprises to form an association in Uyo LGA to protect their interest have any effect on their basic operation?

(3)    Does lack the managerial know-how any effect on the managing of small and medium scale business enterprises in Uyo LGA?

(4)     Do small and medium scale business enterprises in Uyo LGA have access to finance in the area of working capital?

(5)    Are there linkages between the government and governmental non- agencies that support small and medium-scale business enterprises?


Small and medium scale business enterprises are believed to be a sure room for the development of an economy like that of Uyo LGA. This study therefore shall be of immense benefits value to the following:

Small and medium scale Business Enterprise

The research project will be a source of assistance to the managers of small and medium scale business enterprises, it will provide a clue to how they could solve their financial and administrative structure.

The Government and Supporting Institution

This research will provide valuable assistance to the government and their supporting institution in the area of suggestion on how to have feedback on the capital they have advanced to the small and medium scale business enterprises.

Future Researchers

The findings of the research will serve as a source of reference to future researchers who may wish to replicate this study.


This project work is restricted to small and medium-scale business enterprises in Uyo LGA. It will bother on government with small and medium scale business enterprise, provision of finance and managerial problems of small and medium scale business enterprise.


    The result of this project will be limited to the willingness of the respondent in filling the questionnaire. Also as some of the small and medium scale business enterprises are illiterate, this project might be hindered because most of the respondents may not be willing to disclose the facts especially when it concern. The area of their finances and control. Also, the research work is limited to time and cost to complete the work.


The researcher wishes to define some important terms used in this study so as to bring about a better understanding o the context in which they are used. These terms and their definitions are as follows:

Small-scale Business: According to the Act of 1953, (in America) provide that a small business concern is “one which is independently and operated and not dominant in its field of operation”.  That Act also authorizes the small business administration, in making a more detailed detonation to use such criteria as a number of employees and sales volume.

Retailing and services - $1 million or less annual sales.

Manufacturing - $ 5 million or less annual sales.

Business Ownership: This refers to the various forms in which a business can be owned such as sole proprietorship, partnership, cooperatives, small business, etc.

Economic Development: Introduction to Business by I.R Onoja and A.B. Epkah (May 2002) in the basis for continuing industrial progress in any organization.

Poverty: This implies not having enough to eat, unfit shelter, high infant mortality rate, low life expectancy, poor environmental conditions, etc.

Entrepreneurship: This is a force that mobilizes other resources to meet current market demand. It is also the ability to create and build something from practically nothing.

Illiterate: A person who has no formal education up to secondary school level although can speak, read and write.

Finance: It is an activity concerning revenue, expenditure, and departmental operation, and another effect on the economy.

Industry: it is an agglomeration of different firms producing similar commodities under separate management.

Assets: This is a valuable property that a person or a firm can sell especially to pay debts.

Resources: This can best be defined as the sources of economic wealth or means of achieving something.

Profit: It is money gained or benefits obtained from an investment.

Gross Domestic Product: Total Product produces within a country in a given period of time.

National Development: This is the transformation of the society from one state of being to another, changing from traditional way to modern method.

Development: This is the structural changes in society and the economy.




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