The study was undertaken to examine the problems and prospects of small and medium scale food processing firms. Oral interview was used while data collected through questionnaires show the effect of capital outlay, expert manpower, environment, infrastructural development, competition and requisite law on small and medium scale food processing firms in Enugu Metropolis. Major findings are that expert manpower, infrastructural development, healthy competition contribute to the development of these firms. There are also correlations between nature of environment, requisite laws and development of small medium scale enterprises.


Title page Certification

ii i



Abstract v

Table of Contentsvi



Background of the Study1

Statement of the Problem4

Objectives of the Study4

Research Questions5

Hypothesis Formulation6

Scope of the Study7

Significance of the Study7

Area and Scope of the Study7

Limitation of the Study8

Definition of Terms9



Theoretical Framework of Approaches to Small

Business Strategy 11

Prevalence of Small Business in Nigeria26

Financing Small Scale Business in Nigeria27

Problems and Challenges of Small Scale Business28

Business Strategy and Planning31

Government Policies on Small Scale Food

Processing Organization 38

Essential of a Business Plan for Small Scales

Enterprises 41

The Key issue that determine the success of small and Medium Small Scale Food Processing

Firms in Enugu Metropolis 45

Summary of Review of Related Literature58



Research Design66

Population of the Study66

Sample Size Determination and Distribution66

Method of Administration of Research Instrument67




Hypotheses Testing74



Summary of Findings79



Bibliography 85

Questionnaire 90



Business organizations from sole proprietor type to the large multinational conglomerate firms are simply classified into three broad categories. The categories are small scale enterprise (SSE), medium scale enterprise (MSE) and large scale enterprise.

The following definitions of SSE were given by Ayozie (2006;5):

⦁ In Nigeria, the Third National Development plan defined a small scale business as a manufacturing establishment employing less than ten people, or whose investment in machinery and equipment does not exceed six hundred thousand naira.

⦁ The Central Bank of Nigeria in  its  credit  guidelines, classified small scale business as these businesses with an annual income/asset of less than half a million naira.

⦁ The Federal Government Small Scale Industry Development Plan of 1980 defined a small scale  business  in  Nigeria  as any manufacturing process or service industry, with a

capital not exceeding one hundred and fifty naira in manufacturing and equipment.

One of the largest small scale enterprises in Nigeria and in most developing countries is in food processing. It comes in various forms such as: confectionaries, cookery and bakery firms. Each firm in this category is known to produce fast-food. According to Nweze (2006:61), food processing firms are the highest employers of labour in Nigeria. This is due to the fact that it takes small capital to begin if it  is to be started in a  small  way. There are some that take many billions of naira to start. The difference is in the quality of food processed. So, small and medium scale firms contribute to the growth of the Nation much higher than other industries and the most interesting thing is that majority of the operators are in the small and medium scale  categories. Ordinarily, one should have expected much government attention to be given to encourage them.

Nigeria, like every other country, clamour for quick development. Development differs from country to country depending mostly on who champions the strategies of development. According to

Nwanbugwu (2004:89), development is change from indices  of riches. He  notes that  poverty  is  a  relative concept from individual to individual or from a  community  to  community  or  from country to country. Indices of poverty have been articulated by Tunji (2006:113) as including: low calories  intake,  low  per  capital income, poor mode of dressing (no good clothings to  put on),  no good shelter to  live  in,  and  no  resources  to  obtain  sound education or  enter  into  vibrant  business.  He  summarizes  by saying that indices for riches are just the opposite. To Anderson (2007:69), development is growth plus change. Growth has  to do with living the world of the poor  as  exemplified  by  the  indices listed above to the distributive tendency. Anderson argues further that distributive tendency is the tendency  to  distribute  the resources to all the subjects of government on fairness basis.  He notes  that  a  situation  where  riches  are  concentrated  on  few hands does not make for growth.  Peterside  (2007:110)  observes that no country develops without  greater  regard  paid  to  small- scale enterprises. He notes that the  mainstay  of  advanced economies, especially American, is private sector. Private sector is characterized by small capital out lay relative to  government business or multinationals, less number of people being

employed, small market share, and small  financial  outlay  to invest in innovative ideas as well as lack of  unionized  labour force. Medium scale enterprises are those slightly above the small-scale enterprises but are yet small in relation to multinationals. Developing economies can only develop by paying unreserved attention to small and medium scale enterprises, argues Peterside.


Much as every economy clamours to develop its  potentials,  many still wallow in poverty  despite enough resources.  These resources are untapped. Government everywhere clamours for the strengthening of the private sector which is the main drive of the economy. However, this  is  often  checkmated  by  capital  outlay, poor infrastructure development,  few  expert  manpower,  un- relaxed  tax  laws,  unhealthy  competition  as  well   as entrepreneurial skill. These, to a very  large  extent,  limit  the progress of small and medium scale enterprises in Nigeria.


The purpose of the study is to appraise the performance of small and medium scale enterprises to the economic development of Nigeria. Particularly these objectives are set out for the study.

⦁ To assess the extent capital outlay limits the development of food processing SSEs/MSEs performance in Nigeria.

⦁ To address the issue of the  impact  of  expert  manpower  on the development of food processing SSEs/MSEs in Nigeria.

⦁ To evaluate the nature of environment on food processing SSEs/MSEs in Nigeria.

⦁ To discover how requisite laws affect the development of food processing SSEs/MSEs in Nigeria.

⦁ To find out how unhealthy competition limits the development food processing SSEs/MSEs in Nigeria.

⦁ To study the impact of infrastructure on development of food processing SSEs/MSEs in Nigeria.


The following research questions are raised for the study:

⦁ Which of SSEs and MSEs does capital outlay limit their development more?

⦁ How does expert manpower affect SSEs/MSEs food processing firms in Enugu Metropolis?

⦁ How does environment affect  SSEs/MSEs  food  processing firms in Enugu Metropolis?

⦁ What are the requisite laws affecting SSEs/MSEs food processing firms in Enugu Metropolis?

⦁ How does healthy competition affect SSEs/MSEs food processing firms in Enugu Metropolis?

⦁ What is the impact of infrastructural development on SSEs/MSEs food processing firms in Enugu Metropolis?


The study shall formulate the following hypotheses:

H1 Capital outlay limits the development of food processing SSEs more than MSEs food processing.

H2: There is relationship between infrastructural development and performance of food processing SSEs/MSEs.

H3: Expert manpower contributes to the development of food processing SSEs/MSEs more than the entrepreneurs.

H4: There is relation between the nature of environment and development food processing SSEs/MSEs in Nigeria.

H5: There is correlation between laws and development of food processing SSEs/MSEs in Nigeria.

H6: There is difference in the contributions of food processing SSEs and MSEs food processing due to healthy competition.


The  study  is  an  empirical  study  on  Nigeria’s  economy.  Relevant data will be sourced from many places across the  nation. However, five (5) SSEs and five (5) MSEs will be selected for a closer study in Enugu Metropolis. They are Kumac, King David, County Fresh, New Berries  and  Fillin  Station.  Others  are Bubbles, Genesis, Chitis, Chicken Republic and Crunchies.


The study when completed shall benefit several people. Management of SSEs/MSEs shall discover the usefulness of the recommendations given on their respective business. They shall find out that the recommendations shall help them  in  dealing with the public and government agencies as well as customer and international community. The people shall discover that this research work shall help them in relating with companies very well as well as in starting and growing  their  respective businesses.


The study is carried out in Enugu Metropolis with particular attention to food processing. Many of them bake while others prepare food (including table water) for customers. Few are medium scale while majority are small scale. This  study  selects ten small and medium scale enterprises in  Enugu  metropolis. They   are   Country   Fresh,   New   Berries,   King   David’s,   Kumac, Chicken  Republic,  Bubbles,  Genesis,  Crunchies,  Fillin  Station and Chitis. The respondents to the questionnaire are: manager, supervisors and clerks.


To get data from the respondents was not quite easy as many of them are scattered round the metropolis. Some raised questions doubting the genuiness of the research and the academic nature. With persistence and explanations, they were convinced  to divulge relevant information pertaining to the study. So  much time was spent that it affected the time of the completion of this research work.


Capitalization: - The art of empowering firm financially to boost productivity.

Employer  Rating:  -  The  art  by  which  employer’s  performance  on job is evaluated or judged

Customers’ Satisfaction: - The art of fulfilling the demand of customers on quality of the product.

Small Scale Enterprise: -A firm with fixed investment that is not more than N2, 000,000 according to Ministry of Industry and Commerce (Ayozie 2006;02)


Nweze Lawrence (2006) Food Processing Firms in Nigeria

Enugu: Snaap Press.

Nwanbugwu Jonah (2004) Small and Medium Scale Enterprises in Nigeria Aba: Ngwaland Publishers.

Tunji Olatunji (2006) Calorie Intake Lagos: Western Avenue Publishers.

Anderson A. (2007) Growth and Development London: Chapman & Hall Inc.

Peterside Jones (2007) Small Scale Industrial Growth in Nigeria Warri: Ethiope Publishers.

Ayozie D. (2006) The Role of Small Scale Industry in National Development in Nigeria https//www.scrid,.com/doc/23665278/The- Role-of-Small-Scale-Industry-in-Nigeria



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