PROBLEMS AND PROSPECTS OF SMALL AND MEDIUM SCALE FOOD PROCESSING ORGANIZATIONS (A STUDY OF SELECTED FIRMS IN ENUGU METROPOLIS)
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.
TABLE OF CONTENTS
Title page Certification
Table of Contentsvi
Background of the Study1
Statement of the Problem4
Objectives of the Study4
Scope of the Study7
Significance of the Study7
Area and Scope of the Study7
Limitation of the Study8
Definition of Terms9
REVIEW OF RELATED LITERATURE
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
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 DESIGN AND METHODOLOGY
Population of the Study66
Sample Size Determination and Distribution66
Method of Administration of Research Instrument67
DATA ANALYSIS AND PRESENTATION
SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATION
Summary of Findings79
CHAPTER ONE INTRODUCTION
BACKGROUND OF THE STUDY
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.
STATEMENT OF THE PROBLEM
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.
OBJECTIVES OF THE STUDY
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.
SCOPE OF THE STUDY
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.
SIGNIFICANCE OF THE STUDY
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.
AREA AND SCOPE OF THE STUDY
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.
LIMITATIONS OF THE STUDY
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.
DEFINITION OF TERMS
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.