ABSTRACT Many economists developed and developing have come to realize the value of small scale industries, they are seen to be characterized by Dynamism Witty innovation, efficiency and their small size allows faster decision making process. This study seeks to find out the effect of small industries on Nigerian economy, the specific objectives are to ascertain the relationship between the product of small scale industries and the Gross Domestic Product of Nigeria and the effect of import restriction and operation of small scale industries, the hypothesis and research questions are formulated in line with the objectives of the study the validity and reliability of the instrument were tested. The statistical test was carried out at 0.05 level of significance, The findings are that product of small-scale industries significantly contribute to the Gross Domestic Product of Nigerian Operations of small scale industries or significantly affected by the import restriction based on the findings of this research, the study recommends that Government should review the nations and map out strategies to prevent the small scale entrepreneurs from total collapse, managers of small scale should ensure efficient planning at the idea stage to minimize future programs that may occur.

CHAPTER ONE: INTRODUCTION 1.1     BACKGROUND OF STUDY The importance of small scale business to Nigeria can only be fully appreciated when one realizes the dominant roles it plays in our economic development. (Nwana 1995) The small scale enterprises are the mainstay of the Nigerian economy. Providing almost seventy percent of the employment to able men and women in the society. Before the introduction of Nigerian enterprises promotion decree of 1972, most business both small and big were managed by foreign experts, the role of fund to existing and newly established business organization cannot be over emphasized because it serves as a pivot upon which the success of any organization rotates. In order to provide adequate fund, the small and medium scale industries’ Equity Investment scheme requires all commercial and merchant banks o commit 10 percent of their annual pre—tax profit to the funding of the equity investment in small and medium scale industries (The Guardian September 15, 2004 p. 50) A business whether small or big, simple or complex, private or public is created to provide competitive prices. Business in Nigeria has been classified as small, medium and large. In both the developed and developing countries, the government is turning to small industries as a means of economic development and a veritable means of solving problems. It is also a seedbed of innovations, inventions and employment. Presently in Nigeria, assist in promoting the growth of the country’s economy, hence all the levels of government at different times have policies which promote the growth and sustenance of SMEs. Small scale industry orientation is part of the Nigerian history. Evidence abound in the communities of what successes our great grand parents, made of their respective trading concerns, yam barns, cottage industries, and the likes. The secret behind the success of a self reliant strategy does not lie in any particular political philosophy, so much as the peoples attitude to enterprise and in the right incentive adequate enough to make risk worthy business a necessity for the nation. There had been many policy actions by the government, governmental agencies and the private sector to promote SMEs in Nigeria.

L2 STATEMENT OF THE PROBLEM Small scale industries have been facing plethora of financial problems that emanate from the absence of collateral security, high rate of business failure, low productivity, Poor management and effect of activities of small scale industries have not been felt by these drawbacks, the Nigerian government has been using the annual budgets and specialized agencies such as the small and medium enterprises development agency of Nigeria (SMEDAN). The product of these small scale industries have not even contributed to the growth of the Gross Domestic Product of the country. (OLUBI 1998) The import restriction of the federal government have not affected the operations of these industries in line with the above, the research seeks to fill in this gap by assessing the effects of the small scale industries on the Nigerian economy. 1.3     OBJECTIVES OF STUDY The general objective of the study is to assess the effect of small scale industries on the Nigerian economy. The specific objectives are: 1)      To ascertain if there is any significant relationship between small industries and the Gross Domestic Product of Nigeria. 2)      To find out the effects of the import restriction on the operations of small scale enterprises in Nigeria.

1.4     RESEARCH QUESTIONS The following research questions are used as guide to effective carrying out of the research. 1.       What is the significant relationship between small scale industries and the Gross Domestic Product of Nigeria. 2.       To what extent do import restriction of the federal Government affected the operations of small scale industries.