CHAPTER ONE

INTRODUCTION

1.1   Background of the Study 

The role of the small and medium enterprises (SME) as a catalyst for economic growth and development has been well documented in the economic literature and recognized in most countries.  For example, in many of the newly industrialized nations, more than Ninety eight (98) percent of all industrial enterprises belong to the small and medium enterprises sector and account for the large mass of the labour force.

        Small and medium enterprises enjoyed competitive advantage over large enterprises in serving dispersed local market.  Knowledge of this fact, programmes of assistance especially in the area of finance extension and advisory services, as well as provision of infrastructure have been designed by the Nigerian government for the development of small and medium enterprises.

        Specially, successive government in Nigeria have in the last three decades shown interest in ensuring satisfactory financing for small and medium enterprises (SMES), by establishing various schemes and specialized financial institution to provide suitable financial to the sub-sector.

        The role of small and medium enterprises in fostering economic development has also been well activated in different forms of this nature.  The specify attention on them is based on their expected impact and potential contribution on board and diversified production base as well as their accelerative effective in achieving macro objectives pertaining to full employment, income distribution and the development of local technology.  They are particularly most conducive for diffusion of management skills and stimulation of indigenous entrepreneurship overtime.

        Effective role in promoting the growth of small and medium scale enterprises in recognizing the flexible and adaptive nature as well as the economic development in believing that a dynamic and growing small and medium manufacture sub-sector can control significantly to the implementation of a wide various policies to encourage their proliferated and make them credible engine grown and development.

        The basic objective of growth and development policies as contained in the monetary policies are fiscal policy measures to improve financing and other supportive service to small and medium scale enterprises by expanding and improving their access to credit and infrastructural facilities reducing their production costs, boosting their profitability, enhancing by making their products competitive in the export market.  This seminar aims at examining various government policies and their effects on the survival and growth of small and medium scale enterprises. It is important for us to understand and appreciates what constitutes of small or medium scale survival, growth and proliferation for which government policies have been formulated to address.

1.2   Statement of Problem

An important feature associated with small and medium scale industries, which is particularly relevant to our economic problem, is that these industries characteristically depend less on imported inputs relatively to their local capital investment than large firm.

        In view of the economic situation and alarming rate of the unemployment in society, it is important to determine the effective of government policies on small and medium enterprises have on our economic development and their impact on the society at large.

        The study of intents to examine constraints encountered by small and medium scale industries.  Hence, the federal government continues to lay emphasis on self-reliance industrialization through the encouragement of small and medium scale industrial development. New lending schemes and credit institution at both local and federal levels has been establishing to encourage the development.

        They include the national economic reconstruction fund (NERFUND), the national, Directorate of Community Bank and other Development Bank. 

        Inspite of these measures, small and medium scale industries in all parts of the federation has continued to face high rate of business failures because of their reliance of foreign raw material imputs.

        Small and medium scale industries are the pivoted on then which any developing economy like Nigeria stands.

        They creates more jobs per units of investment then large scale ones the there is a problem as to whether their poor performance in as a result of dependence of foreign raw material inputs.  This problem raised this question, will the establishment of small and medium scale raw material processing industries such as palm oil processing plant help to boost the development of small and medium scale enterprises in Nsukka zone in particular and the country in general it is the answer to this question that is focus in this research.

1.3   Objective of the Study

The objectives of this study are as follows:

1. To find out the commercial banks that assist small and medium scale enterprises as stipulated by the government.
2. To find out if government policies affect the production of palm oil at Nsukka.
3. To determine the attitude of people towards innovation and how it affect the source of raw material for production.
4. To determine if the small scale industries can produce at a large commercial quantity.
5. To make general and specific recommendation based on the finding of the study.

1.4   Research Questions

In order to facilitate the study, the following basic questions will be reflected in the interview.

1. Can government polices affect the production of palm oil at Nsukka?
2. Can the attitude of  Nsukka people toward innovation affect the source of raw material for production?
3. Does SABGO palm oil processing industries produce palm oil at commercial quantity.
4. Have the industry ever encountered any environmental constraints?
5. Do the commercial banks in the area assist small and medium scale enterprises as stipulated by the government?
6. Will there be adequate finance and manpower around the Nsukka area to help raise the industry production capacities.

1.5   Hypothesis Formulation

H0:   Commercial banks in the area do not assist regulatory as stipulated by the government as regards to small and medium scale industries.

H1:   Commercial banks in the area assist regularly as stipulated by the government as regards to small and medium scale industries.

H0:   There is no enough manpower around the area of help raise the industry’s production capacity.

H2:   There is enough manpower around the area of help raise the industry’s production capacity.

1.6   Significance of the Study

In realization of the advantages of promoting small and medium scale enterprises the federal government has countries to play pioneering and active roles since 1970’s in stimulating small and medium scale enterprises .

Its policy objectives in this context could be summarized as:

1. Provision of greater employment opportunities
2. Industrial development and natural integration through industrial dispense
3. Increased production of manufactures exports
4. The development of indigenous technology.

The government has according employed combination of monetary and fiscal measures as well as industrial incentive to enhance the achievement of the desired goals.

1.7   Scope of the Study

This study aims at examining various government policies and their effects on the survival and growth of small and medium scale enterprises in Nigeria.

        It is important to understand and appreciate what constitute a small and medium scale enterprises, what factors militates against their survivals, growth and proliferation for which government policies have been formulated to address.

        It also examines how government policies can help small business, owners in Nigeria, with reference to SABGO oil Enugu.

1.8   Limitations of the Study

A research in this nature cannot be carried out without some constraints and possible witcher, which made the work highly demanding and difficult.

        It was therefore common that the researcher found conducting of this research on uphill task.

        As any other researchers in the society such as ours, lot of problems was encountered in the process of conducting this research.

        Some of these limitations include the finance required to carryout the research project that was really enormous some of these limitations include the finance required to carryout the research project that was really enormous.

        This was as a result of high cost of producing the questionnaires, typing and binding its and of course transportation expenses.  The researcher could have been extended but fro time and huge financial requirement involved in running about for the required information, the researcher decided to settle for one location only.

        The researcher also had problems in getting literature material treated on topics that are related.

        However, inspite of the numerous constraints encountered in the course of this study the researcher believed that on appreciable work was finally carried out.

1.9   Definitions of Terms

1.     Policy: Policy is the guideline laid down in general or specific terms to make a company or other organization to reach the long range target or targets bet by the objectives.

2.   Fiscal Policy: This is a macro-economic tools which involves the used of government spending and taxes in guiding the nature economy to achieve pre-determined economic goals.

3.   Monetary Policy: This is the attempt to regulate the economy by regulating the supply of monetary and terms availability of credit.

4.   Finance: This is the activity of managing money, especially by the government or commercial organization.

5.   Budget: This is financial statement items and amount of expected expenditure are source amount of expected revenue of economic unit over a period ahead, usually one year.