IMPACT OF SMALL-SCALE ENTERPRISES IN THE ECONOMIC DEVELOPMENT OF ADAMAWA STATE

IMPACT OF SMALL-SCALE ENTERPRISES IN THE ECONOMIC DEVELOPMENT OF ADAMAWA STATE

CHAPTER ONE:

INTRODUCTION

1.1     Background of the Study

The growth of the economy of a country depends on various economic variables, which they are created through socio-political situation of a country. The contribution of the various economy units to the main stream of the economy brings about growth. Growth in economy involves increasing the size of output of an economy. Small scale enterprise , most especially in Africa are the main economic agents that provide good and service for meeting the need of and aspiration of the people. The importance of small scale enterprise to the industrial sector cannot be over emphasis.

          The small scale enterprise solve the problem of industrialization, tends to propel growth and quacking the achievement of structural transformation and diversification of economy (Adekunle (2002). It is also believed that without the expansion of export neither foreign aids nor import substitute can be seen as a final solution to economic development even after taken into consideration the problem of foreign and import substitute. Considering the vital role of small scale enterprises are playing in terms of economic development in less develop countries like creation of job opportunities, availability of consumer sovereignty ends to which tends to promote general welfare of people in less develop countries (including Nigeria), establishing of the small scale enterprises should be encourage so that they could constitute significantly to stimulating and developing a broad base culture to the state. The important characteristics of all developing countries are their labour intensive nature, Bruton (2000). Their impact will also mitigate rural-urban migration; they also have inability to respond to changing demand because of low capital intensive which allow product to be change at a relating low interval. Small scale enterprises aid the promotion of effective resources utilization in the economy.

Substantial development can only be achieved in Nigeria if the socio-economic problems such as unemployment, immigration, religious and tribal crisis corruption, etc, are properly addressed. Small scale enterprises are part of the tools for addressing these problems.

The economy of the advanced nations started from the establishment of small scale enterprises that were managed by entrepreneurs. More so, they attained levels of industrialization and were aided by their nation’s sound economic policies and social development programmers’. As argued by Graham (1999), small business enterprises constituted a large part of many economies of the world, including those of developed and advanced nations, numbering up to half to two- third of all business all over the world Tuleja, (2001). Thus, many managerial practices, policies, strategies and government interventions have been put in place to encourage the establishment, survival and growth of various types of small — scale enterprises in many economies of the world.

In Nigeria, small — scale enterprises account for substantial part of the total industrial employment and production in Nigeria business concerns. In the same vein, small — scale enterprises generates the industrial wealth of Nigerian in addition to being a major agent in the economic, technological, social and political growth and development of Nigeria not minding the presence of multinational and other large firms in Nigeria, such as shell, Mobil. NNPC, NITEL, PHCN among others Osuagwu (2001).

As small business entrepreneurship is concerned with business innovation and exploitation of business opportunities, in addition to the efficient and effective running of business by individuals, its relevance to today’s economy cannot be overstated. The Nigeria economy, undoubtedly, is characterized by many economic ills among which are high levels of unemployment, low standard of living, high rate of crime etc. small — scale enterprises assist in reducing the level of all these problems and disorder in Nigeria. The aftermath of the creation of jobs is also reducing the dependence of government to provide everybody with jobs. Furthermore, this creation of jobs in Nigerian economy by entrepreneurs would, to a large extend, reduce government expenditure, improve the standard of living of Nigerian, reduce social ills in the society and thus assist in creating a balanced society and economy.

It’s as a result of role played by small-scale enterprises that motivate government to come out with many economic policies aimed at moving the country from its present position as a consuming and import oriented nation country to a nation of self-reliance and industrialization among which was the indigenization programmed of 1972 known as the Nigerian Enterprises Promotion Degree enacted during the regime of General Yakubu Gowon (rtd). Other include General OlusegunObasanjo’s phase two of the indigenization programmed that came out with anti- inflation decision on Operation Feed the Nation (OFN), AlhajiShehuShagari’s austerity measure and economic policy of reformation, General Ibrahim Babangida’s structural adjournment program me (SAP) and General SaniAbacha’s vision 2010. All of these were geared towards socio-economic development of the country.

Adamawa state with a population of over 2, 102,053 people (1991 census), with 21 local government areas, abandoned natural and human resources, has several small and medium enterprises operating all over the state especially in the metropolitan of Yola, the state capital. Therefore, this research study tries to examine the contribution of such enterprises operating in the furniture— making industry in enhancing the socioeconomic development of Adamawa state by taking some selected organizations conducting their activities along AtikuAbubakar road in the metropolitan area of Jimeta — Yola.

1.2     Statement of Research Problem

Small —scale enterprises constitute the bedrock of the industrialization of any economic for any country. In Nigeria, small-scale enterprises, which constitute the majority of the enterprises, have been contributing immensely to the socio-economic development and growth of the country. They provide employment to a lot of people, provide revenue to the government, contribute in reducing the rural-urban drift and hence contribute immensely to the standard of living and well-being of the people in the society. However, this type of business are bedeviled by a lot of problems ranging from ineffective management, poor capital base, low sale, competition, personal use of business funds, over investment in fixed asset, poor location, poor record keeping system and lack of enough government support to carry out their activities. That may explain why they cannot discharge their role effectively and efficiently to the society and economy of the country.

In Adamawa state, just like other states, the small- scale enterprises are facing the above named problems. In furniture- making industry, for instance, most of them cannot operate in large scale because of inadequate capital at their disposal and lack of managerial and technical know- how. Generally, therefore, this study attempts to look at how effective and efficient these enterprises have been in impacting positively on the socio- economic development and growth of the society and economy. Specifically the research study attempt to raise the following questions with a view to answering them in the course of the study.

I.       Could it be due to of management staff of handle the operations of such enterprises?

ii.       Could it be due to inadequate governmental support in running their activities?

1.3     Objective of the Study

Generally, the objective of the study is to assess the contribution of small- scale enterprises on the socio- economic well- being of the people of Adamawa state, taking a case study of furniture making enterprises. It has been established all over the world that small scale businesses employ the highest number of workforce found in any nation, be it developed or a developing nation. It is in the light of the above that the study will specifically focus on achieving the following objectives.

i.        Trying to find out how effective and efficient are these small- scale enterprises in furniture making enterprises in Adamawa state is impacting positively on the social and economic life of the people

ii.       Examining the factors affecting the role of these small- scale enterprises and trying to find way at making them better.

iii.      Analyzing the internal and external environmental factors within the furniture-making enterprises business environment, with a view to seeing how they can be manipulated to their corporate advantage.

1.4     Research Hypothesis

The following are research hypothesis formulated to ascertain their validity.

Hypothesis i

Ho- The small-scale business in the furniture-making enterprises of Adamawa State does not impact positively on the socio-economic development of the society.

Ha: The small scale enterprises in the furniture- making enterprises of Adamawa State do impact positively on the socio- economic development of the society.

Hypothesis ii

Ho: the small scale business does not address the problem of unemployment in the furniture making enterprises in Adamawa state.

Ha: the small scale businesses do address the problem of unemployment in the furniture making enterprises of Adamawa state.

Hypothesis iii

Ho: Lack of government adequate support hinder small scale enterprises in the furniture making enterprises from operating at a fill output capacity toward socio- economic development of the society.

Ha: Lack of government adequate support do not hinder small — scale enterprises from operating at a full output capacity toward socioeconomic development of the society.

1.5     Significance of the Study

The study is on the small — scale enterprises which constitute the bedrock for industrialization in any economy. This is true for Nigeria as elsewhere because they constitute the major industrial sector of the country. Moreover, the fact that the study is on furniture- making industry contribute greatly to the physical growth and development of Adamawa state in particular (where the study is undertaken) at the country in general. In addition, the study may be of benefit to the entrepreneurs, workers and management at the furniture- making enterprises in particular and similar other business in general. Lastly, the study will no doubt contribute to knowledge for students and scholars who are interested in this area.

1.6     Scope of the Study

This study is conducted on small — scale enterprises, particularly on the furniture- making industry along AtikuAbubakar road of Yola metropolitan in Adamawa state. There are seven (7) furniture making enterprises that were selected, they include: Stainless furniture, Interwood furniture enterprises, Fame furniture enterprises, Diamond furniture, Living stone furniture, Obi furniture and fittings, and Asobi furniture enterprises.

1.7     Limitations of the Study

For everything one does in life, there must be some limitations of which this study is not an exception. The problems faced in the course of the research include:

i).      Time factor: The limited time given by the department also affects the research because, necessary information required for the smooth take of the project could not be collected as planned.

ii)      Accessibility of the research data: Due to unwillingness of providing accurate information by those concerned and also improper record keeping by some of the owners of the enterprises. The researcher had the problem of gathering enough data for the project.

iii)     Financial constraint: The researcher was not in possession of enough resources to carry out the study widely.

1.8    Definitions of key terms

The following terms are used in the write-up are hereby define

for clarity sake.

     i.        Small scale enterprises (SSE): It has no universal acceptable definition, it varies among countries depending on their economic size, and the maximum number of the people to be employed also varies among countries. Thus, there are characteristic that are basically used to define small scale enterprises, which include:

o   Independent management

o   Capital structure

o   Operated within a local market

o   Small size

o   Few numbers of employees

   ii.        Entrepreneurship: Management and economic experts defined entrepreneurship as the willingness and ability of the individual to seek out investment opportunity in and able to establish and run the enterprises successfully based on the identified opportunities.

  iii.        Enterprises: This refers to an organization, the purpose which is to perform certain commercial activities aimed at producing, processing and providing something to the market for profit.

  iv.        Furniture making enterprises: this subsection of small scale enterprises that are engaged in movable items/objects in a room or patio suitable for living or working e.g. Chair, desk, or cabinets with the aim of making profit.

   v.        Small scale industrial credit scheme (SSICS): It was establish in 1971 as revolving grant by federal and state government to assist in meeting the credit needs of small scale enterprises on relatively more liberal conditions compare to commercial banks.

  vi.        Structural adjustment programme (SAP): A programme implemented by general Babangida on economy, recommended to countries with balance of payment problems. The aim of the programme was to open up an economy and use of market forces in determining the prices, factors of production and their efficient allocation.