entrprenuership a tools for economic developmed

CHAPTER ONE

1. Introduction

In the words of Levitsky (1996) and Zecchini (1997) small enterprise development is portrayed as one of the most successful economic development trajectories in the post- communist economies of central and Eastern Europe. According to Milford (2000), while quoting from World bank (2000), “enormous store has been placed on its presumed capacity to address extreme poverty, create desperately needed jobs, halt the ongoing de-industrialization process and curtail any further ethnic unrest associated with bleak economic prospects and social collapse”.
Nigeria seeks to be counted among the world’s 20 largest economies by 2020 and this to many is not practical. The goal of this research work is to determine using primary and secondary data, the role of small and medium scale enterprises (SMEs) so far in the economic growth of Nigeria. This would enable one to make deductions and suggestions on how to make use of SMEs at the local scale to engender economic development.

What constitute a small and medium scale enterprise varies especially from country to country. For example, according to the newly enacted Indian Micro, Small and Medium Enterprises Development Act 2006, enterprises are classified into Micro, Small and Medium according to the following criteria:

Type of enterprise
Engaged in manufacture or production of goods
Engaged in providing or rendering of services

Investment in plant and
Machinery
Investment in equipment
Micro enterprise
Does not exceed 25 Lakh rupees
Does not exceed 10 Lakh
Rupees
Small enterprise
More than 25 Lakh rupees, but does not exceed 5 Crore rupees
More than 10 Lakh rupees, but does not exceed 2 Crore rupees
Medium enterprise
More than 5 Crore rupees but does not exceed 10 Crore rupees
More than 2 Crore rupees but does not exceed 5 Crore rupees
Table 1: The Indian working group on science and technology for Small- and medium-scale enterprises, 2007-2011

In Taiwan, enterprises in the manufacturing, construction and mining and quarrying sectors that have paid-in capital of less than NT$80 million or fewer than 200 regular employees are classed as SMEs. For other industries, those enterprises that had annual operating revenue of less than NT$100 million in the previous year or that have fewer than 50 regular employees are classed as SMEs (White paper on SMEs in Taiwan, 2008).
In the United States of America, enterprises in the manufacturing sectors with fewer than 500 regular employees or wholesaling and retailing sectors with fewer than 100 regular employees and an average annual operating revenue of less than US$6 million are classified as SMEs. For the services and construction sector, they may have an average annual income of less than US$6 million and less than US$28.5 million respectively to be classified as SMEs (White paper on SMEs in Taiwan, 2007). In the United Kingdom the classification is based on staff strength. They classify businesses with less than 250 regular employees as SMEs (UK: Department of Trade and Industry)

1.1 Statement of the problem

Over the years, having worked for different successful companies in Nigeria which are considered small players in the industry, I have developed a keen interest in understanding how these small businesses actually affect our economy. The growth of SMEs have been said to combine the strategies of poverty alleviation and industrialization into a unique package that is beneficial not only to entrepreneurs but to the country at large.
Therefore SME can be seen as a tool for both national development and personal growth. As a person who would love to become an entrepreneur in future, I believe that the knowledge gained from this research would not only help me better understand the status of SMEs in Nigeria but would also equip me in strategizing when I intend to start up.

1.2 Aims and Objective of the Study

This research intends to validate the link between the monetary value of SME output and economic growth in the Nigeria context. The statistical definition of SMEs varies by country, and is usually based on the number of employees, capital, or the value of assets and sales volume (Kanamori et al., 2006). According to Schaper (2000), SMEs account for over 95% of private sector firms in most industrialized economies. The importance of SMEs in driving economic growth is again emphasized in the case of communist East and Central European countries that allowed limited forms of officially-sanctioned SME development as a way of ameliorating poor economic performance and lifting living standards (Patterson, 1993). According to Rowen et al., (1998) the rapidity of industrial development success achieved in the last thirty years in East Asian economies have been staggering and this is attributed to SMEs.
This may be the same in developing countries of Africa, such as Nigeria but the degree of impact on economic growth needs to be properly documented and investigated using local case studies. This study seeks to gather data from all relevant sources on the extent to which SMEs have affects the Nigerian economy. The core will be investigating the impact of SME in Nigeria’s economic growth. The research outcome may either validate it as a viable economic tool in the Nigerian circumstance or nullify the belief that it drives the country’s economic growth. Information gathered from primary sources will answer questions on the size of typical SMEs, ownership patterns, approximated value of assets as well as level of assimilation of information technology.
In Nigeria, Kaduna is considered the commercial nerve centre of the north because of its strategic location, peculiar demographics and contribution to the national GDP. Kaduna North local Government is located at the heart of Kaduna metropolis. Hence the choice was made to use it as a location for the present study. 1.3 Research Question

This study based on the Statement of problem would investigate the answers for the following questions.
1. Has the presence of SME brought economic growth and infrastructural development to Kaduna North local Government community?

2. Is doing business at SME level profitable in Kaduna North local Government community?
3. Are SMEs significant employers of labor in this community?
4. Is the Profitability of SME business in this community independent of the nature of goods and services on sale?

5. Has the profitability of small businesses in Kaduna North led to increased presence of banks and financial institutions and subsequent increase in SME loans and incentives by the Banks?

6. Is the presence of Kaduna North directly linked with increased number of IT based business in the Kaduna North community?

7. Is there need for the government to encourage and develop more opportunities for SME level business elsewhere in Kaduna State?

8. Do my findings support the existing theory in the field?

1.4 Significance of the Study
The findings of this research work are significant for several reasons. Most importantly, this research work will throw more light on the issue of small scale and medium term enterprise as a tool for Nigerian economy Development. The result of this study will help consultants/researchers and policy operators to understand the role Small Scale and medium term enterprise played in the development of the economy and make informed business decisions. The result of this study can help entrepreneurs who are seeking information on how to handle their business and environmental challenges. It can also help government in policy formulation on women SMEs development and contribute positively to the body of knowledge. It will create an opportunity for further research on SMEs. Also in Nigeria, where entrepreneurship development is still lacking solid bearing, the outcome will be capable of restructuring policies, curricula and institutional based programmes, particularly, as relating to re-design of skills and strategies for SMEs business.
1.5 Scope of the Study
This study is targeted to assess the contribution of Small Scale and Medium term enterprise to the economic Development of Kaduna North Local Government Community. Six Communities in the Local government have been selected as the scope of this study, these are, Magajin Gari, Ungwar Rimi, Tudun-wada, Kurmin Mashi, Kawo and Badarawa. Also, among all sectors of the Nigerian economy (such as agriculture, manufacturing, service, oil and gas, trade, finance, insurance and others) this study is restricted to four sectors namely: agricultural, manufacturing, service and trade sectors. The choice of these sectors is based on the fact that the works of Soetan (1997); Mistick (1997); Jaimie (1998); COWAD (2004); GEM (2005) are of the opinion that most Entrepreneurs are often found in these sectors.

1.6 Limitation of the Study
In the course of carrying out this study, the researcher encountered some challenges. These include unavailability of sufficient finance, inability to access the required materials for the completion of the work, the time lag in meeting up with the dead line for submission of the work and others. Nonetheless, such challenges were not allowed to diminish the enthusiasm level in accomplishing stated objectives and hypothesis.

1.7 Delimitation of the Study
This sub-section of the study gives information on both the empirical and theoretical
Statements that show the point of departure and areas that could not be focused upon in the research work in terms of definitions, concepts, principles and assumptions. The delimitations of the study include the following;
(a) The selection of the sample size of the study was based on the population established from the registered names of SMEs obtained from Nigerian Associaion of Chambers of Commerce, Industry, Mines and Agriculture, Nigerian Association of Small and Medium Enterprises, Nigerian Association of Small Scale Industrialists, Manufacturing Association of Nigeria (MAN), Nigerian Association of Women Entrepreneurs (NAWE). There are other institutions that might have list of Nigeria SMEs which was not used for this study.
(b) The use of Minimum Returned Sample Size developed by Bartlett, Kotrilik and Higgins (2001) for determining the sample size of this work. Using another method for the sample size determination may offer a different sample size.
(c) The study could not have exhausted the definition of SMEs, entrepreneur, motivation and other concepts available in the body of entrepreneurial knowledge. (e) SMEs entrepreneurship is a complex phenomenon and can be found in a variety of settings and situations. The use of one or two measurements may not capture the entrepreneurial landscape of a country.

1.8 Definitions of Terms
SMEs: Small and medium scale enterprise
Entrepreneurship: Entrepreneurship is a process of doing something new and/or something different for the purpose of creating wealth for individuals or adding value to the society (Kao, 1993).
Entrepreneur: An entrepreneur is a person who undertakes a wealth creating and value adding process, through incubating ideas, combining resources and making things happen.
Entrepreneurism: Entrepreneurism is an ideology based on individual needs to create and/or to innovate and transform creativity and innovative desire into wealth creating and value adding undertaking for the individual’s benefits and common good (Kao, 1997).
Enterprising Culture: Enterprising Culture is the commitment of individual to continuing pursuit of opportunities and developing an entrepreneurial endeavour to its growth potential for the purpose of creating wealth for individual and adding value to the society.
Entrepreneurship Education: Entrepreneurial education is an educational programs that is focused on impacting students with issues on entrepreneurship. Entrepreneurial education is designed to communicate and inculcate the skills needed to recognize business opportunity, organize and start new business venture to students or trainees (Brown, 2000).
Entrepreneurial Intention: Entrepreneurial intention is concerned with the inclination of a person to start an entrepreneurial activity in the future. It is a key determinant of the action of new venture creation moderated by exogenous variables such as family background, position in one’s family, parent(s) occupation, education and training. (Krueger, 2005).
Entrepreneurial Characteristics:Entrepreneurial characteristics are peculiar attributes that can be used to identify successful entrepreneurs. These characteristics may include; desire for achievement; locus of control; risk taking propensity; proactive-ness, tolerance for ambiguity; creativity, innovativeness, competitiveness and others
International Entrepreneurship: International entrepreneurship is a combination of innovative, proactive and risk-seeking behaviour that is across national borders and is intended to create value in organizations and the nations involved (Covin and Slevin, 1991).
Globalized Entrepreneurship: Globalized entrepreneurship is new and innovative activities that have the goal of value creation and growth in business organization and entrepreneurship across national borders (McDougal and Oviatt, 1997)
Intrapreneurship: Intrapreneurship is initiatives by employees in the organization to undertake something new, where an innovation is often created by subordinates without being asked, expected or even being given permission by higher management (Brezeal, 1996).
Intrapreneur: Intrapreneur is an employee of a large organization who has the entrepreneurial qualities of drive, energy, creativity, vision and ambition, but who prefers, if possible to remain within the security of an established company (Gibb, 1988)
Social Entrepreneur: Social entrepreneur is a person who promotes social change, a person who opens up major new possibilities in education, health, environment and other areas of human needs.
Extrinsic Motivation: Extrinsic Motivation refers to motivation that comes from outside of an individual. The motivating factors are external, or outside, regards such as money or grades. These rewards provide satisfaction and pleasure that itself may not provide.
Intrinsic Motivation: Intrinsic motivation refers to motivation that comes from inside an individual rather than from any external or outside rewards, such as money or grades. The motivation comes from the pleasure one gets from the task itself or from the sense of satisfaction in completing or even working on a task.
Creativity: Creativity (or "creativeness") is a mental process involving the generation of new ideas or concepts, or new associations between existing ideas or concepts. It has been said, consists largely of re-arranging what we know in order to find out what we do not know.
Empowerment: Empowerment is a process aimed at consolidating, maintaining or changing the nature and distribution of power in a particular cultural context. The concept of empowerment ranges from encouraging people to play a more active role in their work through involving them in taking responsibility to enabling them to make more and bigger decisions without having to refers to someone higher in position.

1.9 Outline of the Study
This thesis is sectioned into five chapters as shown in Figure 1 below. Chapter one introduces to us the trends in Nigerian economy since independence. Chapter two provides extensive literature on small business from global to the Nigerian economy, their form of organization and current status. Chapter three contains details of the study location, research methodology and findings. Chapter four contains my recommendations and concluding remarks.

Figure 1: Outline of the Thesis

CHAPTER TWO
2. Literature review

2.1 An overview of Small and Medium Scale Enterprises

Nigeria remains a country with very high potential but an equally high inertia to develop. The country is blessed with abundant supply of enormous human, agricultural, petroleum, gas, and large untapped solid mineral resources (Obadan, 2003). Since her independence from British rule in 1960, the country has gone through decades of political instability and this has brought with it a climate of social tension and an unpredictable market for business. The successive forceful takeover of government by the use of military coup and the indigenization policy of the late 70’s has put off investors who hitherto saw the country as a large and growing market. Due to the nature of these governments, there is perceived corruption, policy instability, poor infrastructural development and lack of accountability of public funds. For these reasons, the World Bank described Nigeria as a paradox (World Bank, 1996). This is also true for most Sub-Saharan African countries as industrial production has declined or stagnated over the past decades (Lall, 1992).

According to Mambula (1997), since its independence, the Nigerian government has been spending an immense amount of money obtained from external funding institutions for entrepreneurial and small business development programs, which have generally yielded poor results. Unfortunately these funds hardly reach the desired business because they may be lost to bureaucratic bottle necks and end up in accounts of public office holders.
Despite these setbacks, the role of small business owned by middle class Nigerians, set up by individual savings, gifts and loans and sometimes sustained by profit cannot be ignored. According to Asmelash (2002) countries that have made economic breakthroughs in the last two decades demonstrate beyond doubt that the development of entrepreneurship has been the sine qua non of economic growth and development. According to Asmelah (2002), the significant role SMEs play in development is acknowledged world over. He cited the work of Schell, (1996) who noted that in developed countries such as the USA, where big corporations are dominant, SMEs still play enormous role in the country’s economy. Also, according to the report of the Indian working group on science and technology for Small- and medium-scale enterprises, SMEs occupy an important and strategic place in economic growth and equitable development in all countries. Constituting as high as 90% of enterprises in most countries worldwide, SMEs are the driving force behind a large number of innovations and contribute to the growth of the national economy through employment creation, investments and exports. Owing to the success of the Asian tigers, interest is running high globally particularly in developing countries that are in the rat race to meet up and reduce the economic and development gap. Chinese and foreign experts estimate that SMEs are now responsible for about 60% of China 's industrial output and employ about 75% of the workforce in China 's cities and towns (Schell, 1996). These SMEs creates jobs for workers who have been laid off from state-owned enterprises due to the steady transition from communism to a market based economy.
According to Cook and Nisxon (2000), interest in the role of small and medium-sized enterprises (SMEs) in the development process continues to be in the forefront of policy debates in developing countries. Owing to the relevance of SME’s, in 2006 the government of Taiwan launched a $61 million "branding" initiative, which is aimed to push the economy from being production-based to knowledge-based. According to the report in EE Times Asia in August 2006, the so-called "Branding Taiwan Plan" is a seven-year program designed to help promising small-to-medium enterprises (SMEs) in developing their own brand, according to the Taiwanese government. This was initiated with the full consciousness of the ability of SMEs to drive the economy particularly in the medium term. Small businesses employ 72,000,000 people (Asmelash, 2002).More than 90 per cent of the industries in Indonesia, Philippines, Thailand, Hong Kong, Japan, Korea, India and Sri Lanka are small enterprises (Fadahunsi and Daodu 1997).
A 2004 survey conducted by the Manufacturers Association of Nigeria (MAN) revealed that only about ten percent (10%) of industries run by its members are fully operational. Essentially, this means that 90 percent of the industries are either ailing or have closed down. Given the fact that manufacturing industries are well-known catalysts for real growth and development of any nation, this reality clearly portends a great danger for the Nigerian economy. The acting director-general of the association, Mr. Jide Mike, who disclosed this fact, attributed the cause of this sorry state to such factors as poor infrastructure, multiple taxes imposed on manufacturers in Kaduna state by all tiers of government and the difficulty in accessing finance. He noted, “The debris of dilapidated manufacturing concerns across the country is the outcome of years of harsh operating conditions”. Mr. Jide Mike also remarked, “In addition to policy somersault, funding remains a challenge to all stakeholders in the manufacturing sector, the several palliatives, including the Small and Medium Industries Equity Investment Scheme (SMIEIS) and other sector-specific incentives notwithstanding”. He added, “In summary, 30 percent of industries in Nigeria have closed down. About 60 percent are ailing companies and only 10 percent operate at sustainable level”. The acting director-general of MAN emphasized that low capacity utilization has undermined the competitiveness of manufacturing industries, whose fortunes have been worsened by the impact of globalization. He recalled that at Nigeria’s independence in 1960, the manufacturing sector’s contribution to national Gross Domestic Product (GDP) was 3.8 percent and that despite the discovery of oil, manufacturing contributed as much as 9.9 percent to the GDP from 1975to 1981 when capacity building was above 70 percent. Mr. Jide Mike however regretted that the story is different today as the manufacturing sector is back at the independence level as it contributed a mere 4.7 percent to GDP in 2003while industrial capacity utilization dropped to a paltry 48.8 percent in 2003.The above is indeed not encouraging as it is representative of the fate of the manufacturing sub-sector of the SMEs. It is said that the large manufacturing companies are even better off given that those of them, which have international affiliation do get succor and support from their parent companies or technical partners overseas. The support and services the multinationals get from their parent companies could be driven by the profit repatriation, expansion of their overseas market and other motivations but overall, the Nigerian economy benefits if only through employment generation. President Olusegun Obasanjo in his address on March 01, 2002 at the commissioning of the headquarters of SMEDAN (The Small and Medium Enterprises Development Agency of Nigeria) in Abuja also noted that there was a great disconnection between the SMEs and the large companies in Nigeria, pointing out that the multinational companies dominated business in the country even in the area of finished products. Because of these and other debilitating problems, only about 10 percent of SMEs in Nigeria are into manufacturing.

2.1 Conceptual Issues
2.1.1 Definition, Classification, Size and Characteristics of SMEs Sector
The concept of SMEs is dynamic and relative (Otokiti, 1985; Olorunshola, 2004; Ogunleye, 2004). Several institutions and agencies defined SMEs differently with parameters such as employee’s size, asset base, turnover, financial strength, working capital and size of the business (Olutunla, 2001). Against expectation from most Nigerian literatures on the lack of a comprehensive definition on structure of industries particularly small scale industries, Otokiti (1987) had presented a differential definition between cottage and tiny, small industry and high small industries by comparing the position of South Korea, Hong Kong, Taiwan, some Arab countries. He also x-rayed OECD and UNCTAD concept to develop a more acceptable definition for Nigeria. According to Otokiti (1987)
The cottage and tiny industries are the traditional hand and light mechanically operated industry consisting of hand yarn producers, weavers of Aso-oke Kente and the Agbede (Iron Smith ), carpenter and handcrafts and mostly depending on non-imported technology, with little capital investment which normally does not exceed N1,000 or about $550 but employing not more than 10 persons and mostly located within the residential unit of the entrepreneurs. The small industry are those units having capital investment above N1,000 ($550) but not more than N500,000 or $277,778 having a factory shed normally located in the residential place of the entrepreneurs employing modern power operated equipment and machinery. In their activities, they employed more than 10 persons but not above 199 employees. The special class small industry ( not small scale) are those with investment capital exceeding N1 Million located in most of the industrial estate of Kaduna , Ibadan, Kano, Kaduna Aba, and Benin employing more than 100 person. This criteria might have benefited from NIBD and and NBC financial assistance at various stages of these institution before 1984. it’s also stated that “Henceforth, only promoters and projects that are in tune with the bank new strategy will be entertained

Apart from the above definition, Nigerian Industrial Policy 1989 defined SMEs as ‘enterprise whose investment in working capital is between N100,000 and N2m excluding cost of land’. CBN Monetary Policy Circular No. 22 of 1998 defined SMEs as any enterprise whose investments including land and working capital is less than N300,000 and annual turnover is less than N5m. The Nigerian Industrial Development Bank (NIDB) also defined small enterprise as an enterprise that has investment and working capital not exceeding N750,000 and medium enterprise as one with N750,000 to N3m. The Federal Ministry of Industry Guidelines to Nigerian Bank for Commerce and Industries (NBCI) also defined it as business with a total cost not exceeding N500,000 (excluding cost of land but including working capital). Centre for Industrial Research and Development (CIRD) of the Obafemi Awolowo University, Ile-Ife defined SMEs as an enterprise with capital base not exceeding N250,000 and employing and employing on full time basis, 50 workers or less. Also, according to National Economic Reconstruction Fund (NERFUND), SMEs is an enterprise that has its investment to be less than N10m excluding the cost of land. NBCI defined SMEs as business with total capital not exceeding N750,000 (excluding cost of land but including working capital). New Industrial Policy for Nigeria also defined SMEs as enterprises with total investment of between N100,000 and N2m excluding cost of capital but including working capital (Guidelines for the Small- Scale Industries Investment Equity Scheme (SMIEIS) 2001; Ogunleye 2004).

Another definition of SMEs that worth adopting is that of National Council on Industry (NCI) which in 1992 streamlined the various definitions of SMEs and agreed to change it every 4 years. Before 1992, different government agencies in the country adopted different definitions for SMEs reflecting differences in the policy focus of the agencies (Olutunla, 2001; Olorunshola, 2003; Ojo, 2006). In 1992, NCI defined small scale business as enterprises with fixed assets above N1m but not exceeding N10m, excluding working capital and medium scale business as enterprises with fixed assets that is more than N10m and less than N40m including working capital but excluding cost of land. In 1996, it defined small scale business as enterprises with more than N1m but less than N10m excluding cost of land and including working capital and a labour size of between 11 and 35 workers while medium scale enterprises should have over N40m and less than N150m as fixed assets including working capital and excluding cost of land and labour size should be between 36 and 100 workers (Olorunshola, 2004). The 13th meeting of the National Council on Industry held in July 2003 adopted a conclusive definitions for micro-, small-, and medium-scale enterprises (Udechukwu, 2004).
In furtherance of this, NCI (2001) offered the following definitions for micro, small medium and large scale enterprises in Nigeria.
(i) Micro/Cottage Industry: An industry with a labour size of not more than 10 workers and total cost of not more than N1.50 million, including working capital but excluding cost of land.
(ii) Small-Scale Industry: An industry with a labour size of 11-100 workers or a total cost of not more than N50 million, including working capital but excluding cost of land.
(iii) Medium Scale Industry: An industry with a labour size of between 101-300 workers or a total cost of over N50 million but not more than N200 million, including working capital but excluding cost of land.
(iv) Large Scale: An industry with a labour size of over 300 workers or a total cost of over N200 million, including working capital but excluding cost of land.
National Council on Industry (2001) definition of micro, small, medium and large scale enterprises in Nigeria can be represented in the diagram as in figure 1.Figure: 1 Definition of Enterprises
Definition of Enterprises

Source: Adopted from NCI (2001) and modified by the Researcher.

The above diagram shows the definitions of micro, small, medium and large industry according to National Council on Industry. The size cut-off point of SMEs for this study can also be based on a recommendation from the African Development Bank, which defines SMEs as having less than 50 employees.

The above definitions show that there is no universal definition of SMEs. However, for the purpose of this research work, the definition of SMEs given by NCI 2001 which defined SMEs as establishment with less than N20m (excluding cost of land and working capital) and has up to 10 employees and less than 300 employees (Oyekanmi, 2004) is adopted. Although different government agencies still utilize slightly different definitions as seen in Tables 1, 2 and 3 the definition adopted by the National Council on Industry appears to be broad enough to accommodate all the other definitions. The above definitions can be compared with those obtainable from developed countries which are summarized in Table 1 overleaf.
Table 1. Definition of SMEs in other Nations
Country
Investment Ceiling
Employment Ceiling
India
$170,000 (N23.8m)
No Restriction
Indonesia
$ 85, 000 (N11.9m)
< 100
Japan
$800,000 (N112m)
300 employees
South Korea
$730,000 (N102.2m)
300 employees
Malaysia
$106,000 (N14m)
No Restriction
Philippines
$45,000 (N6.3m)
99 employees
U.K
No Restriction
199 employees
USA
No Restriction
< 500
Tanzania
$1,000 - $50,000
No Restriction
Source: (i) Confederation of Asia Pacific Chamber of Commerce and Industry – Journal of Commerce and Industry, Vol. 11, 1994. (ii) Oyekanmi (2004) Concepts of Equity Financing and its implication for SMIEIS.

The above definition of SMEs from different countries of the world can be compared with the definition of enterprises offered by International Finance Corportion (IFC), Central Bank of Nigeria, National Association of Small Scale Insdustries and National Counsel oo Industry.

Table 2. Definition of Enterprises by Number of Employees, Nigeria
Organization
Micro Ent.
Small Ent.
Medium Ent.
International Finance Corporation

< 10
10-50
50-100
Central Bank of Nigeria -
< 50
< 100
National Association of Small Scale Industries - < 40 -
Accenture

-
10-100
>100-300
Source: http://www.nigeriabusinessinfo.com/news/htm

Among these institutions, the definition of SMEs offered by NCI will be adopted for this research work. The adoption of this definition is based on the fact that it is more comprehensive than others as it covers all the criteria and characteristics of small and medium businesses used by other institutions in defining SMEs.

TABLE 3. SMEs ASSET (EXCLUDING COST OF LAND)- BASED Classification
Organization
Small
Medium
International Finance Corporation
< $2.5 million -

Central Bank of Nigeria
< N1million
499

Manufacturing
130
14364
1939
109
16542
28%
Other Services
854
13573
1074
18
15519
26%
Wholesale & Retail Trade
179
9466
689
10
10344
18%
Private Professional Services
1546
5136
1134
7
7823
13%
Hotel & Restaurant
46
4232
349
6
4633
8%
Agriculture and Forestry
5
1057
438
13
1513
3%
Building &Construction
48
1519
694
30
2291
4%
Total Number of establishments
2808
49347
6317
193
58665
100%
Total in % of establishment
5%
84%
11%
0%
100%

Total Contribution to employment in %
1%
42%
40%
17%
100%

Sources: Otokiti, (1987) ; Ajayi, (2002)

Characteristics of SMEs
The peculiar characteristics of SMEs have helped in determining their performance in the Nigerian economy. By their nature, SMEs constitute the most viable and veritable vehicle for self-sustaining industrial development. They possess common capability to grow an indigenous enterprise culture more than any other strategy (Udechukwu, 2004). Adeleja (2005) enumerated the following as the peculiar attributes of SMEs; creativity, provision of inputs and or material components for large enterprises, they are mainly found everywhere especially in the local communities and fastest tools for job creation. Olorunshola (2004) in his work, identified simple management structure result from the fusion of ownership and management by one man as another characteristic of SMEs. According to Udechukwu (2004); Ojo (2006) SMEs are characterized by labour intensive production processes, centralized management, have limited access to long term capital, use local resources, and closely attached to the products that launched them.

Ojo (2004) described the SME as a vital sub-sector which is often an under rated sector though it harbours most enterprises in the Nigerian economy. Olutunla, (2001); Ojo (2004) further enumerated the main elements and characteristics of SMEs to include’ (i) easy entry into the economic activities (ii) reliance on indigenous resources such as finance and materials; (iii) It is a family-owned enterprise (iv) small scale of operation (v) labour intensive depending mainly on family and labour adopted; (vi) technology; skills to operate the business are required outside formal school system and (vii) there exists an unregulated and competitive market. The peculiarity of SMEs in enhancing economic development can be best described in this statement;
SMEs constitute the most dynamic segment of many transitional and developing economies. They are more innovative, faster growing, usually of family/individual ownership, subjective in decision making and possibly more profitable as compared to larger sized enterprises (World Bank, 2001; Ogunleye, 2004).
In support of this statement, Obitayo (1991) identified the characteristics of SMEs to include:

Figure 3. Characteristics of SMEs. Source: Adapted from Obitayo (1991).
The factors that make SMEs more amenable for assistance according to Obitayo (1991) are as follows:
(i) personal commitment of the proprietors whose life savings etc usually form the start-up capital;
(ii) low initial capital outlay/requirements;
(iii) easy entry and exit and the prevalence of just minimal legal constraints;
(iv) amenability to business advisory services because of their small size which makes them more responsive to improvement suggestions;
(v) availability of less complex technology which can easily be managed by Nigerians without dependence on expatriate technical partners;
(vi) high local value added and availability of locally sourced or searchable raw materials;
(vii) high potential for employment opportunities and dispersal of industry and actions and
(viii) SMEs are more amendable to competition unlike the near monopoly situations which exists with the multinationals, who are often times accused of pursuing their corporate capitalist interest.
2.1.2 Contributions of SMEs to Economic Development
The contributions of SMEs to economic development of both developed and less developed countries have been obvious in these nations’ Gross Domestic Product (GDP) industrial output, employment generation, poverty alleviation and export promotion. Statistically, the Nigerian GDP by sector shows that agriculture contributes about 32%, industry 41% and service 27% (Weller et al, 1999). In most cases, of the industry figure, SMEs usually dominate all other sub-sectors. For instance, in Japan, 80% of the total industrial labour force belongs to SMEs sector, 50% in Germany and 46% in USA are employed in SMEs. In USA, SMEs contribute nearly 39% to their national income (Udechukwu, 2003). Also in other countries such as India, Indonesia, Mali etc., SMEs have been identified to constitute more than 95% of establishments in the organized manufacturing sector and have become a vibrant core sub-sector making substantial contribution in terms of employment generation, industrial output and export. Table 7 shows the contribution of SMEs sector to employment generation.
Table 7: Contribution to Employment and Proportion of SMEs by Sector
Activity Group
Total No
Percentages (%)
SMEs (%)
Large Firms
(%)
Manufacturing
382139
37%
57%
43%
Other Services
196569
19%
85%
15%
Wholesale & Retail Trade
123094
12%
90%
10%
Private Professional Services
110934
11%
87%
13%
Hotel & Restaurant
60862
6%
87%
13%
Agriculture and Forestry
54131
5%
60%
40%
Building &Construction
46217
4%
39%
61%
Land Transport
17410
2%
82%
18%
Electricity, gas & water
12816
1%
39%
61%
Mining & Quarrying
11924
1%
45%
55%
Other Transport
11425
1%
85%
15%
Total
1027521
100%

Sources: Otokiti, (1987) ; Africa Forum (2002)

This means that SMEs play important role in the economies of both developing and developed countries. In support of this, Ariyo (2005) reported that a study by the Federal Office of Statistics revealed that 97% of all businesses in Nigeria employ less than 100 people. This suggests that over 90% of the businesses falls into the class of SMEs who are responsible for more than over 50% of employment in the country and contribute not less than 50% to Nigeria’s industrial output. In essence, SMEs have consistently created greater employment opportunities per unit of capital invested than any other sector (Alison, 2006)
As a result, one can conclude that the Nigerian economic activities in terms of employment generation and value addition rest with the SMEs as well as the future of our industrial development (Ajayi, 2002). According to Soludo (2005) the sectoral contributions to the country’s GDP over a period of six years shows that about 97% of all businesses in Nigeria employ less than 100 people and this businesses are predominately in the agricultural, building and construction, transport, utilities, service and wholesale and retail trade sectors.
Comparing the Nigerian SMEs with that of the other countries of the world, Ogunleye (2004) reported that

In USA, statistically the total enterprises registered as SMEs account for up to twenty- two million naira (N22m) of the total enterprises and they generate more than half (½) of the country’s GDP, employing more than 53% of the total private workforce. In China, the number of SMEs increased from 1.52m in 1978 to 19m in 1991 and the number of people employed by them also increased from 28m to 96m. In Iran, SMEs contributed up to 62% of the nation’s industrial output and more than 75% of total employment in 1996. In Israel, SMEs recorded for 97% of the nation’s enterprises in 1996, employing up to 50% of the country’s workforce. The country recently assisted over 50,000 people in establishing their own business. India also experienced the contribution of SMEs in their economic development recording a total of 3.1m as enterprises classified under SMEs in the period of 1998-1999. The SMEs contribution in India can be classified as 95% of the total industrial units, 40% of the total industrial output, 80% of employment in the industrial sector and 35% of the total export of the country (Ogunleye, 2004).

The above evidences confirmed the assertion that SMEs is believed to be the engine room for the development of many countries’ economy because they form the bulk of business activities in a growing economy. The contributions of SMEs to economic development have been identified in the following areas;

TABLE 8: Percentage Sectoral Contributions To GDP ( 1999- 2005)
SECTORAL CONTRIBUTIONS TO GDP (%)

ACTIVITY SECTOR
1999
2000
2001
2002
2003
2004
2005
1. Agriculture
47.6
35.84
35.58
35.85
34.63
40.99
41.49
a. Crop Production
37.99
29.89
29.66
29.86
28.98
36.48
36.95
b. Livestock
6.06
3.48
3.42
3.47
3.28
2.60
2.63
c. Forestry
1.40
0.78
0.76
0.74
0.68
0.54
0.54
d. Fishing
2.15
1.69
1.74
1.79
1.69
1.37
1.37
2. Industry
19.77
36.98
37.30
34.67
38.16
29.48
27.72
a. Crude Petroleum
12.47
32.45
32.65
29.75
33.44
25.72
23.82
b. Mining and Quarrying
0.37
0.29
0.31
0.31
0.30
0.28
0.27
c. Manufacturing
6.93
4.24
4.34
4.61
4.42
3.50
3.63
3. Building and Construction
2.46
1.95
1.95
2.11
2.08
1.44
1.53
4. Wholesale and Retail Trade
13.62
13.11
12.85
13.22
12.68
12..90
13.74
5. Services
29.72
12.12
12.17
14.12
12.45
14.56
14.88
a. Transport
3.64
2.28
2.28
2.59
2.38
2.38
2.41
b. Communication
0.37
0.11
0.13
0.19
0.21
1.14
1.40
c. Utilities
0.61
0.61
0.46
0.54
0.52
3.58
3.60
d. Hotel and Restaurants
0.57
0.21
0.21
0.21
0.20
0.37
3.98
e. Finance and Insurance
11.16
5.20
5.20
6.50
5.34
4.08
1.41
f. Real Estate and Business Services
0.35
1.90
1.91
1.90
1.78
1.34
0.95
g. Producers of Government Services
11.06
1.22
1.22
1.35
1.24
0.96
0.74
h. Commercial, Social and Personal Services
1.99
0.73
0.76
0.84
0.78
0.71
0.70
Source: Soludo (2005), Sectoral contributions to GDP

The table below shows the contributions of SMEs to industrial establishment, employment, production and value added in some countries including Nigeria.

Table 9: Contribution of SMEs in Selected Countries (Percentages) (1985-1998)
Industrial Characteristics
Malaysia (1985)
Singapore
(1990)
Korea Rep (1991)
India (1994)
Nigeria (1998)
Contribution to total number of industrial establishment

92.1

88

97

94

94
Contribution to total industrial employment
49.4

40
63.5
31
60
Contribution to total industrial production
46.7
26
44.5
40
54
Contribution to total industrial value addition

30

23

45.8

35

40

Sources (i) Confederation of Asia Pacific Chamber of Commerce and Industry – Journal of Commerce and Industry, Vol. 11, 1994.
(ii) Nigerian Agriculture/ Micro Enterprise Field Visit – A Summary report designed to assist in implementation of the USAID/Nigeria Transition Strategy SO2

Table 10: Contributions of SMEs To Overall Economy And on Employment
Generation ( In Percentages)
Economy
% SMEs
Year
% Employed by SMEs
Year
Australia
95%
1991/92
50.6%
1991/92
Philippines
98.7%
1988
50.77%
1993
Canada
99.8%
1992
59.24%
1991
Hong Kong
97.95%
1993
63%
1993
Japan
99.1%
1991
79.2%
1991
Mexico
98.17%
1993
50.77%
1993
USA
99.72%
1990
53.67%
1990
South Korea
99.8%
1992
78.5%
1991
Nigeria
94%
1998
60%
1998
Source: Oyekanmi (2004) Concepts of Equity Financing and its implication for SMIEIS

The table above shows the performance of SMEs in developed and less developed countries which was identified as a result of the following reasons; well-defined and complementary roles of the private and public sectors in SMEs promotion, structure of credit/capital provided to the SMEs, nature of the incentives directed at SMEs, identification and implementation of factors driving such programs (Oyekanmi, 2004).

Table 11: Potentials of SMEs
S/No
Areas of Contribution
Business Activities
(a)
Employment Generation
(i) They have employment generation capacity of about 58% of global working population
(ii) SMEs also play the critical role of principal safety net for the bulk of the population in developing economies.
(iii) Their labour intensity structure accounts for their recognition as a job creation avenue.

(b)
Gross Domestic Product
(i) SMEs contribute more than 30% to global GDP.
(c)
Rural Development
(i) SMEs constitute major avenues for income generation and participation in economic activities in the lower income and rural brackets of developing societies especially in agriculture, manufacturing, trading and ser- vices.
(ii) The employment opportunities offered apparently reduces rural-urban migration and allows for even development.
(d)
Economic Growth and Industrialization
(i) National economic development prospects hinge on entrepreneurial energy of vibrant SMEs as most big business concern grew protect nations from the geographical cost- benefit permutations of a few multinationals who are ever prepared to close up their businesses and relocate at the slightest provocation or appearance of economic downturn.
(e)
Better Utilization of Indigenous Resources
(i) The considerable low capital outlay required for setting up SMEs enables them to convert minimal resources into productive ventures.
(ii) They also offer veritable outlets for technological advancement especially in businesses with rudimentary technology requirements.
Sources: Ogunleye (2004); Ajayi (2002) Potentials of SMEs

2.1.3 Challenges of SMEs
In spite of the potentials and contributions of SMEs to GDP and economic development, the activities of SMEs in Nigeria have been constrained by a lot of challenges. As Hagen (2004) rightly observed, “SMEs in Nigeria are associated with considerable risks, sacrifice and obstacles. These have been the cause of the failure of many SMEs in Nigeria”. As a result of this, one out of every five SMEs folds up between its first and fifth year. These challenges have been noted to be more rampart in the following areas;
(i) Insufficient personal savings/funds resulting in low initial promoters’ equity
(ii) Uncoordinated business ideas and plans
(iii) Non bankable projects by entrepreneurs
(iv) Inability of the customers to satisfy high credit risk standards, including security/collateral
(v) Inability of banks to provide long-term funds due to mismatch between tenor of bank deposits and loans being sought.
(vi) Fluctuating and prohibitive interest rate regime
(vii) Volatile exchange rate regime.
The above SMEs challenges can be summarized in the table below;
Table 12: Challenges Faced by SMEs
Area of Challenges
Challenges faced by SMEs
Access to Finance
Service companies face difficulties due to the nature of their businesses. Cost of capital relative to other countries
Access to Markets
Access to quality, up-to-date information.
Contacts through personal networks Small size of businesses
Access to Training
Technical training
Training on World Trade Organization (WTO) and trade policy and requirements
Access to Infrastructure
Need for reliable physical infrastructure (road transportation, air transportation)
Need for predicable trade support infrastructure (knowledgeable bureaucracy, supportive government mechanisms, etc.)
Access to Technology
Need for reliable telephone and Internet service
Potential for e-commerce and e-trade
Access to electronic banking and transfers
Use of English as the medium of communication through the Internet.
Access to Policymaker/Input into Trade Policy
Large companies and men can more easily influence policy and have access to policymakers who are their peers.
Source: Commonwealth Secretariat for Business Women: Trade Matters, Best Practices and Success, (London), 2002.
.

2.2 Small Businesses in Africa.
Despite the claims globally to the talismanic success of SMEs, Africa is yet to catch up with the fever. In the words of Asmelash (2002), despite the “repeated public announcements about their assumed importance as instruments of development, SMEs in many African countries enjoy a lukewarm support. They lack effective organisation and knowledge of modern management techniques. Organisations created to promote SMEs are not sufficiently prepared for the task and the interference with policy-makers leaves much to be desired”. Although this is true, it is not always so because one cannot overlook the successful small businesses we see in the streets of Kaduna , who despite the constrains of poor social infrastructure particularly electricity and water supply still remain economically viable. There is also the problem of frequent harassment by government officials who extort money from these businesses.
Small business remain a veritable tool for encouragement of entrepreneurship, creating immediate employment opportunities, promoting inter- and intra-regional trade, breaking monopoly of larger enterprises as well as alleviating poverty (Cook and Nisxon, 2000) world over. They can usually be established rapidly and put into operation to produce quick returns. Several African small businesses do not fall short of these qualities but that cannot be justified in the present scheme of things. The reason however is not farfetched because corruption and political instability continues to thrive. Small businesses in Nigeria probably dipped with the introduction of the Structural Adjustment Programme (SAP) in 1986 by the Military government of General Ibrahim Babangida. The SAP policy according to Mambula (2002) caused the value of the national currency to decline. This made it difficult for small business to afford to train their workers overseas and obtain foreign exchange to order or purchase machinery and spares parts.
Small business remains a viable alternative to foreign direct investments (FDI) which are difficult to access as a result the high risk ratings of developing countries like Nigeria (Mambula, 2002).
2.3 Characteristics of SMEs in Nigeria
A major characteristic of Nigeria’s SMEs relates to ownership structure or base, which largely revolves around a key man or family. Hence, a preponderance of the SMEs is either sole proprietorships or partnerships. Even where the registration status is thus that of a limited liability company, the true ownership structure is that of a one-man, family or partnership business. Other common features of Nigeria’s SMEs include the following among others.
1. Labour–intensive production processes
2. Concentration of management on the key man
3. Limited access to long term funds
4. High cost of funds as a result of high interest rates and bank charges
5. High mortality rate especially within their first two years
6. Over-dependence on imported raw materials and spare parts
7. Poor inter and intra-sectoral linkages - hence they hardly enjoy economies of scale benefits
8. Poor managerial skills due to their inability to pay for skilled labour
9. Poor product quality output
10. Absence of Research and Development
11. Little or no training and development for their staff 12. Poor documentations of policy, strategy, financials, plans, info, systems 13. Low entrepreneurial skills, inadequate educational or technical background
14. Lack of adequate financial record keeping
15. Poor Capital structure, i.e. low capitalisation
16. Poor management of financial resources and inability to distinguish between personal and business finance
17) High production costs due to inadequate infrastructure and wastages.
18) Use of rather outdated and inefficient technology especially as it relates to processing, preservation and storage.
19) Lack of access to international market
20) Lack of succession plan
21) Poor access to vital information
2.4 Information communication technology (ICT) and small business
Over the years, information communication technology has metamorphosed from a luxury to a necessity. The need to survive and thrive in global business has forced businesses even in remote areas of Nigeria to embrace ICT. It is no longer new to see computers in shops and small business holdings in the country. The common organization of small business settings in Nigerian cities is to have ‘business centres’ which are set up to render services such as typing, photocopy, lamination, faxing as well as phone call centres. Cyber cafes commonly dot the streets of Kaduna, catering for the ever increasing need to meet new clients and advertise merchandise. The contributions of ICTs to business development according to Frempong (2007) have been pervasive to the extent that it is becoming increasingly difficult for companies to compete effectively in the world market without adequate ICT infrastructures. The reason according to him is that ICTs are revolutionising every activity in the global market, as the various components of ICTs have their significant roles in facilitating business promotion, efficiency and growth. Also according to UNCTAD report in 2005, business processes such as ordering, transaction, delivery, inventory control and accounting can be streamlined and connected regardless of location through the use of network of computers. The internet has opened the way for electronic transactions (e-commerce) which allows for low cost and open ended business (Humphrey et al., 2003). Computers and the internet also open opportunities for learning and obtaining knowledge about happenings world over as well valuable business information. Mobile telephony technology has also greatly affected small businesses positively. Africa’s mobile market has been the fastest growing in the world in the last five years and has grown twice as fast as the
Global market (Kelly and Biggs, 2007). Since the introduction of mobile phones in Nigeria earlier in the millennium, small business which operate as call centres have been on the increase and continue to grow with dynamism. The advent of mobile telecommunications has created opportunities for operators in informal business who hitherto could not afford fixed line telephones, fax and internet. Frimpong (2007) who assessed the level of usage of internet by SMEs in Ghana recorded low level of internet usage (about 33.3%) in companies classified as formal business and only one company was found to have internet service at home. This could be linked to level of education since about 50% of formal business owners had only secondary education.
2.5 Funding of Small Business
“Most small firms will never be able to raise all the funding they would like from banks and other institutions. In this crude sense there will always be a deficiency in the funding of the sector equal to the difference between the total demand for funding and that part of this demand which qualifies for funding support” (Hamilton and Mark, 1998). As a result, a clear and present challenge for operating and intending small business is sourcing of funds. Small business may start up from personal savings, gifts from friends and relatives and sometimes loans. Levy in 1993 reported that smaller enterprises have limited access to financial resources compare to larger organisations and he discussed the impact of his findings in economic growth. According to Cork and Nisxon, (2000) poor management and accounting practices have hampered the ability of smaller enterprises to raise finance. This is coupled with the fact that small businesses are mostly owned by individuals whose personal lifestyle may have far reaching effects on the operations and sustainability of such businesses. As a consequence of the ownership structure, some of these businesses are unstable and may not guarantee returns in the long run. However, there is reason to hope because according to Liedholm et al. (1994), a large number of small enterprises fail because of non-financial reasons. Remmers et al. (1974) reported the debt/total assets ratio to be independent of firm size while Peterson and Schulman (1987) reported that debt/total assets ratio to first rise and then fall with size of firm. Irrespective of which side of the divide one is, the behaviour of loan granting institutions can be obviously predicted when they have a choice of granting loan facilities to either a big business with a good balance sheet or a small business with an equally good balance sheet.
In Nigeria, banks particularly the Agriculture Development banks are mandated to give loans to small business but the inability of most small business owners and intending entrepreneurs to present the required collateral remains a major setback.
It is common practice in the country for small business owners to organize themselves into cooperatives commonly called “Esusu”. Members of an Esusu would generally contribute a fixed amount daily, weekly or monthly, to be pulled and then collected in turns to fund their business or personal projects.
“A good number of NGOs in Nigeria focus on the problem of the declining state of agricultural production, unsustainable farming practices and poverty. For instance, Imo Self-Help Organisation (ISHO), Nsukka United Self-Help Organisation (NUSHO), Committee for Women in Development – Nigeria (COWAD), Lift Above Poverty Organization (LAPCO),Kaduna , Development Exchange Centre, Kakeme, Bauchi (DEC), Country Women Association of Nigeria (COWAN), Alternative Development (Alter Dev), Women Farmers Association of Nigeria (WOFAN), and Farmers Development Union (FADU) focus mainly on poverty alleviating activities among the rural poor all over Nigeria”(Elumilade et al, 2006) .

2.6 The Current Status of Small and medium sized enterprises in Nigeria
Successive governments in Nigeria have initiated numerous programmes and policies to generate employment, reduce poverty and engender development. As at 2000, the incidence of poverty was believed to have risen to 70 per cent at the national level (Obadan, 2003). According to him,” the increasing incidence of poverty, both within and among locations, was in spite of various resources and efforts exerted on poverty-related programmes and scheme in the country, thus suggesting that the programmes and schemes were ineffective and ineffectual. Despite the plethora of poverty alleviation programme which past governments had initiated and implemented, by 1999 when the Obasanjo administration came into power a World Bank’s report indicated that Nigeria’s Human Development Index (HDI) was only 0.416 and that about 70 percent of the population was vegetating below the bread line (Elumilade et al, 2006)
The green revolution (aka “Operation feed the Nation”), a brain child of the military administration of General Olusegun Obasanjo initiated in the late 70’s to address widespread poverty by encouraging involvement in agriculture by both rural and urban dwelling citizens failed to yield sustainable results. According to Obadan (2003) these programmes were to designed to directly benefit the poor. The poor were expected to benefit from the “trickle-down efforts”.
Other poverty reduction and employment generation initiatives in the past include the establishment of;
The Department of Food, Roads, and Rural Infrastructure (DFFRI) with the major aims of opening up the rural areas and to improve the conditions of the vulnerable poor; which had long been abandoned.
The National Directorate of Employment (NDE) to tackle the problem of mass unemployment.
The People’s Banking Nigeria (PBN) to cater for the credit needs of the less privileged Nigerians.
The Better Life Programme (BLP) which was later replaced by Family Support Programme (FSP) which was gender specific. It was meant to improve the life of rural women. The programme failed because the programmes were hijacked by position seeking individuals, who used most of the resources for personal aggrandisement rather than for the set objectives.
The National Agricultural Land Development Authority (NALDA), The Strategic Grains Reserve Authority (SGRA) and the Accelerated Crop Production (ACP) were all established to improve the productive capacities of peasant farmers as well as improving their incomes and well-being.
The Nomadic and Adult Education Programmes were also established to assist in the eradication of illiteracy, which was found to be a major cause of poverty.
(Elumilade et al, 2006)
According to them, these programmes failed because of what could be summarized as politics of personal rule in which the rivalries and struggles of powerful and wilful persons, rather than impersonal institutions, ideologies, public offices, or class interests, are fundamental in shaping political life and the master and servant relationships associated with the programmes to alleviate poverty.
Since 1999, the democratically elected government also headed by General Obasanjo have initiated a number of programmes aimed at poverty reduction and employment generation, the major ones being the National Poverty Eradication programme (NAPEP) and Small and Medium Scale Enterprise development Agency of Nigeria ( SMEDAN). These programmes were initiated in line with the international goal to halve the incidence of poverty by 2015.
This time however the idea was to achieve this by encouraging skill acquisition and ownership of small business. President Obasanjo introduced the National Poverty Eradication programme (NAPEP) in the second quarter of 2001 which was primarily meant to develop “strategies for the eradication of absolute poverty in Nigeria” (FRN, 2001). NAPEP was established bearing in mind four core values; the Youth empowerment, rural infrastructure development, Social welfare service and the natural resource development and conservation schemes. This aims are helping the youth acquire education and vocational skills, improve on basic transportation, health, electricity and water infrastructure for the purpose of effectively harnessing resources that are readily available in the environment which of commercial importance.
It is now clear to the government of the day that only poverty reduction programmes aimed at encouraging individual ownerships of businesses be it production or service oriented is practical and sustainable. However, despite these gains in policy, there remains a major lag in infrastructure and energy supply to drive productive business initiatives of the citizenry. For example, between January 1, 1989 and August 2005 the price of petrol (gasoline) was increased eighteen times from about 60 kobo to N65, eleven of which were in the last ten years. Constant power outages and inadequate power supply means that business has to run on generators as well. As a result of these increases, the production costs of business are always on the rise making it difficult for Nigerian businesses, particularly small ones to operate and compete with cheaper imported goods. Hence the challenge of infrastructural development remains a stumbling block to an ambitious programme like NAPEP.
Nigeria cannot develop without the small businesses since it is productivity that drives every business and it is believed that so far small businesses have played a role no matter how little in our economic development. Hence within this context of this thesis, the role of SMEs in moving the economy of Kaduna North Local Government community in Kaduna State would be investigated.
2.7 Challenges of the SMEs
Most SMEs die within their first five years of existence. Another smaller percentage goes into extinction between the sixth and tenth year thus only about five to ten percent of young companies survive, thrive and grow to maturity.
Many factors have been identified as to the possible causes or contributing factors to the premature death. Key among this include insufficient capital, lack of focus, inadequate market research, over-concentration on one or two markets for finished products, lack of succession plan, inexperience, lack of proper book keeping, lack of proper records or lack of any records at all, inability to separate business and family or personal finances, lack of business strategy, inability to distinguish between revenue and profit, inability to procure the right plant and machinery, inability to engage or employ the right calibre staff, plan-lessness, cut-throat competition, lack of official patronage of locally produced goods and services, dumping of foreign goods and over-concentration of decision making on one (key) person, usually the owner. Other challenges which SMEs face in Nigeria include irregular power supply and other infrastructural inadequacies (water, roads etc) unfavourable fiscal policies, multiple taxes, levies and rates, fuel crises or shortages, policy inconsistencies, reversals and shocks, uneasy access to funding, poor policy implementation, restricted market access, raw materials sourcing problems, competition with cheaper imported products, problems of inter-sectoral linkages given that most large scale firms source some of their raw material outside instead of subcontracting to SMEs, insecurity of people and property, fragile ownership base, lack of requisite skill and experience, thin management, unfavourable monetary policies, lack of preservation, processing and storage technology and facilities, lack of entrepreneurial spirit, poor capital structuring as well as poor management of financial, human and other resources. Their characteristics and the attendant challenges notwithstanding, it is the consensus that SMEs, which globally are regarded as the strategic and essential fulcrum for any nation’s economic development and growth have performed rather poorly in Nigeria. The reason for this all-important sector’s dismal performance have been varied and convoluted depending on who is commenting or whose view is being sought. For sure it has nothing to do with government’s appreciation of the vital central role of the sector as evidenced by how well SMEs have been acknowledged and orchestrated in various government’s budget, with the imperativeness of SMEs as the bulwark for employment generation, poverty reduction and technological development being highlighted. While many attribute the relatively poor performance of SMEs in Nigeria when compared with the significant roles which SMEs have played in developed economies such as the United Kingdom, Germany and the United States and even developing countries of the world like India to the challenges outlined above, some others hinge the reasons on the fair share of neglect on the sector by the government. The latter group argues that government’s appreciation of the SMEs in capacity building has always been restricted to the pages of the budget presentations and submissions at various fora.
Essentially, they argue that poor budget implementations over the years account for the unsavoury impacts of SMEs on the Nigerian economy, which has had a record sluggish growth and declining future as measured by the population of Nigerians becoming literate, having more access to better healthcare, shelter, food, and other necessities of life such as access to more and better paying jobs as well as declining per capita income. Other parameters usually used to measure the performance of SMEs include percentage of working population employed by the SMEs in a given country or economy, the percentage contribution to the country’s GDP, managerial and technical capacity building, percentage of revenue internally generated or percentage of total PAYE accruing to the government from the SMEs employees, years increases in average household income, etc. This research is intended to critically appraise and analyse the operating environment and circumstances of SMEs in Nigeria with a view to actually identifying why they (SMEs) are not playing the vibrant and vital roles in the Nigerian economy as they (SMEs) do in other economies such as India which has so many similarities with Nigeria in terms of population and other demographic variables. This is even more disturbing if one recalls that Nigeria remains the largest market in the African continent where investment opportunities are beckoning to be exploited. This research uses Kaduna North Local Government community in Kaduna state Nigeria as the case study area.
The theories explored herein are in line with my findings. Setting up viable SME businesses will attract infrastructural developments and such infrastructures like road, electricity, water etc will aid the operations of the SMEs in areas of production cost reduction, marketing and products accessibility which will in turn lead to increase in profit margins irrespective of the type of businesses involved. While the SMEs maintain good profit margins and healthy balance sheets, banks and other financial institutions will be disposed to granting financial assistance like loans and grants to the SMEs. Government support is however required to ensure these loans are given at affordable interest rates. Government support is also required in providing favourable and stable policies to make SME businesses more conducive. With such conducive environments, SMEs will continue to thrive and improve on their profit records and will readily embrace Information Technologies (IT). With IT enough knowledge and information is accessible on the globe with which SMEs can use to turnaround and improve on their businesses. It is therefore evident that my findings support the existing theory in the field.

CHAPTER THREE
3. Methodology and Research Findings

3.1 Description of Study Area

Kaduna North is a Local Council Development Authority in Kaduna state. It is a middle to low class community and thrives on the merchandise offered for sale and services rendered by small business holdings. Most businesses are strictly retail outlets, however some involved in the manufacture of leather sandals, vulcanizing of tyres, metal fabrication, carpentry, tailoring rendering of computer services, just to mention but a few.

3.2 Research method and approach used

Primary data for this thesis was obtained through questionnaires designed and administered to small business owner in PANTEKA spare parts market, Magajin Gari, Tudun Wada and Kawo,Ungwar Rimi, in Kaduna North. 200 questionnaires amounting to about 25% of the sample size of business in the area (806) was administered to business owners in this community.
The methodology employed in this research entailed a compilation of questionnaires for SME operators in Kaduna North, Kaduna state. The respondents were even given the option of putting down their names or not in order to ensure objectivity and frankness in their responses. From the responses the researcher discovered that there were few identified problems and challenges facing SMEs. It became also very glaring that many of these problems and challenges were either closely related or essentially meant the same thing but expressed in different words or forms. For example, respondents used various phrases like “irregular electricity supply,” “epileptic electricity supply,” “frequent power outage,” “low voltage” and “frequent load shedding” to express the fact that they experience irregular power supply for their operations. Similarly expressions like “Bad Roads,” “Lack of Good Roads,”“Non existence of Access Roads,” and “Construction of own access roads” were employed by respondents to state problems they encounter with relation to accessing their factory premises. These and other problems relating to the availability of water for use in their (SMEs) factories were all grouped under “Infrastructure” in the questionnaire. The respondents were requested to rank these problem areas in the questionnaire by choosing the best option. The responses were keyed into the computer and analyzed using Statistical Package for Social Sciences (SPSS) analytical package or tool.

3.3 Statistical tool used

The Statistical Package for Social Sciences (SPSS) was used in the analysis of the data collected in this research as the researcher deemed it the most appropriate given its versatility and considering the nature of the data collected. The SPSS has the incredible capabilities and flexibilities of analyzing huge data within seconds and generating an unlimited gamut of simple and sophisticated statistical results including simple frequency distribution tables, polygons, graphs, pie charts, percentages, cumulative frequencies, binomial and other distributions. The Package has the capabilities of executing such high-level analysis as analysis of variance (ANOVA), chi-square tests, multivariate analysis, correlation and regression analysis, tests of statistical hypotheses, time series analysis, estimations, confidence interval estimation, comparison of several means, goodness of fit tests and analysis of contingency table, etc. Considering that the data collected are largely categorical in form, the chosen SPSS package the researcher considered was very ideal for use in the data processing and analysis:

3.4 Limitations of The study

Certain Limitations were encountered in the course of this study. Key among these includes:

Unavailability of Data: One of the greatest challenges the researcher encountered in this study relates to access to and collection of hard data due to extreme data gaps and paucity. This compelled the researcher to limit the study to Small and Medium Scale Enterprises thus excluding Cottage and Micro Enterprises whose challenges though comparable, could be fundamentally different from those of SMEs. The Cottage and the Micro Enterprises have been acclaimed to have significantly impacted on the grassroots by way of poverty alleviation and reduction. On a quite related note, there also appears of late to be a lot of Non-

Governmental Organizations, Bilateral and Multilateral Agencies and Organizations, which focus their attention on and channel their support and donations towards the Micro and Cottage Enterprises in order to contribute towards poverty reduction. Research has also proved that Micro and Cottage Enterprises have a better credit rating than the SMEs. In some places Micro Credits have less than one percent (1%) average default rate while the same cannot be said of SMEs.

Time and Funds: Another limitation of this study relates to time, funds and logistics constraints, which limited the intensity of the spread or area of coverage of the study. Even though SMEs are spread throughout the length and breadth of Nigeria though with negligible concentrations in some States and less urban areas, this study focused largely on SMEs in Kaduna North Local Government Kaduna .

Resistance of Respondents: The researcher was also limited by the reluctance of some respondents to complete the questionnaires promptly and those who even failed to complete them at all. This thus limited the number of respondents involved in the study despite the researcher’s efforts and approaches to them explaining the potential benefits of the study to them.

Materials: Mass literature on SMEs in scattered form abound but published data on categorizing and ranking of problems facing SMEs in Nigeria as well as the contributions of SMEs to our national economic growth and development proved rather difficult to come by. It was easier for the researcher to access data relating to the performer of SMEs in other parts of the world especially the Asian and Western Countries than those pertaining to SMEs in Nigeria. This factor thus limited the depth of discussions in the area of contributions of SMEs in Nigeria to our economic development and growth.

CHAPTER FOUR
4. Presentation and Analysis of Data

The detailed result obtained during this study is attached in the Appendix. A total of 200 respondents comprising of 117 males and 83 females aged between 19 and 61 years were interviewed during the course of this research. 30.5% (61) of the respondents were found to have been in business at least five years while 7.5% (15) of the entrepreneurs started business within this year. There was a significant relationship between age of business and profitability of the business (P≤0.005).

A good majority of the businesses (60.5%) are involved solely in trading of manufactured goods and raw materials (Fig 1). Only 14.0% (28) of the businesses of the respondent were involved in the production of goods. Some combine either two of trading, production and service rendering. Small and medium scale businesses in the community ranged from wine distilling plants, biscuit manufacturing to selling of vehicle and machinery spare parts, computer services and sachet water production. Results from one way analysis of variance shows that there is a significant relationship between type of business and profitability of the business (P =0.002). This does not support Hypothesis 4 which states that Profitability of SME is independent of the nature of goods and services on sale.

More than half (56.5%) of the business in this study were considered profitable by the owners and/or management staff and 27% (54) of the businesses were described as very profitable (Fig 2).

Although only 12.5% of the business surveyed made profits of a least one million naira (about US$10,000) per annum the vast majority made profits of between hundred thousand and one million naira per annum (Fig 3). Estimated annual income was also significantly related to profitability (P≤0.005).
This negates Hypothesis 2 which states that doing business at SME level is not profitable in Kaduna North Local Government.

On the average the staff strength was generally low (less than 10 individuals) although some businesses had up to 100 workers. 35% of the businesses surveyed have not employed a staff in the last year but this is inclusive of those who have no staff. 43% (86) of the businesses surveyed have other small businesses around which sell or produce materials which they need to run. However, only 21% (42) were set up directly as a result of existing SMEs.
This supports Hypothesis 3 which states that SMEs are not significant employers of labor Kaduna North Local Government.

A vast majority of respondents, irrespective of sex or age (70.5%) confirmed that there were infrastructural development in the area as a result of small businesses operational in the community. Majority of respondents (53.0%) particularly those who have been in business for longer periods agreed that there has been road/bus stop construction and repairs as a result of SMEs (Fig 4). The relationship between business profitability and infrastructural development was also significant (P≤0.005).
This negates Hypothesis 1 which states that the presence of SME village has not brought economic growth and infrastructural development to Kaduna North Local Government Community.

A total of 126 (63.0%) of respondents do not use computers and/or internet in their business (Fig 5). Only 16.5% (33) respondents use computers connected to the internet in their businesses, four of which own more than five computers. Almost half of all respondents (41.7%) make use of cyber cafes/ computer centers around the community and 72.5% confirmed that these cafes were established mainly to service the small businesses in the community.

The use of computers was found to be dependent on the type of business (P≤0.005). Majority of respondents (75.5%) confirmed that computer centers in the area where established to service the SMEs in the community (Fig 6).
This supports Hypothesis 6 which states that the presence of SME is directly linked with increased number of IT based business in the Kaduna North Local Government community.

Over 20 commercial banks and financial institutions are located in the periphery of the community and 74.2% of respondents (mostly those who have spent up to 5years at Kaduna North Local Government) confirmed that there were less than 20 banks a few years ago. Although there was a significant relationship between the number of banks and profitability of businesses in the area, this however did not depend on the type of business (P=0.686).
This supports Hypothesis 5 which states that the profitability of small businesses in Kaduna North Local Government has led to increased presence of banks and financial institutions and subsequent increase in SME loans and incentives by the Banks.
All respondents (100%) agreed that the government should encourage and create opportunities for small businesses in other parts of the state. In most cases (80.7%) they based their reason on employment generation (Fig 7).
This negates Hypothesis 7 which states that government should not encourage and develop more opportunities for SME level business elsewhere in Kaduna State.

4.1 Summary of Findings:
The table below summarizes the results of the hypothesis:

Hypothesis
Result
The presence of SME has not brought economic growth and infrastructural development to Kaduna North Local Government community.
No

Doing business at SME level is not profitable in Kaduna North Local Government.
No

SMEs are not significant employers of labor in Kaduna North Local Government
No

Profitability of SME is independent of the nature of goods and services on sale
No

The profitability of small businesses in Kaduna North Local Government has led to increased presence of banks and financial institutions and subsequent increase in SME loans and incentives by the Banks.
Yes

The presence of SME is directly linked with increased number of IT based business in the Kaduna North Local Government community.
Yes

The government should not encourage and develop more opportunities for SME level business elsewhere in Kaduna State.
Yes

My findings support the existing theory in the field
Yes

Table 2: Summary of hypothesis results

5. RECOMMENDATIONS AND CONCLUSIONS

SMEs have been fully recognized by governments and development experts as the main engine of economic growth and a major factor in promoting private sector development and partnership. The development of the SME sector therefore represents an essential element in the growth strategy of most economies and holds particular significance in the case of Nigeria. SMEs not only contribute to improved living standards, employment generation and poverty reduction but they also bring about substantial domestic capital and achieve high levels of productivity. From a planning standpoint, SMEs are increasingly recognized as the principal means for achieving equitable and sustainable industrial diversification and growth. In most countries, including developed countries like Japan, USA, UK etc, SMEs account for well over half the total share of employment, sales and total contribution to GDP.
A major gap in Nigeria’s industrial development process in the past years has been the absence of strong SME sub-sector. With over 120 million people, vast productive farmland, rich variety of mineral deposits and other natural resources, Nigeria should have been a haven for SMEs. Unfortunately, SMEs have not played the significant roles they are expected to play in Nigeria economic growth, development and industrialization.
The findings of this research point to the main causative factor as to why Nigerian SMEs are performing below expectation as to having a relationship to our environment. This includes our culture, government, lackluster approach to policy enunciation and poor implementation among others. The solution to the problems of Nigerian SMEs can only be realized if both the leaders and the citizens concertedly work together. The government has to take the lead by extending the current reforms to the educational and industrial sectors especially as regards policy formulation and implementation, port reforms, transportation sector reforms, revamping the infrastructural facilities, value re-orientation and reduction of bribery and corruption to the barest minimum if not eradication. Given efficient and effective execution of these as well as the political will and good leadership and followership, the SME sector will certainly be an effective tool for a rapid industrialization of the Nigerian economy.
Small and Medium Enterprises (SMEs) in Nigeria are largely not properly structured, are informal, labor intensive, have centralized or concentrated management, are basically involved in trading activities and disorganized as a result of low-level capacity in management, marketing and technical know-how as well as low level knowledge of legal and regulatory practices, policies and accounting practices.

The SME sector in Nigeria is replete with a multitude of problems some of which are intrinsic to it while others such as the lack of an enabling environment in terms of poor or non-existent infrastructure like bad roads, water, power, and access to finance are largely external.

Past successive governments in Nigeria have attempted to address the problems of SMEs, which is a pointer to the fact that the government has all along appreciated the crucial role and significance of SMEs as the ‘soul’ of economic growth and development and hence industrialization. SMEs represent the sub-sector of special focus in any meaningful economic restructuring programme that targets employment generation, poverty alleviation, food security, rapid industrialization and the stemming of rural-urban migration. To a large extent, Nigeria’s ability to realize the Millennium Development Goals (MDG) hinges on her ability to revamp and reinvigorate the SME sector.

Small and medium scale enterprises remain an important contributor to the development of
Nigeria as indicated by results in this study in Kaduna North Local Government. However the use of family labor and casual staff threatens to undermine the potential benefits of such businesses. This cannot be blamed solely on the entrepreneurs because they try to minimize cost which is mainly associated with the prohibitive cost of fuel. SMEs as observed in this study contribute to the establishment of other businesses which service them with raw materials and essential services particularly internet services. The fact that SMEs contribute to industrial development has also been resounded by this research as respondents agreed that road construction as other developmental projects have come to the community as a result of SMEs. The profitability and sustainability of small businesses could be the reason why respondents generally support the establishment of similar businesses elsewhere in the state. Overall the findings of this research indicate that SMEs are important contributors to economic growth in Nigeria. The results of this research work generally agree with existing theories in the field and once again link underperformance and cost of businesses to government actions and inactions.

5.1 Recommendations

Driven by the findings in this research, SMEs in Nigeria have a long way to go for the sector to be relevant, focused, productive enough, and play the crucial role it is expected to in relation to contributing to the growth and development of the economy of Nigeria.
The challenges and problems of the SMEs in Nigeria are hydra-headed and hence can only be effectively tackled by a multi-dimensional and concerted approach by all stakeholders i.e. the governments (Federal, State and Local)and their agencies and parastatals, banks, regulatory authorities, tax authorities, SMEs (owners and management), the employees of SMEs, multilateral and bilateral agencies and donors.

It behooves the government to create an enabling environment that is appreciably devoid of corruption and bureaucracy, and at the same time, motivating and entrepreneurially friendly. It has to be a two-pronged approach for the government efforts to be effective in recreating a conducive environment in which SMEs can thrive and blossom. It has to be an environment full of opportunities and incentives which would sufficiently attract investors and would-be entrepreneurs including young school leavers who would be motivated enough to opt to be employers instead of looking for paid jobs.

For the government to succeed in reinventing the future of SMEs, it has to extend the current reforms to our educational system to make it more functional, relevant and need-oriented and driven. The thrust and emphasis should be on modern technology, practical technological and entrepreneurial studies aimed at producing entrepreneurs. This implies a change in our culture, value system and orientation as well as Nigerians’ overall attitude, ethics and appreciation of the need for every Nigerian to contribute in making our country better than we met it.
The transformation of our educational system has to start from primary through secondary and tertiary emphasizing the cultural reorientation and focus on technological studies through all the stages. Where possible, the technological and entrepreneurial studies can be thought in the indigenous or local dialect to ensure full understanding and appreciation by the pupils and students. This method is bound to enhance fast and full integration of the new values into the culture of these young impressionable Nigerians.
A change in our value system, which would place high premium and recognition on entrepreneurial acumen, honesty, diligence, and ability to contribute to the society through invention or creation of employment opportunities for others, demonstration of quality leadership and the likes, should concurrently be introduced into our educational system with the above technological thrust.
In the same vein, morality, civics and war against corruption should also be introduced at the primary, secondary and tertiary levels of our education alongside entrepreneurial and technological studies. Corruption should be viewed as a canker worm, which eats deep into the fabrics of any progressive nation and certainly destroys the value system as well as economic growth and development. Civic studies should also be vigorously pursued in our educational system, as it will help the fight against corruption.
The existing anti-corruption agencies should not only continue but also be invigorated to more aggressively pursue their respective mandates in ensuring a better and more conducive and enabling environment for investors and entrepreneurial pursuits.
There is the urgent and dire need for the government to revamp the SME sector of the economy in order to redress the growing unemployment rate in the country, reduce poverty level, enhance standard of living and stimulate economic growth and development.
The government as a matter of urgency, should priorities the SME sector giving it devoted practical and visible attention with a view to making it virile, vibrant, focused and productive. The era of ‘lip service’ attention to the sector should be done away with. Nigeria cannot develop without a vibrant SME sub-sector, and so should do all within its arsenal to reverse the situation. Government should readily and freely assist prospective entrepreneurs or existing enterprises to have access to necessary information relating to business opportunities, modern technology, raw materials, markets, plant and machinery, goods and services etc which would enable them to reduce their operating cost and be more efficient and competitive. For this to be feasible, effective and functional, government should establish Business Information Centers (BICs) and Business Support Centers (BSCs) in partnership with States and Local Governments at every state capital and local government headquarters. The BSCs should offer advisory and mentoring services to entrepreneurs and also provide them with business plans or profiles of industrial projects ideally suited to the callers’ circumstance, conditions, endowment, skills and knowledge level and exposure. The ongoing reforms in the public service should be extended to the SME sector if the intended laudable objectives of the reforms are to be fully realized and the impact reflected in the Nigerian economic front.

5.2 Conclusion

Small and medium scale enterprises remain an important contributor to the development of Nigeria as indicated by results in this study in Kaduna North Local Government. However the use of family labor and casual staff threatens to undermine the potential benefits of such businesses. This cannot be blamed solely on the entrepreneurs because they try to minimize cost which is mainly associated with the prohibitive cost of fuel. SMEs as observed in this study contribute to the establishment of other businesses which service them with raw materials and essential services particularly internet services. The fact that SMEs contribute to industrial development has also been resounded by this research as respondents agreed that road construction as other developmental projects have come to the community as a result of SMEs. The profitability and sustainability of small businesses could be the reason why respondents generally support the establishment of similar businesses elsewhere in the state. Overall the findings of this research indicate that SMEs are important contributors to economic growth in Nigeria. The results of this research work generally agree with existing theories in the field and once again link underperformance and cost of businesses to government actions and inactions.

5.3 Future Research Suggestions

Since no secondary data on the performance of SMEs in Nigeria was readily available, primary data from questionnaires distributed and collated from respondents in Kaduna North Local Government was used for this research. A suggested avenue for future research is to develop data on SMEs in Nigeria to permit a broader level of inquiry into firm size prevalence and economic growth.
Also an in-depth study on SME informatization by industry should be undertaken, taking into account the different characteristics of each industry. This research for example involved SMEs located in Kaduna North Local Government, an urban city of Kaduna state of Nigeria. There is an apparent substantial gap in informatization between SMEs in urban and rural areas. Future studies should consider the regional differences when analyzing the impact, future and contributions of SMEs in Nigeria.
Further research should also be directed on investigating barriers, if any, inhibiting the adoption of IT and e-businesses. Such research should explore the learning barriers and examination of the relationship between IT skills of SME owners and the IT infrastructure and IT budget of the respective SMEs.
Furthermore, it is obvious that some initiatives have been introduced by the government to aid the development of SME market in Nigeria. Such initiatives like setting up of SMEDAN (The Small and Medium Enterprises Development Agency of Nigeria) and microfinance houses have not yet produced desired results. Thus one of the areas that will require empirical investigation is the relationship between the level of microfinance commitment and the level of entrepreneurs’ satisfaction.

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7. APPENDIX A: SURVEY QUESTIONNAIRE QUETIONNIARE FOR SMALL BUSINESSES IN KADUNA NORTH LOCAL GOVERNMENT L.G.A, KADUNA STATE, NIGERIA

SECTION 1

NAME (OPTIONAL):

AGE (OPTIONAL): SEX:

SECTION 2 (Circle the most appropriate)

1. What type of business do you do?
a. trading
b. production
c. service rendering
d. Other (Please specify):…………………………………..

2. When did you set up at Kaduna North Local Government?
a. this year
b. last year
c. 5 years ago
d. over 5 years ago

3. How would you say business has been?
a. very profitable
b. profitable
c. not profitable

4. What is your estimated annual income?
a. More than 10 million naira
b. More than 1 million but less than 10 million naira
c. less than N1million but greater than N500,000
d. less than N500,000 but more than N100,000
e. less than N100,000

5. How many staff do you have?

Please specify:……………………….

6. By how much have you increased your staff strength in the last year?

Please specify:……………………….

7. If yes how many did you recruit?
a. less than 20
b. more than 20

8. How many other small business sell/produce things/raw materials you use?
Please specify…………………………

9. Did they start up because of your business? Y/N

10. If yes, how many started because of you?

11. Has there been any infrastructure introduced to Kaduna North Local Government community because of small businesses around? Y/N

12. If yes, what are they?
a. Roads/bus stops
b. Street lights
c. Housing projects
d. Electricity
e. Others (please specify)…………………………..

13. Do you use computer and/or internet in your business? Y/N
14. If yes, how many do you own in your business?
Please specify…………………..

15. If yes, do you own your computer and/or internet?
a. Yes
b. I own but it is not connected

16. If you don’t own one do you patronize internet cafe /computer service centers around?
a. yes
b. no
c. can’t tell

17. Did the computer centers come to this area as a result of the small business around? Y/N

18. How many banks do you think service this community? ……………………..

19. Where they as much when you started your business? Y/N

20. If not what is the estimate number of banks then?.........................................

21. Do you suggest that government should encourage and create opportunities for small business in other parts of the state? Y/N

22. If yes, why ……………………………………………………………………………

23. If no, why……………………………………………………………………………

24. Please feel free to add any additional comment you may want to add: …………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

Thank You for your Time!

8. PPENDIX B: FREQUENCY TABLE age of respondent

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
below 25
27
13.5
13.5
13.5 between 25-60
166
83.0
83.0
96.5 above 60
7
3.5
3.5
100.0 Total
200
100.0
100.0

sex of the respondent

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
male
117
58.5
58.5
58.5 female
83
41.5
41.5
100.0 Total
200
100.0
100.0

type of business

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
trading
121
60.5
60.5
60.5 production
28
14.0
14.0
74.5 service rendering
23
11.5
11.5
86.0 trading and production
13
6.5
6.5
92.5 trading and service rendering
7
3.5
3.5
96.0 production and service rendering
8
4.0
4.0
100.0 Total
200
100.0
100.0

start time of the business

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
this year
15
7.5
7.5
7.5 last year
51
25.5
25.5
33.0 3years ago
10
5.0
5.0
38.0 4 years
9
4.5
4.5
42.5 5years ago
61
30.5
30.5
73.0 over 5 years ago
54
27.0
27.0
100.0 Total
200
100.0
100.0

profitability of the business

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
very profitable
54
27.0
27.0
27.0 profitable
113
56.5
56.5
83.5 not profitable
29
14.5
14.5
98.0 4
2
1.0
1.0
99.0 5
2
1.0
1.0
100.0 Total
200
100.0
100.0

estimated annual income

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
over 10million
5
2.5
2.5
2.5 over 1 million
20
10.0
10.0
12.5 less than 1 million but greater than 500thousand
81
40.5
40.5
53.0 less than 500thousand but greater than 100 thousand
75
37.5
37.5
90.5 100 thousand and below
19
9.5
9.5
100.0

Total
200
100.0
100.0

number of staff

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
less than 10
124
62.0
62.0
62.0 greater than 10
45
22.5
22.5
84.5 none
31
15.5
15.5
100.0 Total
200
100.0
100.0

have you employed in the last year

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
126
63.0
64.3
64.3 no
70
35.0
35.7
100.0 Total
196
98.0
100.0

Missing
System
4
2.0

Total
200
100.0

how many new staff

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
less than 10
95
47.5
50.3
50.3 10 and above
31
15.5
16.4
66.7 None
63
31.5
33.3
100.0 Total
189
94.5
100.0

Missing
System
11
5.5

Total
200
100.0

allied business

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
0ne
66
33.0
34.4
34.4 two and above
86
43.0
44.8
79.2 None
40
20.0
20.8
100.0 Total
192
96.0
100.0

Missing
System
8
4.0

Total
200
100.0

did they start because of your business

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
Yes
42
21.0
29.0
29.0 No
103
51.5
71.0
100.0 Total
145
72.5
100.0

Missing
System
55
27.5

Total
200
100.0

how many started because of you

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
One
43
21.5
81.1
81.1 two and above
10
5.0
18.9
100.0 Total
53
26.5
100.0

Missing
System
147
73.5

Total
200
100.0

any infrastructure introduced to Kaduna North Local Government because of small businesses

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
141
70.5
70.5
70.5 no
57
28.5
28.5
99.0 4
2
1.0
1.0
100.0 Total
200
100.0
100.0

if yes, what is the infrastructure

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
road or bus stop
106
53.0
72.1
72.1 street light
15
7.5
10.2
82.3 housing projects
1
.5
.7
83.0 electricity
21
10.5
14.3
97.3 others
4
2.0
2.7
100.0 Total
147
73.5
100.0

Missing
System
53
26.5

Total
200
100.0

do you use computer and/or internet

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
68
34.0
35.1
35.1 no
126
63.0
64.9
100.0 Total
194
97.0
100.0

Missing
System
6
3.0

Total
200
100.0

if yes, do you own your computer and/or internet

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
33
16.5
48.5
48.5 I own but it’s not connected
35
17.5
51.5
100.0 Total
68
34.0
100.0

Missing
System
132
66.0

Total
200
100.0

if yes, how many computers do you own

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
one
29
14.5
37.7
37.7 two to five
44
22.0
57.1
94.8 more than five
4
2.0
5.2
100.0 Total
77
38.5
100.0

Missing
System
123
61.5

Total
200
100.0

if you do not own one do you patronize internet cafe/ computer centers around

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
63
31.5
41.7
41.7 no
82
41.0
54.3
96.0 can 't tell
6
3.0
4.0
100.0 Total
151
75.5
100.0

Missing
System
49
24.5

Total
200
100.0

did the computer centers come to this area as a result of the small businesses

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
145
72.5
72.5
72.5 no
55
27.5
27.5
100.0 Total
200
100.0
100.0

how many banks service this community

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
less than 20
8
4.0
4.0
4.0 more than 20
192
96.0
96.0
100.0 Total
200
100.0
100.0

where there as many when you started your business

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
48
24.0
25.8
25.8 no
138
69.0
74.2
100.0 Total
186
93.0
100.0

Missing
System
14
7.0

Total
200
100.0

if not what is the estimate number of banks then

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
less than 20
124
62.0
79.0
79.0 more than 20
33
16.5
21.0
100.0 Total
157
78.5
100.0

Missing
System
43
21.5

Total
200
100.0

should the government encourage and create opportunities for small businesses elsewhere in the state

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
yes
198
99.0
100.0
100.0
Missing
System
2
1.0

Total
200
100.0

if yes why

Frequency
Percent
Valid Percent
Cumulative Percent
Valid
employment
155
77.5
80.7
80.7 employment and development
31
15.5
16.1
96.9 employment and crime reduction
6
3.0
3.1
100.0 Total
192
96.0
100.0

Missing
System
8
4.0

Total
200
100.0

if no why

Frequency
Percent
Missing
System
200
100.0

APPENDIX C: ANOVA

Type of Business and Profitability of the business Sum of Squares df Mean Square
F
Sig.
Between Groups
9.710
5
1.942
3.838
.002
Within Groups
98.165
194
.506

Total
107.875
199

Age of business and Profitability of the business Sum of Squares df Mean Square
F
Sig.
Between Groups
13.857
5
2.771
5.718
.000
Within Groups
94.018
194
.485

Total
107.875
199

Profitability and estimated annual income Sum of Squares df Mean Square
F
Sig.
Between Groups
29.492
4
7.373
11.315
.000
Within Groups
127.063
195
.652

Total
156.555
199

Infrastructure introduced to Kaduna North Local Government because of small businesses Sum of Squares df Mean Square
F
Sig.
Between Groups
15.619
4
3.905
19.259
.000
Within Groups
39.536
195
.203

Total
55.155
199

The use of computers and type of business Sum of Squares df Mean Square
F
Sig.
Between Groups
50.149
1
50.149
30.652
.000
Within Groups
314.124
192
1.636

Total
364.273
193

Profitability and number of banks Sum of Squares df Mean Square
F
Sig.
Between Groups
3.822
4
.955
48.285
.000
Within Groups
3.858
195
.020

Total
7.680
199

Type of business and number of banks service this community Sum of Squares df Mean Square
F
Sig.
Between Groups
.120
5
.024
.618
.686
Within Groups
7.560
194
.039

Total
7.680
199

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