*Economics / 9. Industrial Economy.
BABALOLA YISAU ABIODUN
Accounting and Auditing Department
Volodymyr Dahl East Ukrainian National University, Lugansk,
Ukraine
THE INFLUENCE OF SOCIO-ECONOMIC CHARACTERISTICS ON SMALL-SCALE
ENTERPRISES IN NIGERIA
Introduction
The small-scale enterprises
whether set up
by an individual, group of
people or society
has economic contributions which
include: the mobilization of idle or untapped financial resources, conservation
of foreign exchange, utilization of local resources inputs, as well as avenues
for economics integration. Others are transformation of the traditional sector
into modern form, creation of employment opportunity, providing training ground
for managerial skill acquisition and affording a source of livelihood for the
majority of low income earners nationwide (Owualah, 1999) cited by Adepoju, O.
I. et al (2012). Despite the dominant importance of the small scale industry to
economic growth and social development in Nigeria, the social-economic status
of the country has considerably affected the development and improvement of
certain sectors. World Bank (2000) stated that there is no country in Africa whose
deterioration is socio-economic status has been as severe as that of Nigeria to
the extent that within the last five years, half of the population is living
below the poverty line.
Recently, a
number of strategies and activity have been put in place such as: sharply
expressed programmes, techniques and innovation in agricultural programmes to
address the deteriorating socio- economic situation. Ovia (2000) stated that
the establishment of structural Adjustment programme (SAP) in 1986 in Nigeria
led to the downsizing of many large-scale enterprises and created opportunities
for small-scale enterprises. Inspite of the strategies and activities put in
place, small scale enterprises are still battling with many problems that exist
in promoting their growth and development like, low capital, low level of
technology, shortage of adequate
entrepreneurial skills and
absence of an
effective management technique
(UNIDO, 1999).
Among others,
Nigeria, one of the major oil producing countries in the world was recent
classified to be one of the poorest countries. World Bank (2000) stated that
the poverty has increased dramatically with 65% of the population living below
the poverty line as against 43% in 1992. It has been observed that there is no
country in Africa whose deterioration in socio-economic status has been as
severe as that of Nigeria, to the extent that within the last five years, half
of the population is living below the poverty line (World Bank, 2000). The
socio-economic status of the country has considerably affected the development
and improvement of certain sectors. Recent times have witnessed a number of
strategies, and activities like sharply expanded programmes, techniques and
innovations in agricultural programmes in Nigeria in order to address the
deteriorating socio-economic situation. Universities, research institutes and
private sector organizations are the most important institutions involved in
the technical entrepreneurship, which is one of the major sources of wealth,
power and employment in developed countries. Unfortunately, the absence of
viable industrial and private sector, the deficiencies of existing
infrastructure and dominance of foreign-based multinational companies tend to
have a limiting effect on the capacity to create, foster and nurture indigenous
enterprises in Nigeria. Identifying and supporting the activities of potential
and existing entrepreneurs has become a major concern for an increasing number
of governments in developed and developing countries. Public policies are
designed in developing countries to increase the pool of entrepreneurs and to
promote the formation of certain types of business at the micro and small-scale
levels which foster technological activities. The governments in most
developing countries such as Nigeria were criticized for paying inadequate attention
to the need for accelerated economic growth and for not harnessing the
abilities of their own citizens for technological innovations and
entrepreneurship (Anamekwe, 2001) cited by Adepoju, O. I. et al (2012).
In
Nigeria, small-scale businesses represent about 90% of the industrial sector in
terms of the number of enterprises. They also account for 70% of national
industrial employment if the threshold is set at 10-50 employees, contribute
10% of manufacturing output and a meager 1% of gross domestic product (GDP) in
2001 (Ajayi, 2002). Similarly, they have also contributed significantly to
economic development through employment, job creation and sustainable
livelihood (Nigeria Investment Promotion Commission, 2003).
In
spite of the major role, the significance and contributions of the small-scale
enterprises to the national economy, this set of enterprises are still battling
with many problems and certain constraints that exist in promoting their development
and growth. For instance, (International Labour Organization, 1994) study shows
that inadequate entrepreneurial talent affects the development of small-scale
manufacturing and processing industries. While large-scale industries are
established with expatriate capital, small-scale industries need to have a
domestic entrepreneurial and industrial base. Other problems that hinder the
advancement of small-scale enterprises are the persistent low level of
technology, the shortage inadequate entrepreneurial skills of operators and the
absence of an effective management technique. Discussion of a change in the
level of technology and its impact on the Nigerian industries has focused on
large firms (i.e. capital-intensive, high technology sectors). Focus on this
change in the small-scale firms is relatively little. Small-scale enterprises
tend to concentrate on traditional industries where low entry barriers, low
minimum production scales, and relatively large labour force are the potential
advantages. However, the traditional industries have not been immune to the
recent technological revolution taking place in the field (Adubifa, 1990) cited
by Adepoju,
O. I. et al (2012).
Nigeria since
independence has been undergoing some economic strangulation that has
impoverished the nation and its citizenry over the years. The Centre for Gender
and Social Policy Studies (CGSPS) in a communiqué early in the year 1999
observed that the general socio-economic situation in Nigeria over the years
has deteriorated and consequently, poverty has increased. It was agreed that
Nigeria has descended to join the group of low-income countries and poverty is
pervasive and deep-seated in the country. It also pointed out that there are
lot of unrecognized poor people in Nigeria today especially in the rural areas
which have not benefited economically from government agricultural development
policies.
Many Nigerian
families can no longer provide enough food, adequate shelter, comfortable
accommodation, decent clothing and proper Medicare for family members. In some
cases, the breadwinner, father or mother is out of job. In several other cases
both father and mother and even the children have jobs but their incomes fall
flat in the face of inflation and high cost of living. People die of hunger and
starvation for lack of money to buy foods and drugs. Individuals in the rural
communities (especially in the river line areas) live in shacks and houses with
leaky roofs because of their inabilities to pay house rents. The
same report has
it that poverty level in Nigeria family
rose to about
75% in 1997. Polygamous marriage was prevalent in these rural areas as
well as the high numbers of children per family contribute to family poverty;
Adepoju, O. I. et al (2012).
Meanwhile,
since the inception of the Structural Adjustment Programme (SAB) in Nigeria in
June 1986, the inflation has skyrocketed thereby greatly eroding the real
income of consumers. Thus, Nigeria’s real per capital income declined more than
three folds from over US$ 1,000 in the early 1980s to about US$3000 by the
early 2000s. The current economic situation has turned many marginal
entrepreneurs bankrupt. The emerging trend is that many people, regardless of
their income level, now depend on small-scale entrepreneurial services for
survival as imported goods and services increasingly becomes out of reach of
the masses. This had led to a rapidly expanding demand for the small-scale
industrial goods and services.
References
Ajayi, C.A.
(2002). Development of small-scale industries in Nigeria; Being paper presented at workshop on Grassroots
Advocacy and Economic Development.
Adepoju, O.
I. et al (2012). European Journal of Social Sciences ISSN 1450-2267 Vol.33 No.1
United Nations Development Organization
(1999); small Scale industries Industrialization of Development Countries.
Problems and Prospects UNIAD development.