THE IMPACT OF NON-GOVERNMENT FUNDING PROMOTIONS AND DEVELOPMENT OF SMALL SCALE ENTERPRISES

CHAPTER ONE

INTRODUCTION

Background of the study: Small scale industry orientation is part and parcel of Nigeria. Evidence abound in our respective communities of what successes our great grand parents made of their respective trading concerns, yam barns, iron smelting, farming, cottage industries and the likes. So the secret behind their success of a self reliant strategy does not lie in any particular political philosophy, so much as in the people’s attitude to enterprise and if the right incentive is adequate enough to make risk worthy ventures and decisions worth taking. Back home in Nigeria, the respective government policies accorded and gave priority to the country’s small scale enterprises. This has been in recognition that they constitute the fountain head of vitality for the National economy, and consequently their problems have been viewed as those of the nation, by virtue of their number, diversity, penetration in all sectors of production and marketing contribution to employment and to the prosperity of the particular areas in which they operate. In concrete terms, small scale industries constitute a greater percentage of all registered companies in Nigeria, and they have been in existence for a quite long time. Majority of the small scale industries developed from cottage industries to small enterprises and from small scale, to medium and large scale enterprises.

Prior to Nigerian Independence, the business climate was almost totally dominated by the Colonial and other European Multinational companies like United African Company (UAC), GB Olivant, Lever Brothers Company, Patterson Zechonics, Leventis, and many others. These companies primarily engaged in bringing into Nigeria finished goods from their parent companies overseas. These companies have vast business experience and strong capital base, and dominated the Nigerian economy. The government of those days encouraged them to become stronger by giving incentives as favourable traffis and tax concessions. Towards the tail end of the 1950s, the Nigerian Industrial Development Bank (NIDB) was established to assist potential entrepreneurs to get involved in Agriculture, exploration of natural resources, Commerce and Industrial production. That period and the early 1960s saw the massive increase in import into the Nigerian market, while the Nigerian economy became largely dominated by very few large foreign firms.

A major/remarkable break through in small scale business came about through the indigenization Decree of 1972 and later in Nigeria Enterprises Promotion Act of 1977. These were genuine attempts by the Federal Government to make sure that Nigerians play an active and worthwhile roles in the development of the economy. In its 1970-74 National Development Plan, the Federal Government gave special attention to the development of small scale industries particularly in rural areas. This was in recognition of the roles of small and medium scale industries, as the seedbeds and training grounds for entrepreneurship. The cardinal point of the 1970 – 1974 development plan was;

1. Accelerating the pace of industrialization and dispersal of industries.

2. Generating substantial employment opportunities.

3. Promoting individual initiatives and entrepreneurship among the populace.

4. Assisting in the established of small scale industries.

5. Developing and increasing export trader, and 6. Complementing large scale industries.

Within this period, the government policy measures placed emphasis on the technological aspects of industrial development of small scale industries in Nigeria. Various tiers of government within this decade embarked on corrective measures to divert efforts towards the maximum exploitation of natural resources, and tried to discourage capital intensive mode of production in the light of the abundant resources available. In this regards, the industrial policy tried to focus its attention mainly on local resources utilization through various forms of incentives worked out by governments.

1.2 Statement of the Problem

The federal and state government have both contributed to the growth of small scale industries in Nigeria especially in the rural areas. In recent times, various fiscal and non-fiscal incentives have been established for investors and entrepreneurs in the small scale sectors of the economy. Of special mentioning was the strategy adopted by the federal government towards the training and motivation of the unemployed graduates, to be gainfully employed after graduation, referred to as the entrepreneurship development programmes. To show its seriousness, the Federal Government through its educational agencies like the National Board for Technical Education (NBTE), the Nigerian University Commission (NUC), and the National Youths Service Corps (NYSC) programme gave a directive that entrepreneurship development courses and programmes be incorporated into the curricular of tertiary institutions and in the NYSC programmes.despite the huge training carried out by these various channels, SMEs in Nigeria seems to be suffering from poor financing. This limitation is huge such that it affects the contributions and the productivity of the Small and Medium Enterprise. The focus of this study is to examine the impact of non-governmental funding on the promotion and developments of SMEs among youths in Lagos state.

1.3 Objectives of the Study

1. To determine the importance of government funding towards the promotion and development of SMEs among youths.

2. To examine the constraints to effective promotion and development of SMEs in Lagos.

3. To examine Effective Approaches on SME Promotion and development  among youths in Lagos.

1.4 Research Questions

1. What are the implications of non-government funding towards the promotion and development of SMEs among youths?

2. What the constraints to effective promotion and development of SMEs in Lagos?

3. What are the various effective Approaches on SME Promotion and development  among youths in Lagos?

1.5 Significance of the study

This study is targeted at examining the role of government funding towards the growth and development of SMEs in Lagos state. The essence is to ensure that SMEs in Lagos become productive and continue to contribute towards national development. This study therefore is of importance to policymakers. Also, the study would prove important to SME managers, as it would enable them understand the importance of government funding and therefore align themselves to various government promotional programmes. Finally, this study will contribute to academics.

1.6 SCOPE AND LIMITATION

The study is focused on government funding as regards the promotion and development of SMEs in Lagos state. Without digression, it examines the importance of government funding among SMEs. The study was however limited by the number of SME operators that participated in the study. It is limited also to Lagos state. The implication is that the study is open for further researches.

1.7 DEFINITION OF TERMS

SME: Small and Medium Enterprises

Funding: Funding is the act of providing financial resources, usually in the form of money, or other values such as effort or time, to finance a need, program, and project, usually by an organization or company.

Promotion: Activity that supports or encourages a cause, venture, or aim.

Development: A specified state of growth or advancement.