ISSUES, CHALLENGES AND PROSPECTS OF SMALL AND MEDIUM SCALE ENTERPRISES (SMEs) IN AFRICA (A survey of Small and Medium Scale Enterprises in Nigeria)

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ABSTRACT
The purpose of this research is to discuss Issues, Challenges and Prospects of Small and Medium Scale Enterprises (SME) in Lagos, Nigeria.This came about due to the high rate of unemployment in the society and the poor performance of SMEs in terms of employment generation. While the research questions address the extent to which poor financing, inadequate social infrastructure, lack of managerial skills and multiple taxation constitute major challenges in the performance of SMEs in Nigeria, it assumes that government intervention through the provision of financial assistance, social infrastructures and favorable taxation policies will reverse this trend.


This research will replicate the model used by Agwu M.O and Emeti C.I in a research conducted in Port­Harcourt city, the research which also tends to investigate a similar topic ­ Issues, Challenges and Prospects of SMEs in the Port­Harcourt city. A descriptive research approach using 115 randomly selected registered operators of SMEs in Lagos, Nigeria will used in this particular research.Results from the data analysis indicated that poor financing, inadequate social infrastructure, lack of managerial skills and multiple taxation were major challenges confronting SMEs in Lagos ­ Nigeria, thus Agwu M.O and C.I Emeti in their Journal titled European Journal of Sustainable Development (2014), 3, 1, 101­114 recommended: provision of soft loans to SME operators, government guaranteeing of long­term loans to SME operators, establishment of SME funding agency, public/private sector partnership in infrastructural provision /development, capacity building for SME operators and provision of tax incentives for SME operators.


TABLE OF CONTENTS

1.         INTRODUCTION

2.         Background and History
2.1 Literature Review
2.3 SMEs and Economic Development in Nigeria
2.4 Nigeria’s Business Environment: An Overview
2.5 Statement of the Problem.
2.6 The Objectives of the Study
2.7 Research Questions
2.8 Limitation of the Study

3.         Small and Medium­sized Enterprises SMES
3.1       Types of Small and Medium­sized Enterprises
3.2       The Importance of Small and Medium­sized Enterprises in Nigeria (SMEs)

4.         The Role of SMES in the Field of Economic Development in Nigeria
5.         The Problems of Small and Medium­sized Enterprises in Nigeria
5.1       Policies and the Implications for SMES
5.2       Problems with Policies on SMES
5.3       The policy of the Government on Development of SMES  Business
5.4.      The Prospects for the Creation of a Favorable Business Environment in Nigeria.

6.         The Project Methodology
6.1       Data Sources

7.         Research Findings and Analysis
7.1       Population of Study
7.2       Answers to Research Questions
                        7.2.1. Question 1
                        7.2.2 Question 2
                        7.2.3 Question 3                                 
                        7.2.4 Question 4

8.         Conclusion and Recommendations
APPENDIX


1.                INTRODUCTION
Small and medium­sized enterprises (SMEs) are widely considered the engine room of economic growth and development in many developing countries as well as in countries with economies in transition. According to the executive summary of the OECD report on (Promoting SMEs for Development: The Enabling Environment and Trade and Investment Capacity Building in 2004, pg 5) “SMEs play a key role in transition for developing countries. These firms typically account for more than 90% of all firms outside the agricultural sector and constitute a major source of employment, generate significant domestic and export earnings. As such, SME development emerges as a key instrument in poverty reduction efforts.” SMEs are in a better position to increase employment, promote industrialization and improve the contribution of non oil exports to government purse.


Small and medium­sized enterprises (SMEs) have been increasingly recognized as a major platform by which many African countries can become developed owing to their existing contribution and capability to further drive the entire African continent to a developed status. According to Charles Yeboah Frimpong in his article on SMEs As An Engine Of Social And Economic Development In Africa (July 2013), For example, “it is estimated that SMEs account for 70 percent of Ghana’s gross domestic product (GDP) and 92 percent of its businesses. They also make up 91 percent of formalized businesses in South Africa and 70 percent of the manufacturing sector in Nigeria”. SMEs are not only the engine of the economy, but can also serve as a stimulus for economic diversification in other sectors of the economy. SMEs with innovative technology have the potential to internationalize and enter foreign markets both regionally and globally. Support for SMEs have the capacity to significantly improve the standard of living of the populace and improve the economy of not only many countries in sub­Saharan Africa but the African continent as a whole.


This research considers the challenges inhibiting the development of SMEs in Nigeria. Experience shows that, although the number of SMEs in Nigeria is high, their expectation for growth is still very low. In order to understand this issue, this study looked into the support SMEs receive from the government among other factors and come to the conclusion that it is significantly different across the continent. Lack of access to credit is also another identified obstacle many SMEs are battling with and if this can be tackled, it would make a positive impact on SMEs’ development.

MATERIALS AND METHODS:

The scope of this research is limited to the 115 randomly selected operators of SMEs in Lagos, Nigeria. It is assumed that their responses will reflect the opinions of all SME operators in Lagos, Nigeria. The research adopted a cross sectional survey method and administered the questionnaire to 115 randomly selected operators of SMEs in the city of Lagos. The assumed population of the study consists of about 1,150 registered operators of SMEs in Lagos, Nigeria while the actual sample size of 115 equals 10% of the population size. Data collected would then be presented using tables, pie charts analyzed using nonparametric simple percentages to determine our stated question and same would be used for the analysis.


THEORETICAL FRAMEWORK

This research identifies not only how the state and leadership has failed to provide the necessary support and conducive environment that enables SMEs to thrive and succeed, but also how poor followership and interest has encouraged that failure. Examining the influential role leadership plays in the success of followers, it is obvious from the responses of those interviewed during the course of this study that many of the SMEs look up to the leaders/state for support. According to Amabile, T. M. & Kramer, S. J. in their article ¨What really motivates workers (#1 in breakthrough ideas for 2010). Harvard Business Review, 88:1, 44­45,¨ “when the business community supports an idea, change can happen really fast” They were of opinion that when workers have a sense of belonging this gives them a motivation that help them to pursue success.For the sake of this study this will mean that when the leadership performs well, the followers will equally do well because there is that genuine desire to succeed. The leadership...


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