CHAPTER ONE
INTRODUCTION
1.1Background to the Study
Small
and Medium Scale Enterprises (SMEs) are recognized as the driving force for
developed and developing countries across the globe for playing an important
role in economic growth and sustainable development (Ariyo, 2005). SMEs occupy
or contain a place of pride in virtually every country or state. Because of
their significant roles in the growth and development of various economies,
they have aptly been regarded as “the engine of growth” and “catalysts for the
socioeconomic transformation of any country”. SMEs serve as a veritable vehicle
for the achievement of national economic objectives for poverty reduction at
low investment cost and employment generation as well as the development of
entrepreneurial capabilities, which include indigenous technology. In same vein
intrinsic benefits of vibrant and healthy SMEs include access to
infrastructural facilities occasioned by the present or existence of such SMEs
in their surroundings, and the stimulation of economic activities which include
suppliers of several items and distributive trades for items produced or
required by SMEs, stemming from rural-urban migration, and also enhancement or
strengthening of standard of living of employees or workers of the SMEs and
their dependents as well as those that are directly or indirectly related to
them (Onugu, 2005). SMEs worldwide can boast of being the major employers of
labour and the likes mentioned above if it is compared to the major industries
including the multinationals.
Oladele
and Akeke (2010), enterprise is an organization established for the purpose of
providing goods and services that meet customer’s needs. With the current
inclination of economic activities in Ekiti State, Small and Medium Enterprise
(SMEs) are undoubtedly recognized by the government, private, individual and
developmental experts as the main engine room for any nation’s growth and
development which can be summarily referred to as the bedrock of the nation
(Ariyo, 2009).
According
to Sanberge, Vinberg and Pan (2002), performance of SMEs is their ability to
contribute to job and wealth creation through enterprises start up, survival
and growth. SMEs performance can be termed to be the firm’s success in the
market which may have different outcomes and can be referred to as the final
phenomenon in enterprises studies which invariably can be characterized as the
firm’s ability to create acceptable outcomes and actions (Chittithaworm. Islam,
Keawchana, and Yusuf, 2011).
The
establishment and growth of SMEs undoubtedly had positively affected the
bottom-line of the state economic activities. Without an iota of doubt, the
upward economy growth of the state started shortly after its creation of 1996 y
late Gen. SanniAbacha, which had since then attracted to local and local and
foreign investors to establish small and medium enterprises. The emergence of
these has led to the creation of employment, alleviate poverty, improve
standard of living, generate more revenue for the government, enhance the use
of local raw materials, create viable market, act as training ground for future
entrepreneurs and reduction in crime rate, to mention but a few.
Considerable
number of researchers has worked on the subject matter in the years past but
little or no effort was geared towards accessing the determinant factors of
small and medium enterprise performance in Ekiti State, especially between
2003-2015. A previous study shows that many factors are responsible for SMEs
performance which include but not limited to educational background, political
stability, government policy, infrastructure, competences of expert and market.
Therefore,
the research study aims of examining if determinant factors such as: Education,
political, policy, infrastructure, funding, entrepreneur, competencies, raw
materials, technology, channel of distribution and consumers patronage actually
enhance the SMEs performance and the most effective amongst the factors in
Ekiti State.
1.2 Statement
of Research Problem
The
contribution of SMEs to the Nigerian economy is still very small and negligible
when compared with other countries such as the Asian Tigers (Owualah, 1998).
The SMEs in Nigeria still face a lot of problems ranging to survival, the rate
of mortality is alarming. The government has made a lot of efforts to ensure
that the SMEs are given a helping hand to frog-leap; growing to complement the
modern day industrial structures like other developing nations of the world.
Over the years, there have been serious divergent opinions as to what should be
an appropriate policy to develop for Nigerian SMEs. In recent times, the
government merged the Nigerian Industrial Development Bank (NIDB), Nigerian
Bank for Commerce and Industry (NBCI) and Nigerian Economics Reconstruction
Fund (NERFUND) to form the bank of Industry (BOI); all in the Small and Medium
Enterprises Equity Investment Scheme (SMEEIS) was set in 2001 by the Bankers
Committee which was a response to government overture that banks should device
ways of funding SMEs in Nigeria. Now government has converted all the Community
Banks in the country to Micro-Finance Banks, strengthening the capital base, so
as to be able to lend a helping hand to the development of SMEs. In spite of
these developmental policies, the result from this sector of the economy has
not been encouraging. Some scholars are of the view that the effort of Nigerian
government is unidirectional. Apart from financial support, little is being
done by the government about other environmental support such as infrastructure
and technology. No doubt, in Nigeria and indeed as in many other developing
countries, poverty level is still very high. Some scholars have maintained that
the high rate can be linked to the investment environments which have been
friendly to the survival and development of SMEs. This is evident from the role
of mortality of these small scale enterprises.
1.3 Research Questions
i. What are the sources of finance for
entrepreneurial development in Ekiti State?
ii. What are the roles of government in
entrepreneurial development in Ekiti State?
iii. What is the impact of small and medium
enterprises on community development in Ekiti State?
1.4 Objective of the
Study
The broad objective of the study is majorly to critically evaluate
the effect of entrepreneurial finance on the performance of small and medium
scale in Ekiti State. The specific objectives of the study shall be to:
i.
Examine the sources of finance for
entrepreneurial development in Ekiti State.
ii.
Evaluate the roles of government in
entrepreneurial development in Ekiti State.
iii.
Examine the impact of small and medium
enterprises on community development in Ekiti State.
iv.
Make recommendations for further
researchers, entrepreneurial and government agents.
1.5 Research
Hypothesis
Ho:Entrepreneurial finance has no significant effect on the
performance of small and medium scale in Ekiti State.
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