THE ROLE OF SMALL AND MEDUIM SCALE ENTERPRISES (SMES) IN AN ECONOMY (ECONOMICS PROJECT TOPICS AND MATERIALS)
The research work aimed at examining the role of Small and Medium Scale enterprises (SMEs) in an economy using Eddison Aluminum Company as a case study. The main instrument used to generate data for the study was the questionnaire, sixty (60) in number which received 93.33% response rate.
The key issues uncovered by the research study are that respondents agreed that small and medium scale enterprises like Eddison Aluminurn Company have played a significant role in the Iron, Steel and Aluminum Industry in particular and the economy in general. Also, most of the barriers to the growth of SMEs in Nigeria include poor managerial skill, lack of feasibility studies, lack of timely information, inconsistent government policies and inadequate infrastructural facilities.
Effective training can improve the productivity of Eddison Aluminum Company. There is prospect for the survival of SMEs in Nigeria.
However, the findings of the Study, the following recommendations are proffered. The Federal Government should provide enabling environment like the provision of infrastructures such as good roads, electricity supply, water to enable the operations of SMEs in Nigeria. Finally financial institutions like banks, finance houses, mortgage homes should grant soft loans to SMEs without too much rigidity on collateral security.
1.1BACKGROUND OF THE STUDY
The growth of small and medium scale enterprises in any economy is usually regarded as a catalyst to the development of industrial sector in that country. Small and medium scale firms have a vital role to play in promoting the social and economic well being of the nation. This is because this sub-sector is a viable means of utilizing the locally available resource. It is also a sustainable means for food security, employment generation, improving the earning capacity of the populace and laying the foundation for a sustainable development programme.
According to Ojodu (2002), in “Reinvigorating Nigeria Economy” the promotion of small scale business is a well recognized and much heralded strategy of industrial development in developed and developing countries, and its ability to enhance entrepreneurial and managerial skills. In advanced economies of us, Japan, Germany, U.K. etc, small and medium scale business have been recognised as the appropriate production units for the transformation of locally produced agricultural and other products which serve as inputs for large ‘scale industries.
Development economists are of the opinion that labour intensive industries like the SMEs can enhance employment generation, advance development goals like improved income distribution, generation and diffusion of technology and industrial skills, increased utilization of local resources, improved spatial distribution of industrial activities and reduction of rural urban population movement. In a depressed economy; like Nigeria, effective and efficient operation of small and medium scale enterprises as well as creation of conducive operating atmosphere is the only way for industrial development.
By definition in 1979, the Central Bank of Nigeria (CBN) in its credit guidelines to commercial banks, stated that small scale enterprises were those with annual turnover not exceeding N500,000.
In addition, a small and medium industry is defined in CBN Briefs (2002-2003) edition as any enterprises with a maximum asset base of N200milion excluding land and working capital, and with the number of staff employed by the enterprise not less than 10 and more than 300.
In view of the operational efficiency of Eddison Aluminum Company, an aluminum and other related components producing enterprise, it becomes germane to undertake a study on the role of small and medium scale enterprises (SMEs) in an economy. It is worthy mentioning that the Federal Government of Nigeria has made some initiative to promote indigenous entrepreneurship in small and medium scale businesses.