Small Scale Industries In Nigeria: The Slow Growth, Causes And The Way Forward

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Small Scale BusinessThe role of small industries in the economy of any nation cannot be overemphasized. Thus, small scale firms provide goods and services which are essential needs of people, create huge employment opportunities, generate income and also serve as a great source of revenue for the government, to mention few of the important roles of small scale business in an economy. Perhaps, it should be noted that businesses at micro, small and large scale make significant contribution to the economic growth and development of a nation.

Small scale business in Nigeria experiencing a setback in their mode of operation, in this period of low level of economic activity and slow rate of growth of the economy as well as its devastating effects on the demand for labor. Undoubtedly, job opportunities are available. The importance of small scale business enterprise is not overemphasized in the process of socio-economic development of the country.

In spite of the recognition of the role of small scale enterprises in fostering economic development through the promotion of indigenous technology, production, employment generation activities and bordering of production base of the economy, the impact has not been given adequate recognition, hence its slow growth. Studies have shown that below are some of the causes for the slow growth of such small scales.

Firstly is the scarcity of funds: for expansion, additional funds are required for investing in both fixed assets and current assets. Funds are fixed capital and working capital and working capital are not easily available and small firms have to borrow at high rates of interest.

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Secondly high risk: expansion means more risk. Many small firms do not have the ability or well power to assume this risk particularly where the competition is acute and raw materials have to be imported. Some small scale owners continue to operate at a given scale due to the risk and difficulties involved in expansion.

Also, technology: expansion often requires upgrading of technology and replacement of plant and machinery. Upgrading of technology is a time consuming and expensive process. It became expensive and essential to recruit new staff or retrain the existing staff in the use and operation of new technology.

In the same vein, capital is also responsible for the slow growth: some firms by their nature and level of operations which shows their lack of adequate capital base. Others may not even posse’s credit worthiness to win bank funding.

Worthy of consideration is also obsolete techniques: some firms are unable to adopt new production techniques and buy modern equipment’s these firms that are able to acquire them may not maintain them properly.

It is fundamental to consider management of these small scales industries in this discourse. Basically, some firms especially proprietorship and partnership are not efficiently ruined, because many owns lack management knowledge. They may not employ skilled workers and may not even have a good accounting system for day to day activities.

In light of the discourse above, the way forward is that, in contemplating any business venture, it is desirable to consider the factors that are essential for survival and growth of any business enterprises which are:

Management Ability and Background: The first pre-requisite is real management ability on the part of the manager or management team. Concretely, this means skills in handling men, money and inventories along with the ability to formulate wise policies, select proper methods, merchandise aggressively and create good relationship with employees, consumers and the general public.

Secondly Adequate Capital and Credit: another requirement for success is adequacy of capital and credit, together with the knowledge on how to use both resources properly in financing operations.

Thirdly, existence of business operation: critical factors for business success in the existence of real, nor merely an apparent, business opportunity. This means that the firm must sale god or services needed and desired to public it. Also requires enough customers who are willing to buy at a price an insufficient volume to permit continuing profitable operation.

Modern Methods: This is another prerequisite for business success identified by Broom, closely related two hat of management ability, is the use of modern method for the business. It is high cost of antiquated methods and lack of research that moves modern methods and scientific approach imperative on every business.

Also there should be Insurance for Measureable Risk, the final prerequisit4e business success to the identification of all possible business risks and carrying of adequate insurance covering all those that are insurable. In fact one can insure against almost any business risk accept these that are not measurable such as depression, wars of decline in sales and profits.

However, Small Scale Industry sector is a major contributor to production, export and employment, therefore, it becomes imperative to study its growth performance. In light to this view, a comparative analysis of average annual growth rates would be carried out for the key parameters, like numbers of units, production, employment and fixed investment. The analysis which serves as impact of economic reform on all of those indicators.

Abdulmutalib Halimat is a final year student of mass communication department of the  Bayero University, Kano


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