Comparative Study Of The Role Of Small And Medium Scale Enterprises In The Economic Growth Of An Economy
(A Case Study Of Enugu State)
Small and Medium Scale Enterprises (SMEs) play a crucial role in fostering economic growth within a nation. These enterprises, often characterized by their relatively modest size, operate across diverse sectors, contributing significantly to employment generation, innovation, and overall economic development. Small and Medium Scale Enterprises act as dynamic agents, driving entrepreneurship and bolstering the resilience of economies. Their adaptability to market changes, agility in adopting emerging technologies, and capacity to cater to niche markets make them integral components of a vibrant economic landscape. By providing job opportunities and stimulating local economies, Small and Medium Scale Enterprises enhance income distribution and alleviate poverty. Additionally, Small and Medium Scale Enterprises often serve as breeding grounds for innovation, injecting fresh ideas into the economic bloodstream. Their ability to bridge gaps in various industries and contribute to export activities further solidifies their position as catalysts for sustained economic growth.
This study was aimed at examining the role being played by the small and medium scale enterprises towards economic growth of an economy with E-nugu state as our case study. From the study, it was observed that indeed, small and medium scale enterprises contribute to the economic development of Enugu state.
Lack of adequate finance was identified as one of the mayor problems hampering the development of small and medium scale enterprise in Enugu state.
In order to provide a sound theoretical framework and sound judgment for the work, the work of other researchers in the same issue were reviewed.
The use of Taro-Yamani Statistical formular was used in selecting an adequate sample size for the study from the population.
A total of six hypothesis were formulated and also tasted using the chi-square method of hypothesis testing.
In order to elicit proper information from the respondents who are both illiterate and literate, the researcher utilized both questionnaire and interview. The data collected were properly analyzed using the table and simple percentage response formular.
In the final analysis, the research work found out that small and medium scale enterprises affects the economic growth of the Enugu State Economy.
Title page
Acknowledgement
Dedication
Abstract
Table of content
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
1.2 STATEMENT OF THE PROBLEM
1.3 STATEMENT OF RESEARCH OBJECTIVES
1.4 SIGNIFICANCE OF THE STUDY
1.5 RESEARCH QUESTION
1.6 RESEARCH HYPOTHESIS
1.7 DEFINITION OF TERMS
1.8 SCOPE AND LIMITATIONS
1.8.1 SCOPE OF THE STUDY
LIMITATIONS OF THE STUDY
CHAPTER TWO
2.1 REVIEW OF RELEVANT LITERATURE
2.2 LITERATURE REVIEW
2.3 ACTIVITIES OF SMALL AND MEDIUM ENTERPRIESES INNIGERIA:
2.4 SMALL AND MEDIUM SCALE ENTERPRISE AND THE NIGERIAN ECONOMY.
2.4.1 CONTRIBUTES IN LOCAL AND REGIONAL DEVELOPMENT
2.4.2 ENCOURAGE AND SUSTAINS SELF RELIANCE
2.5 PROBLEMS OF SMALL AND MEDIUM SCALE ENTERPRISES IN THE PERFORMANCEOFTHEIR DUTY
2.6 SOLUTIONS TO SMALL AND MEDIUM SCALE ENTERPRISES PROBLEMS
CHAPTER THREE
3.0 RESEARCH METHODOLOGY
3.1 RESEARCH DESIGN
3.1 RESEARCH METHOD
3.2 RESEARCH DESIGN:
3.2.1 Questionnaires
3.2.2 Interview
3.2.3 SECONDARY DATA
3.3 Research population
3.3 RESEARCH POPULATION:
3.4 RESEARCH SAMPLE:
3.5 measuring instrument
3.6 DATA COLLECTION
3.7 DATA ANALYSIS
3.8 EXPECTED RESULTS
CHAPTER FOUR
4.1 DATA ANALYSIS AND RESULTS
4.2 questionnaire result
4.3 INTERVIEWS
DISCUSSION
REPORT ON HYPOTHESIS
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATIONS
5.1 SUMMARY
5.2 CONCLUSION
5.3 RECOMMENDATIONS FOR FURTHER STUDY
REFERENCES
INTRODUCTION
1.9 BACKGROUND OF THE STUDY
The term business has over the years turned out to be a house hold name. In different places and under different circumstances, people have tended to give the term “business” different definitions and meanings. However, it is also important to note, that in some instances, the dimension and size of an organization or an enterprise can determine the order of its definition.
In some instances, business can be regarded as the performance of the entrepreneurial function of co-ordination of all the factors of production – labour, capital, natural resources and management to provide goods and services which may be sold at a profit.
It therefore follows that business entails the proper coordination of the various factors of production with a view of utilizing them in the production of the necessary goods and services in order to maker prodit.
Business enterprises have also been identified to operate of the basis of different levels and capabilities. These ranges from small privately owned enterprises to large organizations that are either privately or publidy owned.
Based on the above definition of business, one would understand some basic issues. This include the fact that business are organized with the purpose of making profit. Therefore in essence, a good business venture is one in which is geared towards profit making. Therefore in a qust to make profit, the business organization must surly operate in an existing environment.
Having said that established the fact that most business establishments are geared towards profit making and at the sarve time that business organization exists within an environment, it will be wise to say that the environment of any business venture surly contributed to the success or failure of such a business.
Based on this, it is wise to examine on the other way round if there is any role the business organization on their own part does for the environment. This assentron will for the bedrock of this study which centers on examining the role of small and medium scale business enterprises to the economic development of the economy with emphasis on Enugu state.
1.10 STATEMENT OF THE PROBLEM
The import of entrepreneurial resource as a crucial input process of material development is becoming widely recognized, with growing emphasis on the role of small and medium scale enterprises in view of their contribution to general economic growth. (Ezeh 1998) Observed that, even where there are incentives and inducements, it is found from experience that entrepreneurs do not respond spontaneously to available business opportunities. This according to (Makinde 1999) can be attributed to inadequate intrastructural facilities and lack of access to bank credits. However, in most cases this is attributed to the low economic activities within the economy.
It is thus against this backdrop that the researcher intends to find out the impact of the small and medium scale enterprises towards the economic development of the economy, with emphasis on Enugu state.
1.11 STATEMENT OF RESEARCH OBJECTIVES
One of the objectives of this study is to find out if small and medium scale enterprises in Enugu state have any effect on the economic development of Enugu state economy.
Having noted that Enugu state is one of the environments in which there is the existence of small and medium scale enterprise.
More importantly, the study is also directed at ascertaining of the effect of the small and medium enterprises in Enugu state is positive or negative oriented.
1.12 SIGNIFICANCE OF THE STUDY
The study intends to analyze the small and medium scale enterprise in Enugu state with respect to their contribution to the development of Enugu state.
The study will help in a proper understanding of the role and effect of small and medium scale enterprises on an economy.
It is hoped that this research work if properly and adequately done to its logical conclusion will enable policy makers and manyers understand the impact and the nud to encourage the establishment of small and medium scale enterprises in Enugu state as well as the other states of the federation.
The study will help policy makers and business men and women to appreciate and evaluate the impact of small and the medium scale enterprises.
Finally it is hoped that this study will benefit feature researchers in this area of study and also help every Nigerian appreciate the small and medium scale venture in Enugu state and Nigeria.
1.13 RESEARCH QUESTION
To be in a very good position to tackle the problem environmental in this study, a number of questions are outlined which the researcher feels would aid in the proper tacking of this study. The questions includes the following.
1. Has small and medium scale enterprise played any role on the economic development of Enugu state?
2. To what extent has the small and medium scale enterprises contributed to economic development of Enugu state?
3. How does the small and medium scale enterprise contribute to the economic development of Enugu State?
4. What factors contribute in helping small and medium scale enterprises contribute to the economic development of Enugu state.
5. Are there need to encourage the establishment of small and medium scale enterprise in Enugu State?
1.14 RESEARCH HYPOTHESIS
In order to enable the researcher adequately arrive at answers to the already outlined research problems and research questions, the following hypothesis were drawn.
Hi: Small and medium scale enterprise have effect on the economic development of Enugu state.
1.15 DEFINITION OF TERMS
ROLE
OPERATIONAL
The contribution or the significance of the small and medium enterprises.
Role
Conceptional: An action or function that a person or thing typically has or is expected to have.
SMALL SCALE
OPERATIONAL
Industries with total cost including working capital above #1 million but not exceeding
#10 million.
CONCEPTIONAL: Any small organization that is involved in the production of goods and services in a small scale level.
MEDIUM SCALE
CONCEPTIONAL: Any organization that is involved in the production of goods and services in a medium scale but higher then small scale.
OPERATIONAL
Firms with total cost of production excluding cost of land but including working capital above #10 million but not more than #40 million.
ECONOMIC DEVELOPMENT
OPERATIONAL
Any economic activity that is geared towards improving the life and the living condition of the people in Enugu state.
CONCEPTIONAL
Any activity that will bring about economic change.
1.16 SCOPE AND LIMITATIONS
1.16.1 SCOPE OF THE STUDY
It is the desire of the researcher to be very intensive in the process of carrying out this study.
The researcher will examine the various journals and publications that has to do with the issue of small and medium scale enterprises in order to assentain the views and opinions of the writers.
The various small and medium scale enterprises in Enugu metropolis will also be examined with a view of finding their response.
Also, the researcher will examine some individuals in the metropolis of Enugu town in a bid to ascertain their own views and opinions.
LIMITATIONS OF THE STUDY
This research work is subjected to limitations associated with survey research and student projects.
Taking into consideration that there is no grant to this study, there will most likely be the problem of finance and transportation that will enable a more enormous study of this research work.
Having taken into consideration the large and vast nature of Enugu state the researcher wants to limit the population of this study to only the small and medium scale enterprises within Enugu town.
Role Of Small And Medium Scale Enterprises In The Economic Growth Of An Economy:
Small and Medium-Sized Enterprises (SMEs) play a crucial role in the economic growth and development of an economy. They are often referred to as the backbone of an economy due to their significant contributions in various aspects. Here are some of the key roles SMEs play in fostering economic growth:
Employment Generation:
Small And Medium Scale Enterprises are major employers in many economies, providing jobs to a significant portion of the workforce. This is particularly important for reducing unemployment and underemployment rates.
They offer opportunities for self-employment and entrepreneurship, empowering individuals to create their livelihoods.
Innovation and Entrepreneurship:
Small And Medium Scale Enterprises are often hubs of innovation and entrepreneurship. They are more agile and adaptable than large corporations, which allows them to experiment with new ideas and technologies.
These innovations can lead to the development of new products, services, and processes, driving overall economic growth and competitiveness.
Contribution to GDP:
Small And Medium Scale Enterprises contribute significantly to a country’s Gross Domestic Product (GDP). They may individually have a smaller turnover than large corporations, but their cumulative contribution is substantial.
In many developing economies, SMEs make up a substantial portion of the GDP and are vital to economic stability.
Regional Development:
Small And Medium Scale Enterprises are often dispersed across various regions, including rural and less-developed areas. Their presence can help in reducing regional disparities by providing economic opportunities in areas that may otherwise be neglected.
They promote balanced regional development by decentralizing economic activities.
Export Promotion:
Small And Medium Scale Enterprises can serve as an essential part of an economy’s export strategy. They often engage in exporting niche products and services to international markets, helping to diversify export portfolios.
Export-oriented SMEs can earn foreign exchange and contribute to the country’s balance of trade.
Supply Chain and Linkages:
Small And Medium Scale Enterprises are often suppliers and subcontractors to larger firms. They form a crucial part of supply chains, creating linkages between large corporations and local economies.
These linkages enhance efficiency, create interdependencies, and stimulate economic growth throughout the supply chain.
Resilience and Economic Stability:
Small And Medium Scale Enterprises tend to be more resilient during economic downturns compared to larger corporations. Their adaptability allows them to weather economic shocks more effectively.
The presence of a strong SME sector can contribute to economic stability by diversifying economic activities.
Poverty Alleviation:
Small And Medium Scale Enterprises can be instrumental in poverty alleviation by providing income-generating opportunities to marginalized communities and helping reduce income inequality.
Tax Revenue:
As Small And Medium Scale Enterprises grow and become profitable, they contribute to government revenues through taxes, which can be reinvested in public infrastructure and services.
To maximize the positive impact of Small And Medium Scale Enterprises on economic growth, governments often implement policies and programs that support their development, including access to finance, business development services, and regulatory reforms. By nurturing a vibrant SME sector, economies can enjoy sustainable and inclusive growth.