You are on page 1of 8

Download this Document for Free

THE ROLE OF SMALL SCALE INDUSTRY IN NATIONAL DEVELOPMENT IN NIGERIA Ayozie Daniel Ogechukwu, Delta State Nigeria, The Federal Polytechnic, Ogun State, Nigeria Abstract





A business whether small or big, simple of complex, private or public is created to provide competitive prices. Business in Nigeria has been classified as small, medium and large. In both the developed and developing countries, the government is turning to small and medium scale industries, as a means of economic development and a veritable means of solving problems. It is also a seedbed of innovations, inventions and employment. Presently in Nigeria, SMEs assist in promoting the growth of the country’s economy, hence all the levels of government at different times have policies which promote the growth and sustenance of SMEs. Small scale industry orientation is part of the Nigerian history. Evidence abound in the communities of what successes our great grand parents, made of their respective trading concerns, yam barns, cottage industries, and the likes. The secret behind the success of a self reliant strategy does not lie in any particular political philosophy, so much as the people’s attitude to enterprise and in the right incentive is adequate enough to make risk worthy businesses a necessity for the nation. There had been many policy actions by the government, governmental agencies and the private sector to promote SMEs in Nigeria. Many experts recognize marketing as a major problem and relevant solution to the growth of SMEs. This paper identifies the historical development and orientation of SMEs in Nigeria, tackles the operational definition and scope, and describes the role of the Nigerian government as a participant, regulator and facilitator, both legally and politically in the growth of SMEs. It identifies the marketing problems of SMEs in Nigeria, the provision and enactment of beneficial and supportive laws, the provision of infrastructural facilities, constant man- power and development, direct financial assistance to SMEs and the establishment of finance institutions to support SMEs. It identifies the roles of SMEs in Nigeria’s development and growth. It concludes by clearly specifying the role of marketing to the survival of SMEs in Nigeria, and Advances relevant recommendations. For SMEs to survive marketing practice and principles must be given prominence. Economic history is well stocked with enough insights into the humble beginnings of present great corporations. Evidence abound that almost all of the multinational giant corporations in America, Europe and even Nigeria were cottage enterprises, growing as their industry grew, and through their own sheer ability, marketing skills, and efforts to reproduce and produce existing products better and cheaply. Japan’s economy was dominated by traditional industries, cottage firms and by many SMEs, who drew their strength, not only from the abundance of capital, but from the role of marketing in guaranteeing the growth of SMEs. Association for Small Business & Entrepreneurship 32nd Annual Conference

Even at the international level. there may be a need to classify the small scale industry into MICRO and SUPER MICRO business. Business in Nigeria has been classified as small. The federal and state ministries of Industry and Commerce have adopted the criterion of value of installed fixed capital to determine what a small scale industry is. this value has now been reviewed and subsequently.SMEs have contributed greatly to Nigerians development by the provision of employment. marketing of goods and services and the growth and development of the rural areas. N500. diversity. and by a large number of small scale firms. Back home in Nigeria. 000. Japan’s economy was dominated by traditional industries. iron smelting.000 in 1979. penetration in all Corpus Christi. the value has varied from N60. It has also brought about the growth of indigenous entrepreneurship in Nigeria. farming. by virtue of their number. In the meantime. 000 per annum is a small scale industry. Evidence abound in our respective communities of what successes our great grand parents made of their respective trading concerns. 000 in 1986. The National Directorate of Employment (NDE) concept of a small scale industry has been fixed to a maximum of N35. 000 in 1972. yam barns. This figure is exclusive of and building and subject to government determination and land prevailing objectives of public policy. capital. increased to five million naira. with a view to providing adequate incentives and protection for the former. 000. Texas November 1-3. any business or enterprise below the upper limit of N250. N250. a small scale industry can be defined by the criteria of project costs. So the secret behind their success of a self reliant strategy does not like in any particular political philosophy. in the early stages of her industrialization. simple or complex. Historical Development and Orientation of Small Scale Industry in Nigeria Small scale industry orientation is part and parcel of Nigeria. N159. in this respect. medium and large. 000 and whose annual turnover exceeds that of a cottage industry currently put at N5. cottage industries and the likes.000 (two million Naira) in 1992. so much as in the people’s attitude to enterprise and in the right to which the right incentive is adequate enough to make risk worth taking are provided. In the wake of SFEM. etc. 000 in 1975. cottage firms. and through their own sheer ability either reproduce existing products more cheaply or improve their ability. the respective government policies accorded and gave priority to the country’s small scale enterprises. to a fixed investment of not more than N2. etc is created to provide competitive prices. This has been in recognition that they constitute the fountain head of vitality for the variational economy and consequently their problems have been viewed as those of the nation. private or public. growing as their industry grew. Evidences abound that almost all of the multinational giant corporations were cottage enterprises. Economic history is well stocked with enough insights into the humble beginnings of present day grand corporation. cost turnover by the employee. However. 2006 Association for Small Business & Entrepreneurship 32nd Annual Conference sectors of production and marketing contribution to employment and to the prosperity of the . and SAP. Since this happened. drawing their strength not from an abundance of capital but rather from her supply or labour. Introduction A business whether small or big.

The government of those days encouraged them to become stronger by giving incentives as favourable traffics and tax concessions. Even then. (d) Developing and increasing export traders. Patterson Zechonics. and (e) Complementing large scale industries. the Nigerian Industrial Development Bank (NIDB) was founded to assist potential entrepreneurs to get involved in Agriculture exploration of national resources. Towards the tail end of the 1950s. Leventis. few Nigerians mostly the Semi-illiterates benefited from the generous government attitude of this time.particular areas in which they operate. who were leaving the civil service to return home because of the imminent independence in 1960. These companies have vast business experience and strong capital base. small scale industries constitute a greater percentage of all registered companies in Nigeria. This was in recognition of the roles of small and medium scale industries. (b) Generating substantial employment opportunities. The cardinal point of the development plan was: (a) Accelerating the pace of industrialization and dispersal of industries. In its 1970-74 National Development Plan. Unilever Plc. . These were genuine attempts by the Federal Government to make sure that Nigerians play an active and worthwhile role in the development of the economy. Nigerians considered the civil service to be more prestigious than business despite the creation of the colony development loans board. the business climate was almost totally dominated by the Colonial and other European Multinational companies like United African Company (UAR). and they have been in existence for a quite long time. GB Olivant. as the seedbeds and training grounds for entrepreneurship. This time and the early 1960s saw the massive increase in Nigeria import market. These companies primarily engaged in bringing into Nigeria finished goods from their parent companies overseas. (c) Promoting individual initiatives and entrepreneurship among the populace. etc. Pre-Independence Historical Development Prior to Nigerian Independence. Majority of the small scale industries developed from cottage industries to small enterprises and from small scale to medium and large scale enterprises. while the Nigerian economy became largely dominated by very few large foreign firms. by the colonial administration. In concrete terms. The educated Nigerians then were not interested in entrepreneurship mainly because their focus was on the positions being vacated by the expatriate staffs. However. Commerce and Industrial production. and dominated the Nigerian economy. 1970 – 1976 A major/remarkable break through in small scale business came about through the indigenization Decree 1972 and later in Nigeria Enterprises Promotion Act 1977. the Federal Government gave special attention to the development of small scale industries particularly in rural areas.

sales turnover. to that of gainful self solely employment. Nigerians need to take care from economic history. The Federal Government Small Scale Industry Development Plan of 1980 defined a small scale business in Nigeria as any manufacturing process or service industry. approved loans are disbursed through pre-selected commercial banks assisted by the National Directorate of Employment. NDE and the People Bank of Nigeria were solely charged with the responsibility of generating employment through their various programmes for thousands of unemployed Nigerians. which is well stacked with enough Corpus Christi. Different authors. land building and equipment of up to N60. classified small scale business as these businesses with an annual income/asset of less half a million nairas (N500. 2006 Association for Small Business & Entrepreneurship 32nd Annual Conference feasible projects. 000). 5.An amendment to the decree made in 1997 provided than in order to be economically selfreliant. 2. number of employees. the Third National Development plan defined a small scale business as a manufacturing establishment employing less than ten people. market share and the level of development. capital. available plant and machinery. with a capital not exceeding N150. and schools have different ideas as to the differences in capital outlay. the Federal Government through its educational agencies like the National Board for Technical Education (NBTE). The small scale industries association of Nigeria (1973) defined small scale business as those having investment (i. The Peoples Bank of Nigeria (PBN) was also in the vanguard of granting of soft loans to unemployed youths and artisans. and this aimed at diverting the attention of youths from government salaried jobs. In Nigeria and worldwide. 4. 1. scholars. Operational Definition of the Term Small Scale Business Small scale business. these features equally vary from one country to the other. there seems to be no specific definition of small business. 000 in manufacturing and equipment alone. 000 pre-SAP Value) and employing not more than fifty persons. the Nigerian University Commission (NUC). Texas November 1-3. small scale industries and small scale entrepreneurship are used interchangeably to man a small scale industry firm. To show its seriousness.e. and the National Youths Service Corps (NYSC) programme give a directive that entrepreneurship development courses be incorporated into the curricular of tertiary institutions and NYSC programme. 3. or whose investment in machinery and equipment does not exceed six hundred thousand naira. fixed capital investment. The Central Bank of Nigeria in its credit guidelines. Its deliberation was to refer to the operational definition. . In Nigeria.

in the United States. This also shows the same trend as in Nigeria. 2006 . the small business administration defines a small business as one that is independently owned and operated is not dominant in its field. employing up to 50 full-time workers. Lastly. or servicing industry involved in a factory of production type of operation. The Centre for Management Development (CMD) definition of small industry in the policy proposal submitted to the federal government in 1982 defined small scale industry as. 6. and meets employment or sales standard develop by the agency. 000 (pre-SAP Value) including working capital to set up. For most industries these standards are as follows.The Federal Ministry of Industries defined it as those enterprises that cost not more than N500. Corpus Christi. “a manufacturing processing. although the exchange value makes the financial criteria to be different. Texas November 1-3.

H. O. J (1972). G (1978). Ojo (eds) Management of SMEs in Nigeria (Lagos Punmark Nig. M (ed). T. The Role of Policy in Ade T. Danayo Inc. Concepts. M. P. Coy Ilaro. Effective Growth and Survival of Small and Medium Scale Enterprises in the 1990s and Beyond.REFERENCES Abdulahi Taiwo Co. Local Economic Initiative. pp 12 – 15. Baker.The Marketing Books. C. Spring. E. in Read Mayer and Stanley. O. Coy) Ogun State Nigeria. Baker. D. Solicitors (1993): Establishing a Business in Nigeria. (1994). Adegbite E. et all (1997). (1968). 9. A. III. (London : Cassel Publishers Ltd) Corpus Christi. 4. (1999). Bauer. Asolo A. Cannon. O. ‘Eastern Europe : A Dilemma for the Strategic Planner’. (1971). Small Scale Business and National Development Conference paper delivered at the CAB. T. A. Ajayi G. Ayozie D. Ayozie D. ‘Some Aspects and Problems of Trade in Africa’. (London: HMSO) Boswell. Bullion Publication of CBN Vol. Basic Marketing. (2001): Financing and Promoting Small Scale Industries. Issues and Prospects. (1999). Marketing. O. Small Firms: Reports of the Committee of Inquiry on Small Firms. (1990).. Autumn. Kaduna Polytechnic. Nigeria. Management Conference. (Oxford Bufferfield Heinemann). (2000) Entrepreneurship Development in Nigeria. ‘A Handbook on Small Scale Business for National Diploma Student. (eds). M. Richard D. Irwin. Principles and Practice. O. One More Time: What is Marketing?” in Baker. Export Myopia. 3. Kinsbond Publishers Ilaro. J. Quarterly Review of Marketing. 2006 . Principles and Practice of Marketing for Nigerian Students and Managers. (1979). No. O. Ogun State. (WPI : School for Advanced Urban Studies University of Bristol) Brown. 4th Edition (Lagos Academy Press Plc). (1995). The Rise and Decline of Small Firms. Ayozie D. (London : Allen & Urwin) Bramley. Texas November 1-3. Ayozie. Markets and Marketing in Developing Economies (Homewood. 25 No. M. (1997). Vol. C. Inc) Bolton. Ltd) Anyanwu C. (1999): Small Scale Business for Nigerian Students (Danayo Inc.

U. et al (1998) Entrepreneurship Development in Small Scale Business (Lagos – Labson resource Nigeria Ltd) MAN (2001) Annual Reports MAN (2002) Newsletters. 3 pp 36. (1983). Doyle P. (1985): Innovation and Entrepreneurship. F. The Federal Polytechnic Ilaro. . 1. (2001): The role of Development Finance Institutions (DFIs) in the financing of Small Scale Industries (SSIs) Bullion Publication of Central Bank of Nigeria Vol. E. 78. Vol. Practice and Principles (London Heinemman) Easien O. ‘Marketing and Competitive Performance of British Industry Areas for Research’. Onwuchuruba. Entrepreneurship Development Programme for Youth Corp members (1990) : NYSC Publication. Journal of Marketing Management. 1 & 2 pp. 25 No. Lagos Nigeria.89 Tijani-Alawe (2004): Entrepreneurship Processes and Small Business Management. Vol. Lagos Nigeria) Tijani-Alawe B. Lagos Nigeria. (2001) The role of marketing in small scale business in Nigeria. 3. 1. Ineghenebor A. (2000) Small Scale Business in Nigeria. 25 No. The Vital Majority. Obitayo K. 15 Awolowo Way Ikeja. A case study of Nigeria Cascon Journal of Management. U. 116 – 27 Shokan O. (1999) Corporate Governance of Commonwealth Organisation towards National Development. Bullion Publication of CBN. April/May & August. Paper delivered at the second school of management studies conference. Abeokuta Raod Sango Otta. No. (1985). A. Ogun State Nigeria. (2004). (Shone Publishers. 18 Nos. U. Onwuchuruba G. A. Owoyemi House. Marketing Management Strategic Planning approach services. ‘Factors Affecting the Profitability of Small Firms’ in Carson (ed). M. (1989): Entrepreneurship in Pita Ejiofor (eds) Foundations of Business Administration (Onitsha Fep Publishers) Lawal A. pp. Industrial Science Centre. Summer Drucker P.20 Association for Small Business & Entrepreneurship 32nd Annual Conference Chaganti N. G. (2001): Creating and Enabling Environment for Small Scale Industries. Vol.

Vol. Corpus Christi. Journal of Social and Policy Issues. 1 No. 1 pp 59 – 66. Abribas Experience in Maternally Moderated Aggressive Fatalism International.Tijani-Alawe (2002) Contemporary Lessons in African Philosophy of Business. Texas November 1-3. 2006 .