SURVIVAL STRATEGIES OF SMALL AND MEDIUM ENTERPRISES IN NIGERIA (A STUDY OF SOME SELECTED SMES IN ENUGU METROPOLIS)


ABSTRACTS

The Survival Strategies of Small and Medium Enterprises in Nigeria case study of Enugu Metropolis. The purpose of this study is to identify general problems against the effective operation of SME in Nigeria, to know their survival strategies, to provide an overview of the role of government in financing and developing SMEs in Nigeria, to determine to what extent the government policies support or hinder their growth and also to suggest strategies through which SME’s can compete with the products of emerging economies and that of developed world. The research method is by sampling method. The researchers came up with the following; majority of the SMEs do not have infrastructural facilities at their disposal, that most SMEs pay tax from the profit they generated while they are registered. Most SMEs adopt the integrated marketing strategy, some SMEs have had their products gain market access while only few of them expose their staff to seminar, in the area of implementation government policies were ranked as one of the highest problem they are facing and that government has been able to support SMEs through establishment of certain initiative schemes and through reduction of loan interest. The primary goal of government initiative/scheme such NEEDS, SEEDS, BOI, SMIEIS, etc is to build a private sector through SMEs that can take advantage of the opportunities that abound in the domestic, regional and global markets and contribute to the development of the Nigeria economy.


CHAPTER I

1.0 INTRODUCTION

This chapter 1 introduces the background of the study, statement of the problem, purpose of the study, research questions, significance of the study, scope of the study, limitations of the study and definition of terms.


1.1 Background of the Study

Small and Medium Enterprises (SMEs) have been fully recognized by governments and development experts as the main engine of economic growth and a major factor in promoting private sector development and partnership. The development of SME is therefore an essential element in growth strategy of most economies and holds particular significance for Nigeria. SMEs not only contribute significantly to improved living standards, they also bring about substantial local capital formation and achieve high levels of productivity and capability. From a planning stand point, SMEs are increasingly recognized as the principal means for achieving equitable and sustainable industrial diversification and dispersal, and in most countries, SMEs account for over half of the total share of employment, sales and value added.

A major gap in Nigeria’s industrial development process in the past years has been the absence of a strong and virile small and medium enterprises sub sector. The little progress recorded from the courageous efforts of the first generation of indigenous industrialists were almost completely wiped out by the massive dislocation and traumatic devaluation which took place under the Structural Adjustment Programme (SAP) 1986. The SAP policies were rooted in the new-classical theory of perfect competitive markets whose assumptions do not adequately reflect constraints on SME in developing countries. The human and natural resources base is a significant feature that gives the country a special status in Africa. However, like most less developed countries, the country is witnessing a rapid population growth and this contrast with the less than average rate of development in communication, technological and social infrastructure. Instability and high turnover of staff have impacted negatively on the performance of primary institutions responsible for policy monitoring and implementation, resulting in distortions in macro economic structure and low productivity.

These problems constitute hindrance to development of Small and Medium Enterprises which provide the critical building blocks for industrialization and sustainable economic growth. With the dismantling of trade and other barriers, the world has been transformed into a global village. Consequently, SMEs in developing countries such as Nigeria are struggling to survive under intensive competitive environment both domestic and international. For this reason, there is an urgent need to provide the required enabling environment for the development of Small and Medium Enterprises (SMEs), so that that they could adequately play the role expected of them in transformation. Such role include mobilization of domestic savings for investment, appreciable contribution to gross domestic product, increased harnessing of local raw material, employment generation, significant contribution of poverty reduction effort through a sustainable livelihood and enhancement in personnel income, technological development and export diversification Udechukwu (2003:7).

In line with this, it is pertinent that the challenges of SMEs are well noted as well as the strategies to overcome them and grow so as to ensure effective coordination and utilization of economic resources.


1.2 Statement of the Problem

According to Kpakol (2007:2) the development and survival of micro, small and medium enterprises in Nigeria is of course critical to the sustainability and rapid transformation of Nigeria to one of the twenty largest economies in the world by 2020 because it holds the key to job creation, employment generation, enhanced productivity and wealth creation towards launching Nigeria into the class of developed economy.

In spite of efforts by many successive governments right from independence to promote SMEs in the industrialization process, the development of the sub-sector has been constrained by a number of factors both internally and externally. They includes:

a) Unstable macro-economic environment

b) Poor implementation and coordination of efforts on SMEs

c) Absence of sustainable institutional mechanism

d) Poor infrastructural facilities i.e. road, railway system, water supply, electricity, telecommunication etc. and

e) Lack of effective financial support system.

The role of government in fashioning policies and ameliorating the constraints of SMEs has been fully recognized to be very crucial in facilitating and initiating remedial action. This is more so with rapid changing of global environment moving towards deregulations knowledge-based economy, borderless trade and investment which present new challenges and opportunities for SMEs in developing countries such as Nigeria Kpakol (2007:16).

Chibundu (2006:42) the fact that has emerged from the appraisal of various past and present policy initiatives on the promotion of SMEs in Nigeria is that although finance is a major constraint.. The effective utilization of substantial financial resources provided under various past programmes was constrained by such factor as lack of skill as well as absence of the enabling environment for investing in small and medium scale sector.

However, it has been observed that more attention is paid now than ever with reference to the aforementioned constraints, especially the controllable factors such as managerial skills, effective cost control, working capital management, marketing management, monetary policy.

This research work intends to investigate the survival strategies for small and medium enterprises in Nigeria.



1.3 Purpose of the Study

The specific objectives of this study include the following:

i. To identify the general problems or challenges militating against the effective operations of SMEs in Nigeria.

ii. To identify the survival strategies of SMEs in Nigeria.

iii. To provide an overview of the role of government in financing and developing SMEs in Nigeria.

iv. To determine to what extent the government policies support or hinder growth of SMEs in Nigeria.

v. To suggest strategies through which SMEs can compete favourably with the products of emerging economies and that of developed world.



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