CHAPTER ONE
INTRODUCTION
BACKGROUND OF THE STUDY
Small and Medium Scale Enterprises (SMEs) are recognized as the driving force for developed and developing countries across the globe for playing an important role in economic growth and sustainable development (Ariyo, 2005). SMEs occupy or contain a place of pride in virtually every country or state. Because of their significant roles in the growth and development of various economies, they have aptly been regarded as “the engine of growth” and “catalysts for the socioeconomic transformation of any country”. SMEs serve as a veritable vehicle for the achievement of national economic objectives for poverty reduction at low investment cost and employment generation as well as the development of entrepreneurial capabilities, which include indigenous
technology. In same vein intrinsic benefits of vibrant and healthy SMEs include access to infrastructural facilities occasioned by the present or existence of such SMEs in their surroundings, and the stimulation of economic activities which include suppliers of several items and distributive trades for items produced or required by SMEs, stemming from rural-urban migration, and also enhancement or strengthening of standard of living of employees or workers of the SMEs and their dependents as well as those that are directly or indirectly related to them (Onugu, 2005). SMEs worldwide can boast of being the major employers of labour and the likes mentioned above if it is compared to the major industries including the multinationals. Cook and Nixson (2000) argues that
the interest in the growth and development of SMEs and their contribution to the development process continue to move at the forefronts of the policy debates in developing countries. The advantages claimed for SMEs are many, which includes greater likelihood that SMEs will utilize labour intensive technologies; encouragement of entrepreneurship and thus have an immediate impact on employment generation; there can quickly be established rapidly and put into operation to produce quick returns; their development can encourage the process of both inter and intra-regional decentralization; and there may become a countervailing force against the economic power of Larger Scale Enterprises (LSE). However, the growth and development of SMEs is seen as
accelerating factors for the achievement of wider economic and socio-economic objectives or goals, including poverty alleviation (Hallberg, 2000).
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