CHAPTER ONE
1.0 INTRODUCTION
1.1 BACKGROUND OF THE STUDY
A basic reality of modern economic life is the inter dependence of the business. No modern business is an outlay in itself. There is no doubt whatsoever that the small scale and medium companies constitute the real fabric of a nation’s economy. And to say that the present and future economic advancement of this our great country Nigeria lies in the dynamism and growth of small-to-medium scale enterprises (SME) is not an overstatement.This opinion was upheld during the economic conference in Lagos in 1989 at the instance of three bodies namely – the Nigerian institute of social and economic research (NISER).
The National Association of small-scale industries (NASSI) and the Friedrich Albert foundation. In other words, SMEs constitute a vital engine to economic growth and development.However, the environment in which this sector operates in Nigeria is both challenging and rewarding. It is challenging because it is fraught with the changers of risks arising from having, in the first place to invest money in a business and the problems of managing it in the country’s recessed economy.Moreover, there is the challenge of government regulatory activities which may effect the performance of SMEs adversely.
Nevertheless, there is smiling countenance of success, should the SMEs be given dynamic leadership and properly managed in the present economically recessive climate in the country, and with the aid of the various packages of incentives given by governments (Federal, State and Local) to this group of business.Past records of different countries that are regarded to be developed revealed that industrial revolution had been the main cause for their economic survival. The financial capacity the said developed countries has, come mainly from the acquisition industrial and technological power.
Small and medium scale industries undisputely constitutes the bed-rock for any meaningful industrial development and for the acquisition of this trial and technological power.In recent years, development economists and policy makers have become increasingly troubled by two problem found commonly in less developed and develop countries. There are slow growth in industrial development and lag in rural development, it is often suggested that small-scale and medium scale enterprises (SME) would help promote rural development as well as general urban employment. It is however remarkable to note that in spite of this high hope, little success has been achieved in Nigeria.
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