THE ROLE OF SMALL SCALE INDUSTRY IN
NATIONAL DEVELOPMENT IN NIGERIA
Ayozie Daniel Ogechukwu, Delta State University, Abraka, Delta State,
The Federal Polytechnic, Ogun State, Nigeria
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, 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.
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. It has also brought about the growth of indigenous entrepreneurship in Nigeria.
A business whether small or big, simple or complex, private or public, etc is created to provide competitive prices. Business in Nigeria has been classified as small, medium and large. However, a small scale industry can be defined by the criteria of project costs, capital, cost turnover by the employee, etc. 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, in this respect, the value has varied from N60, 000 in 1972, N159, 000 in 1975, N250.000 in 1979, N500, 000 in 1986, to a fixed investment of not more than N2, 000,000 (two million Naira) in 1992. This figure is exclusive of and building and subject to government determination and land prevailing objectives of public policy. In the wake of SFEM, and SAP, this value has now been reviewed and subsequently, increased to five million naira. Since this happened, there may be a need to classify the small scale industry into MICRO and SUPER MICRO business, with a view to providing adequate incentives and protection for the former.
In the meantime, any business or enterprise below the upper limit of N250, 000 and whose annual turnover exceeds that of a cottage industry currently put at N5, 000 per annum is a small scale industry. The National Directorate of Employment (NDE) concept of a small scale industry has been fixed to a maximum of N35, 000.
Small scale industry orientation is part and parcel of Nigeria. Evidence abound in our respective communities of what successes our great grand parents made of their respective trading concerns, yam barns, iron smelting, farming, cottage industries and the likes. So the secret behind their success of a self reliant strategy does not like in any particular political philosophy, 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.
Economic history is well stocked with enough insights into the humble beginnings of present day grand corporation. Evidences abound that almost all of the multinational giant corporations were cottage enterprises, growing as their industry grew, and through their own sheer ability either reproduce existing products more cheaply or improve their ability. Even at the international level, in the early stages of her industrialization, Japan’s economy was dominated by traditional industries, cottage firms, and by a large number of small scale firms, drawing their strength not from an abundance of capital but rather from her supply or labour.
Back home in Nigeria, the respective government policies accorded and gave priority to the country’s small scale enterprises. 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, by virtue of their number, diversity, penetration in all sectors of production and marketing contribution to employment and to the prosperity of the particular areas in which they operate.
In concrete terms, small scale industries constitute a greater percentage of all registered companies in Nigeria, and they have been in existence for a quite long time. Majority of the small scale industries developed from cottage industries to small enterprises and from small scale to medium and large scale enterprises.