The role of small scale industry in national development in nigeria




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The Nigerian Government Participation in Small Scale Industries

That there is a kind o relationship between business and government is never a dispute, the issue has always been degree of affairs, co-operation, flirting and co-operative marriage, that existing between the two society’s sub-systems. In Nigeria, it is imperative for business operators to understand that manner of relationship. This is because the type of relationship that exists between the government and business goes a long way to determine the existence, growth and development of the small scale business operator. The government is a super-body that exerts enormous power in a given nation state. By this implication, it has the capacity and ability to influence almost every institution under its jurisdiction for good or small scale business and other economic activities have its root in her major function as a resource allocator.

In Nigeria, there is an implication of a mixture of command and market determined mechanism. Thence, it is often called mixed economy. The dictionary of economics defines mixed economy as an economy. The dictionary of economics defined mixed economy as an economy which contains elements of both a small, medium and large private sector, participation in business, as well as a group of large nationalized industries.
Specially, in these circumstances, the role of business as multi-furious and categorized as:

(a) Participatory role

(b) Regulatory role

(c) Facilatory role



A Government is seen as a Participated

Where it actually involved in and control business enterprises by owning and managing such enterprise.


Government acts as a business regulator with the overall aim of helping to maintain a climate of confidence; sanity and to stimulate the activities of the enterprises, so that they can have the respect for the rule of competition. Onuoha (1990) identified some of usual justification for government regulatory activities in business including what they hope to achieve. They are:

  1. To achieve an environment permitting the enterprise to exist in an atmosphere of stability and cooperation.

  2. To fix and distribute public and social burden in a supportable and equitable manner, taking into consideration the differences in sizes of various enterprises and the economic activity of the country.

  3. To protect the interest of the consumer against exploitative actions of business or specific measures against sub-standard of dangerous products.

  4. Government control business as part of her fundamental responsibilities towards exercising her sovereign rigor or all activities within her jurisdiction business inclusive.

  5. Government control of business is durable because it is one of the methods by which government raises revenue, the revenue comes in the form of registration fee, excise duties, educational levies, etc.

  6. Government control business as a way of ensuring that the economy is not dominated by foreigners.

Through appropriate and calculated control, government enlarge the propensity for greater indigenous participation in economic business activities. These act of governmental control in business activities come in various forms, of which the most popular and widely used in through the instrumentality of law. Relevant laws or decrees edicts and status are often used specifically to achieve a control or regulatory objectives. For instance, the following itemized laws and acts among others are targeted towards regulating business in Nigeria, with the twin objective of business and industrial developing, and maintaining sanity among the business key players and operators.


1. Registration of Business Names Act 1961, No. 1

2. Trade Mark Act 1961, No. 29

3. Factories Act capt. 1966

4. Exchange Control Acts 1961, No. 16

5. Nigerian Standard Organisation Acts 1971, No. 36

6. Trade Union Act 1973, No 31

7. Pre-shipment inspection of import Act, 1978, No. 36

8. Import prohibition order in 10, 1979, etc.


Alawe Tijani (2004) opined that the Bank of Industry was established by the Nigeria government in October 2001, as a result of the merger of the National Economic Industrial Development Bank (NIDB), the Nigerian Bank for Commerce and Industry and the National Economic Reconstruction Fund (NERFUND). It major aim is to provide necessary financial assistance and incentives for the establishment of large, media and mostly small scale projects, and the expansion and diversification of existing industries. It engages in fund mobilization, project appraisals, financing, implementation and investment activities.

  • The Nigerian Agricultural Cooperative and Rural Development Bank (NACRDB) established in the year 2002, is a merger of the defunct Nigerian Agricultural and Cooperative Bank (NACB), People’s Bank of Nigeria (PBN) and the Family Economic Advancement Programme (FEAP).

  • The federal government set up the Bank of Industry limited in October 2001. It was one of the hallmarks of the President Olusegun Obasanjo democratic government in merged the Nigerian Industrial Development bank (NIDB) the Nigerian Bank for Commerce and Industry (NBCI) and the National Economic Reconstruction Fund (NERFUND).

  • From 1996 till date many Community Banks (CBs) were established as self-sustaining financial institutions.

  • They might be owne4d and managed by a group of communities or a community, for the main purpose of providing credit, deposit banking and other financial incentives to its members and the SMEs. The promote SMEs, and rural development by providing credit and deposit services, and the increase of the productive capacities of SMEs and rural people in industry and in agriculture.

  • The Small and Medium Industries Equity Investment Scheme (SMIESIS) was set up on June 19, 2001 and launched in August 2001. It is the banker’s committee initiative which requires banks to set aside 10% of their profit before TAX, for equity investment in small and medium scale enterprises. Its main target is in the areas of Agro-allied business, Information Technology and Telecommunication, Manufacturing, Services, Tourism, Leisure and Construction (Alawe 2004).

  • Also a 10 man Advisory Committee on SMIEIS has been set up to advice the presidential consultative committee on SMIES. The committee comprises of the Central Bank of Nigeria as the Chairperson, three representatives of the Banker’s Committee (i.e. Oceanic Bank, Ecobank and the Metropolitan Bank), three representatives of the organized private sector and three representatives of the federal government which comprises of the federal ministry of industry, and the office of the secretary to the federal government.



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