CHAPTER ONE

INTRODUCTION

Small and medium scale enterprises play a crucial role in providing a solid base for a country’s socio-economy development. According to Nwankwu (1992) in a speech delivered on the financing opportunities of small and medium scale enterprises. It is estimated that probably up to 90% (ninety percent) of all registered categories of business organization in Nigeria are in the category of small and medium scale (SMSE).

The small and medium scale enterprises produce goods and services for both end and intermediate users and also utilize low capital cost for creating jobs especially in a first growing services sector of the economy. Lied Holm and mend (1987) in their contribution have also agreed with the above facts. When they argued on the role of small and medium scale enterprises in providing productive employment and earning opportunity. Small and medium scale enterprise serves as vehicle through which ideas for new products and services fund their way to the consuming public.

Most countries in the world have attained advanced stage in industrial development because they started their industrialization process with programs in the small and medium scale enterprises (SMSE). Through the provision of efficient banking services and infrastructure facilities like portable drinking water, electricity, good road and communication network.

Given the forgoing, an important factor for making a striking impression on the development of these categories lies in the abilities to generate enough fund to business expenditure. The small and medium scale enterprises have also been regarded as an affective way of developing countries of Africa, Asia, and Latin America. The government of these countries have also realized that the large scale industrialization of the past has failed, generally to solve the problem of global under employment and object poverty.

Realizing the great potentials of small and medium scale enterprises, the federal government Nigeria has through its agents such as the Nigeria bank for commerce and industrial development (NBCI), the commercial bank, Nigeria industrial development bank. (NIDB) people bank of Nigeria etc. has consistently continued to play pioneering and active roles in stimulating the small and medium scale enterprises in Nigeria. The activities of financial institutions as directed by the government are a clear manifestation of government active participation in the promoting of small and medium scale enterprises development from the forgoing so far the question is how effective is the role-played by the small and medium scale enterprises in revamping the Nigeria economy? It is the aim f this research work to give solutions or near solution to the aforementioned problem.

1.1       BACKGROUND OF THE STUDY

Star line Nigeria limited started as a sole proprietorship in the mid fifties, making pharmaceutical product under the name of Owumma and sons co. and founded by Chief (DR) Peter Owunna  (Late) it metamorphosed into star line Chemist and company in 1962 under the leadership of the founder. Star line just prior to the outbreak of hostilities (Civil war) in 1967 became a lender in the importation and marking of pharmaceutical products in Nigeria

Activities however resumed after cessation of the civil war in (1970) with every thing lost, the founder guiding principle of perseverance handwork honesty and integrity helped set star line Nigeria limited on the fort path  to resumption  of business once again from his humble beginning and strong belief in the Almighty he nurtured star line through him into industry.

In 1973 star line Nigeria limited has incorporated and together with their enormous trading experience and distributive network started the same year. Determination led to the establishment of pilot cosmetics, factory in 1975 and 1978. a pharmaceutical   factory was established in 1985 and chemist shops modernized to present a credible outlet for her ever increasing range of product. It is important to not that a vertical system exist between the cosmetics, plastics and pharmaceutical factories whereby all needed packing materials are supplied by the plastic factory.

Background integration saw the company going into palm oil plantation 1988 star line Nigeria limited senior management is structure in such way as to give defined function and levels of accountability, influence and power to cope with it. The thrust is to position the company and ensure that it moves through the 90’s (Nineties) into the new millennium (2000) from a position of strength, innovation growth and diversification will continue to be an internal part of its corporate policy and star line Nigeria limited is well poised to meet the challenge of the future. An organizational structure of star line Nigeria limited revenues assigns certain well defined work area to specialist. A production specialist many be used to supervise marketing and it an be diagrammatically represented thus:

Star line is a market leader in the manufacturing of cosmetics and toiletries pharmaceuticals and plastics in Nigeria, its range of pharmaceutical, cosmetics and plastics  have become an important need for Nigerians growing population over 60% of it product ranging from  cosmetics pharmaceuticals and plastics are  currently in the market, the product are also distributed in the west African countries. The company factories and corporate headquarter is located at number 114/116 Aba Owerri road umuanagasi Aba P.M.B 7376 Aba Abia state and is  widely acclaimed the Japan of Nigerian.

Star line Staff strength is about 300 (three Hundred) workers and some of the activities carried out by it includes:

1.                  Manufacturing

2.                   Pharmaceuticals, Cosmetics, Toiletries, Plastics, Palm oil Milling/refining chemicals.

3.                  Trading general merchant/ pharmaceuticals.

4.                  Real estate International/ local real estate.

5.                  Finance LOP/ project financing.

6.                  Farming, palm plantation

7.                  Investment, diversified substantial interest in financing institutions braving and European trading.

8.                  Philanthropic- full education scholarship foundation for further less children and Orphans. Star line quality drugs includes.

Tetracycline HCL BP /1000 capsules 250mg stamicillin  Ampicillin BP/1000 capsules (100*10) in sachets.

Other household product of star line Nigeria limited includes.

i.          Candles

ii.         Air fresher

iii.        Camphor bull

1.2       STATEMENT OF THE PROBLEM

Despite the concerted efforts of both the and state government through its agents (NBCI, NIDB and state chamber of commerce and industry) in promoting small and medium scale enterprise. The small and medium scale enterprises still rule certain major problem, which sometimes arises from the nature and characteristics of the enterprises. These nature and characteristics are summarized below.

i.          There is low employee turnover with higher labour investment ratio.

ii.         There is less organizational differentiation.

iii.        Decision making process are more often subjective rather than on any national analysis (he takes decision of own).

iv.        There is mobility of the proprietor to separate his private fund from the company fund.

Arising from the nature and characteristics of the small medium scale enterprises, their problems can be categorized into two viz.

a.         Those inherent in the small and medium scale enterprises (SMSE) most significant among these includes:

i.          poor Management:      So many small and medium scale enterprises in Nigeria have been crippled by poor management resulting from poor control system, improper keeping of financial. 01 records and lack of technical and economic counseling.

ii.         Shortage of skilled labour: Due to inadequate financial resources, many small and medium scale enterprises rely on semi-skilled labour. This also account for their low productivity limits their expansion and competitiveness.

iii.        Indiscipline:    In many case, loans obtained for projects support are deliberately diverted to other uses. Small and medium scale  enterprises though may not divert loans, return to service such loans more so when obtained from government owned financial institution which they misconceived as their share of national cake performance.

iv.        Low productivity:       As profit is the outcome of sales and cost, the volume produced influence cost and profit. Consequently as a result of low productivity the small and medium scale enterprises find it difficult to survive under been competition.

b.         Those arising from break institutional support to the small and medium scale enterprises (SMSE).

i.          These among others include, infrastructure inadequacies, the vision of essential service such as telecommunication, access road electricity water supply is one of the biggest headache of the industrial sector in Nigeria, most small and medium scale enterprises cannot afford the financial resources to put in place the above mentioned infrastructural facilities. The absence of these facilities has negative impact on  production capabilities.

ii.         Restricted access to market:   The product of most of the small and medium scale enterprises are not standardized which inevitably restricts their access to nation wide market. It’s a result of this fact large scale enterprises prefer to import them to buy small bits and piece of scale enterprises.

iii.        Restricted access to institutional credit:         Adakunye (1990) regards an average Nigeria small and medium scale enterprises proprietor as a very high investment risk with inadequate collateral to ensure the much sought fund. Consequently many of them are unable to meet the lending requirement of both the commercial and merchant banks owing to improper record keeping and inadequate capital.

1.3       PURPOSE OF THE STUDY

From all that has been written above, it is the aim of this study to take a segment of the small and medium scale enterprises and study its roles in revamping/uplifting the Nigeria economy. Such role among others include:

i.          Production of goods and services for both end and intermediate users.

ii.         Creation of employment/job opportunities.

iii.        Serving as local ground for entrepreneurs.

iv.        intensive users of basic raw materials.

To this end the researcher will also make recommendation that would be effective to the small scale and medium scale enterprises to the Nigeria economy.

1.4       SCOPE OF THE STUDY

The scope of this study will be very wide if the research is carried out in all small and medium scale enterprises. How ever it is narrowed to the activities of star line Nigeria limited Aba based on the fact that there is not time financial and material resources in additio                 n to other academic programs to be done, the researcher hasn’t able to cover each and every members of staff of organization under study.

1.5       RESEARCH OF HYPOTHESIS

It is the objective of this study to know:

i.          What part the small and medium scale enterprises play in the Nigeria economy?

ii.         How small and medium scale enterprises produce goods and services for both end and intermediate users.

iii.                How small and medium scale enterprises produce employment for up to 50% of the countries population.

iv.                The way which small and medium scale enterprises serves as training ground for local entrepreneurs,

v.                  How small and medium scale enterprises utilize low capital in its cause of production.

vi.                How small and medium scale enterprises survive in the face of large enterprises.

1.6      SIGNIFICANCE OF THE STUDY

A research hypothesis is a statement which guide an investigator by providing attentive solution to the research problem. It is an intelligent gues to research question. After a problem has been well defined, the next thing to do is to give a focus or direction to its solution, which is what is achieved through the formulation of research hypothesis.

The following hypothesis form the  frame work for earning out the Nigeria economy.

i.                    Small and medium scale enterprises provide employment for up to 50% of the countries population.

ii.                  A small and medium scale enterprises serves as a place for the development of local technology.

iii.                A small and medium scale enterprises serve as training ground for local entrepreneurs through effective stimulation

iv.                Small  and medium scale enterprises mitigate rural urban migration.

v.                  Small and medium scale enterprises constitute the very basis of the country’s national economy.

vi.                A small and medium scale enterprises utilizes low capital in its cause of production.

SIGNIFICANCE OF THE STUDY

This study is very timely, especially today that all hand are on desk to enhance the development and growth of the Nigeria’s economy through the small and medium scale enterprises. This study will be of immense benefits to cottage enterprises as well as other small and medium scale enterprise.

Furthermore, the research work will serve as a secondary data to future researches on small and medium scale enterprises.

Finally, this work is of importance to the researcher in the following ways.

i.                    It will expose and enable him to know more about the organization. Enterprises under study.

ii.                  It will enable him to more about the role, which small and medium scale enterprises play in Nigeria.

iii.                It will also enable him to know the different meaning/definitions and classifications of small and medium scale enterprises.

1.8      DEFINITION OF TERMS

The following term used in this study should be taken to mean the following.

BUSINESS ORGANIZATION:      This could be defined as whatever group or agency that engages in the production of good and services regardless of the motive force behind he decision to product but for the satisfaction of human wants.

CORPORATE POLICY:      According to Luftman  etuall (1987) it is a concept that is applicable in management, which expresses the limits of decision making by members of the organization charged with the responsibility of operating the organization as a system.

CAPITAL:     It is defined as any thing that has  been made by man for the purpose of using it as an aid when producing other good and services.

ECONOMIC DEVELOPMENT:     It can be defined as the process whereby a country’s real per capital gross national product of income increases over a sustained period of time through continuing increases ie per capital productivity.

ENTREPRENEURS:            According to Meredith et al (1991) an entrepreneur is an individual who has the ability to see and evaluate business opportunities, gather the necessary resources to take advantage of them, and initiate appropriate action success. He is also risk taker.

INDUSTRIALIZATION:    This is defined as a concentration of industries in a geographical area, which is soured because of any or all of the following reason, availability of raw material, labour, electricity etc.

MANAGEMENT:     It is the study, mystery and utilization of manufacturing and industrial methods. It is also entails the systematic application of knowledge to practical tasks in industry.

Get this material NGN 5,000

Message Us on WhatsApp  »