ABSTRACT
The Nigeria’s public sector has ballooned, in part since independence in
1960, on the back of the oil-boom years of the 1970s. the country had more 2000 public enterprises by early 1990s and there were concerns about inefficiencies and have negative effect on the aggregate economy, consequently, most of them have either been privatized or commercialized. Ostensibly, global economic literatures and parameters reveal that small-scale industry is the bedrock of economic development. It is one of the secrets behind economic growth over the years. The various Nigerian governments have also adopted or pursued one policy or the other intended to foster grass root development, and improved the standard living of our rural dwellers. All these policies and programmes have failed to impact significantly on this area. The researcher affirming the global view on small-scale industries, and decided to investigate the contributions of small-scale industries at Ikorodu Local Government Area of Lagos State. The researcher adopted the use of questionnaire and oral interviews as statistical instrument for the study. During the study 500 questionnaires were randomly distributed to 500 respondents two industries in that Local Government Area. The data collected were presented and analyzed using chi-square at 95 percent confidence level (i.e. x = 0.5). The study reveals that small-scale industry is the engine of rural economic development. The industry creates job opportunities, provides basic. Infrastructures and social amenities, Small-scale industry motivates other economic activities that guarantee qualitative standard of living. However, the researcher concluded by emphasizing on the performance of small-scale industries in Lagos State and she urges the State and Local government to encourage the establishment of such industries in the rural areas because of their goals and objectives of grassroots development will be achieved.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Nigeria is a country greatly endowed with many natural and human resources. The business environment apparently offers opportunities for many entrepreneurial ventures. Ironically, despite these endowments, her state of economic development leaves much to be desired.
Whereas entrepreneurship may not be the missing factor alone. It is without doubt an important component in the process of economic development. Infact, the start up and development of small industries remain one of the major ingredients of continue growth in any national economy. Consequently, in the quest for Nigeria’s economic development, the role of indigenous entrepreneurship likely to be much more important in small industries than in large undertakings that are generally favoured by planners in the past.
Some time ago, Albert Hirschman (1958), said that development is like a jigsaw puzzle, it is easier to fit in a particular piece when the adjoining pieces are already in place; the pieces that are hard to find are those with only one neighbor in place. This clever analogy evokes two very important economic principles that both researchers and policy makers are rediscovering as Nigeria moves from the decade of adjustment to a
new period of reforms and growth. The first one is that during the early phases of development, when an economy is no more than a collection of fragmented markets and regions, the establishment of government institutions, the construction of infrastructure, and the direct participation of the government in some areas of the economy are not only desirable but indispensable preconditions for the growth process.
The second principle is more in line with the recent theories of endogenous economic growth (see Scott, 1991, Lucas 1988; and Uzawa
1965). It reflects the motion that the opening up of investment opportunities through changes in the environment where individuals works save and invest, both creates and reveals new investment opportunities. In Hirschman’s example, once the difficult parts of the puzzle have been solved, the remaining pieces begin to fall into place almost automatically. What this means for the role of the government in economic development is that after an initial period of protection and government intervention, growth no longer respond as strongly to further involvement as it did during the very first stages of industrialization. Furthermore, this analogy conveys the motion that once the basic institutional framework has been implemented, the public will be better served by indirect support of economic activity through deregulation,
privatization, trade liberalization and a competitive environment than by direct government participation in production activities.
Today, government participation in economic activity is very different from a decade ago. Growth policies are geared towards creating a propitious climate for the participation of small-scale industries. Instead of subsidies and nationalization, the emphasis is on the elimination of institutional constraints on competition, the creation of new markets, and the generation of opportunities for all embers of the population.
The government growth and economic reform policies may not achieve sustainable results without rural development. There is high concentration of large, medium and even small-scale industries in the urban areas of the country due to availability of markets for the products, infrastructures and social amenities, various administrations came with one program or the other intended to liberate the rural dwellers from perennial poverty, but unfortunately, some of these programmes failed to achieve the expected results. Examples of such programmes include Directorate of Food roads and Rural Infrastructures (DFRRI), MAMSER, the Better Life programme for rural Dwellers and poverty Eradication programme etc.
The shift of emphasis to grassroots development is a matter of necessity at the present stage of our development, and small-scale industries have been identified as the major way towards rural economic emancipation, it is well known that at least 75 percent of our country’s resources endowment abounds in the rural areas. Thus development projects and programmes cannot achieved only appreciable improvement or impact until they focus on these rural areas.
Therefore, in respect to weakness of these large scale manufacturing companies government has sought to promote small scale industries as a strategy for self-reliant industrialization. Thus, it became evident by 1985 that the small-scale industries which had hitherto generally be neglected could play the aforementioned roles as well, if not better than the large- scale industries. Other reasons that promoted for small-scale industries development in our country (Nigeria) include;
The low level of capital required the establishment of the industries
The large number of the establishment and their labour intensive mode of operation guarantees employment for a large number of persons.
Inventions, adaptations and general technological development are found to be common in these industries
Industrial diversification and relatively more balanced regional development is assured.
Tendency among small-scale industries to become feeders of large scale industries and service products made by the latter.
Theoretically, small scale industries have potentials worth gunning for the promotion of Nigeria’s industrialization. Thus, in the Second Development Plan (1969-1974), both the Federal and State Governments are to actively support and promote the development of small-scale industries. In the third National Development Plan (1975-1980), government explicitly states that main objectives of a programme for the development of small-scale industries as the creation of employment opportunities, mobilization of local resources, mitigation of rural urban migration and more even distribution of industrial enterprises in different parts of the country. These are to be achieved through complementary assistance to small-scale entrepreneur in financial, managerial and technical aspects. The main vehicle designated for administering the incentives are the industrial Development centre (IDC) and the state’s small-scale industries credit scheme.
Different government regime in Nigeria has initiated laudable programmes aimed at rural development, but the impact of these programmes are not significant in those areas. The researcher has noticed
constant entry and exit, rise and crumbling of small-scale industries and standardo f learning in our rural areas and sets out to identify the causes of the phenomenon in view of highlighting possible solutions.
1.2 STATEMENT OF PROBLEM
Available statistics indicate that about 75% of our population live in rural areas. These people are predominantly peasant farmers whose modes of agricultural production are relatively primitive. One of the causes of backwardness in rural areas is the inadequacy of investment funds to finance small-scale industries. It is generally believed that rural small- scale industries can provide employment to rural labour force and also enhance development.
There are many small-scale industries, which can thrive in the rural areas but for the lack of rural infrastructure and social amenities. Funds of such small-scale industrial activities had been very difficult to come by and the effort by the government in this direction has not yielded appreciable result.
Most of the proprietors or promoters of some of the rural small-scale industries are illiterate who lacked managerial and technical know-how. Their outputs are very inferior and sub-standard thus loose acceptability in the market. In the course of this study, other problems that have been
militating against the existence of small-scale industries in our rural areas will be identified and small-scale industry performance especially at two industries at Ikorodu Local Government Area in Lagos State.
1.3 OBJECTIVES OF THE STUDY
The objectives of this research are as follows:
To analyze the contributions or benefits of small-scale industries at
Ikorodu Local Government Area of Lagos State.
To identify the causes of why small-scale industries shun rural areas.
To offer some useful suggestions to encourage the influx of small- scale industries in our rural areas.
To encourage our young graduates to be self employed through establishment of small-scale industries.
To ensure that small-scale industries that located where their products and services are needed or close to the target market
1.4 RESEARCH QUESTIONS
(1) How would you rate the presence of small-scale industries in our rural areas?
(2) Do you think that active presence of small-scale industries in rural areas will ensure good profitability margin to the promoters?
(3) Do you think that active presence of small-scale industries will ensure development in our rural areas?
(4) Would Banks and other financial institutions be willing to grant credit facilities to small-scale industries without collateral?
(5) What is the role of the government authority to rural development? (6) Do you think that active performance of small-scale industries would attract multi-nationals who may sources their raw materials
from these small-scale industries?
(7) Do you thing that these small-scale industries are really located where there products and services are needed?
1.5 RESEARCH HYPOTHESES
Small-scale industries do not create employment opportunities in our rural areas.
There is no correlation between small-scale industries and higher standard of living on our rural areas.
Establishment of basic infrastructures and social amenities cannot attract small-scale industries to our areas.
Establishment of small-scale industries in our rural areas do not grantee good profitability margin to the promoters.
Banks and other financial institutions would not grant credit facilities without a reasonable collaterals.
1.6 SIGNIFICANCE OF THE STUDY
The findings will encourage government to allocated more funds to establishment of basic infrastructures in the rural areas.
The result will encourage investors to promote the establishment of small-scale industries in our rural areas.
It will facilitate poverty alleviation in our rural areas.
The government will pump more funds on the establishment of more technical schools, well equipped and employment of competent personnel.
It will lead to economic transformation and increase in business activities in the rural areas.
It will help to find solution to perennial unemployment that have bedeviled the social and economic status of the country.
The study will discover some obstacles to these industries and profound solutions to them.
1.7 SCOPE OF THE STUDY
The study is limited to one local government area (Ikorodu, L. G. A.) of Lagos State, Nigeria. It examines the performance of existing small-scale industries, livestock feeds industry and Sonak Plastic industry. The study evaluates the basic infrastructures and their impact on business activities in that Local Government Area. The study demonstrates the multiplier
effect of small-scale industries and how this can lead to economic emancipation in the rural areas.
1.8 LIMITATION OF THE STUDY
There are peculiar difficulties in studying small-scale industries. There was problem of obtaining accurate statistics of the performance of small scale industries.
Another limitation was how to locate these industries because Lagos State is wearing a new look now due to tierless effort of the present administration of Governor Raji Fasola.
After these industries have been located, their proprietors were not readily available. It was also found out that some of them have two or more unrelated businesses they run. The most difficult problem was finances. At a time the researcher ran out of fund which led to the delay to continue the exercise.
This material content is developed to serve as a GUIDE for students to conduct academic research
PERFORMANCE OF SMALL SCALE INDUSTRIES IN IKORODU LOCAL GOVERNMENT AREA OF LAGOS STATE
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