ABSTRACT
The study was carried out to determine the problems that militate against the establishment of small scale industries. This necessitated carrying out a survey of small scale establishments with view to findings lasting solutions  to  the  problems.  Questionnaires  are  unstructured  oral interviews were the major instruments used in this study. A sample of 44 small  scale  establishments  in  Augata,  Awka  and  Nnewi  Local Government Areas of Anambra State were served the questionnaires and the various Pie charts were used in presentation and analysis of data and for clarity purpose. It was found out that the problems confronting the establishment of small scale industries are lack of adequate capital, problems, relating to management/managerial, marketing, manpower, quality/standard and non-availability of raw materials. These problems are caused by political instability in the country, lack of good manpower development programme, poor leadership style and unawareness cum non-utilization of government assistance programmes.  However, these problems are at various stages of growth but most at the existence stage when authority is still centralized and yet to stabilize. To solve these identified problems, local sourcing or law materials, employment of trained personnel and skilled manpower, as well as full utilization of government assistance aimed at improving the productivity of the establishment were recommended.
CHAPTER ONE INTRODUCTION
1.1 BACKGROUND OF THE STUDY
Every organization in the process of pursuing its aims and objectives is bound to have problems and prospects. Small Scale firms are not left out in this effect.
The significance of small scale manufacturing enterprises in socio- economic development, in many parts of the world has been well documented. In Nigeria the contribution of small-scale business is not in doubt. However, in the recent times the contribution of this vital sub- sector to our economy has increasingly, assumed an unprecedented development. It has come to occupy a central position in the development aspiration of Anambra State.
As stated already, the concept of small-scale business is not new; it is the practice that is new. According to UNIDO monographs on industrial Development review titled: Industrialization of developing countries: Problems and Prospects of Small Scale Industries there are two broad categories of small scale industries. The first is the industry carried on by traditional craftsmen and artisan, some of whom may need assistance to modernize their skills, tools and techniques of production; the second is the industry carried on by the group of small manufacturing enterprises
which produce a variety of consumer and simple producers’ goods required by large industry. In both categories the scale of operation is generally too small to be of interest to a foreign entrepreneur.
According to Peter Ejiofor (1989:69), in pre-colonial Nigeria, the bulk of the employed labour forces were farmers some were also engaged in traditional industries and crafts. Such industries and crafts according to him were small in scale and were mostly practiced in the home. For example, there were elementary processing of agricultural products such as floor from yam, garri, cassava and plantain, oil from palm fruits and gin from palm wine. There were also cloth weaving from cotton yarn, dying of cloth fabrics, casting and smelting works based on ferrous and non-ferrous ores and metals, leather works and manufacture of simple weapons, tools like iron, spores, wooden spore heads, swords, guns, poisoned arrows, matchets, knives, hoes and household utensils such as tripods for the fire place, metal cooking pots and oil lamps. These industries together with crafts like carving from woods and shell, weaving from raffia and grass, pottery products, calabash decorations and products from cane and cassava constituted a vital secondary sector in precolonial Nigeria.
However, with the advent of colonialism and its introduction of Western Education, much of the hands involved in the indigenous small scale cottage industry abandoned it for Western education in order to take up the so called white-collar jobs. This was further worsened by the influence of urbanization which led to an unprecedented rural-urban drift or migration, draining the rural areas of its youths that would have taken over indigenous crafts from their fathers and mothers and grandparents.
Thus as Nigeria moves from predominantly traditional to a modernized economy, much of the character of its cottage industry mostly carried out in the home, has drastically change, as much of it has been replaced by small but modernized factories.
The much said, and publicized about the numerous documentation on small scale industries are only on papers, journals and text books and restrited only to those living in the cities with access to this information. About 75 percent of Nigerians who live in the rural areas have no access to this information. During the precolonial days and the period after independence the then ministry of commencer and industry went from village to village shooting documentary films on how to improve upon our small-scale ventures, how to use better improved variety seedlings; how to combat pests using pesticides etc. Even today, majority of those who are involved in small-scale business in this country arc not aware of
the so called numerous research and documentation on small-scale enterprises.
The major blame of the problems confronting small scale enterprises today would go to the government which immediately after independence in 1960 neglected and discouraged this important and indispensable sub- sector of the economy that would have acted as engine of growth for our economic development efforts, as reflected in its various economic development plans. According to J.A. Ezeh (1997:1-2) since 1960 the year of independence, the country’s development plans have laid a great deal of emphasis on public sector controlling of the economy. We have a situation where the public private sector mix has increasingly titled towards public sector domination. For instance, while in the first National Development Plan (1962-1968), the private sector received 62% of the total capital expenditure, in the Fourth plan (198 1-1985) only 12% of the total capital investment was accorded the private sector with the public sector controlling a staggering 88%. This trend has generally distinguished the government as a major investor in a lot of businesses
which otherwise should have been left to the private sector3. This
apparently wrong development planning did not pass without adverse consequences for the Nigeria economy that we are in today.
In the developing countries, therefore it is now realized that the government parastatals and large scale enterprises have not played and cannot single-handedly be expected to play the dynamic role that they are supposed to play in the rapid growth and development generation, increasing local value added, technological development. It is thus becoming evident as observed by May 1, Nwoye (1991:12) that small scale manufacturing enterprise which had hitherto generally been neglected could play the aforementioned roles, as well, if better than the large scale establishment.
The specific attention now paid to small-scale enterprises is based on their expected impact and potential contribution on broad and diversified production base, as well as their accelerated effect in achieving macro objectives pertaining to full employment, income distribution, development of local or indigenous technology among others. Peter Drucker (1980:7) clearly pointed out that small scale industries are important not only because they account directly for a significant proportion of the investment output and employment in a nation, but also and even more significantly, because they provide vital links in the chain of the economy at large, motivating, energizing and connecting various sectors and sub sectors for greater over all output, employment and
productivity.5
Indeed, the country’s low per capita income, low technological know- how and abundant supply of cheap labour force, make small-scale manufacturing enterprises an important anchorman to national development. It was therefore, in recognition of this unique position of small scale enterprises within the national economy that a National workshop-the first of its kind-on promotion and development of small and medium scale enterprises was sometime held at the Administrative College of Nigeria (Kuru Plateau State). Among the objectives of workshop were to highlight the importance which the small and medium scale enterprises could play in the revival and restructuring of the Nigerian economy; to identify the problems confronting this category of enterprises and to bring these to the notice of the Federal and State Governments so they can adopt necessary measures to facilitate the promotion and development of these vital sub-sectors of the economy. To this effect, therefore, the need to promote active indigenous participation in all aspects of the economy has never been in doubt through deliberate policies by government at different stages of their economic development. Thus the promulgation of the Nigeria Enterprises promotion Decree, 1972 was the first real scientific approach to tackle this subject with the full appreciation of its magnitude and complexity. The Nigeria Enterprises Promotion Decree of 1977 has been promulgation in consequence of a comprehensive appraisal of the result
oaf that of 1972. Besides providing for further indigenization of enterprises in Nigeria, the primary objective of the decree is to promote and protect the participation of all Nigerians in all spheres of the economy.
Interestingly, enough, emphasis by the recent government policies on expansion and setting up of new ones by private individuals through the establishment of peoples banks, Community banks, Nigerian Bank for Commerce, Credit and Industry, export promotion through many incentives to discourage import so as to encourage local industries, Fund for Small Scale Industries (FUSSI), Small Scale Industries Scheme (SSIS), Industrial Development Centre (IDC), National Economic Reconstruction Fund (NERFUND) etc. It is therefore not surprising that
the 3rd National Development Plan (1975- 1980) specifically state that
the main objective of the government programme for the development of small scale industries are the creation of employment opportunities, mobilization of local resources, mitigation of rural urban migration and even more distribution of industrial enterprises in different parts of the country. Presently, emphasis is on small scale enterprises in all sector of the economy. The Federal government has established some agencies to device and coordinate the efforts of small scale business entrepreneurs. However, the impact of these agencies is yet to be felt.
1.2 STATEMENT OF PROBLEM
According to statistics, one in every new businesses fails within the first year of operation, while a staggering four out of five small business fail during the first five years. These problems which include managerial, financial, marketing, raw material acquisition, accessibility and other environmental factors militate against the efficient and smooth attainment of the organizations immediate, attainable or visionary objectives. Obong and Jakande have attributed the failures to management and financial problems.
The present research seeks to investigate the viability and rapid folding up of these small scale industries in our fledging and developing economy.
1.3 OBJECTIVE OF THE STUDY
The study has the following objective:
1. To determine the major problems encountered by small scale establishments which pose danger to their survival and growth.
2. To determine the nature and causes of these problems as well as their impact on the small scale businesses.
3. To find out the best and most efficient way of handling these problems with view of finding lasting solution.
4. To make recommendations based on the findings of this study.
1.4 RESEARCH QUESTIONS
This study endeavoured to answer the following questions:
1. What are the major problems confronting the small-scale industries?
2. What are the causes of these problems?
3. What are the possible solutions to these problems facing the small scale firms?
4. At what stage of growth are these problems encountered?
1.5 SIGNIFICANCE OF THE STUDY
The study is significant because the resultant findings and recommendations will:
1. Reflect problems areas which would aid in better decision making towards the continued and successful operation by the owners.
2. Draw attention of the small industrialists to vital factors or problems that may impinge on their growth.
3. Provide information on how best to avoid or tackle the problems that are ‘defined’ and as are common with small businesses.
4. Help government identify requiring attention, thus stimulating government into proper directing of incentive and loans to improve upon existing infrastructures.
5. Provide useful guide for prospective entrepreneurs that wish to choose self employment as a career.
6. Form or serve as secondary data for subsequent studies by a prospective entrepreneur or researcher.
1.6 SCOPE AND LIMITATIONS OF THE STUDY
Small scale industries are beset with myriads of problems. These problems cannot be adequately covered in a research work taking into cognizance the time constraint, financial and material (data) resources at our disposal. Nevertheless much was covered and the research was limited to Animal Husbandry farms, Restaurants, and Bankers within Anambra. Thus study was based on data collected from the few selected small scale enterprises in Anambra State.
In the pursuance of a successful completion if this study, certain limitation posed some threats to the researcher. Among them were the unavailability of sufficient books by Nigerian Authors in area of small business management and other problems associated with data collection (which includes misleading and incomplete information from respondents); limited time available for completion of the enormous work and family, the financial resources available to carry out the research. However, the researcher despite all odds was able to counter the affects of these limitation.
1.7 DEFINITION OF IMPORTANT TERMS
1. Small-Scale Industry: The definition of small-scale industries varies with people and countries (localities) such that it is better defined based on the characteristics. In the Nigeria context small scale enterprise is any servicing, processing or manufacturing industry with an investment in machinery and equipment above N500, 000 (Uaboi, l987). According to the Center for Management Development, (CMD) in a policy proposal on Federal Government in 1982, ‘A small scale enterprise’ is a manufacturing, processing or service enterprises involved in a factory or producing type operation employing up to 50 full time employees, investment in plant machinery are utilized in its operation.
2. Manufacturing: This is the mechanical or chemical transformation of inorganic or organic substances into new products (Heyel (ed) 1963).
3. Management: According to Akpala (1990:3) management is the process of combining and utilizing an organization’s input (men, material, and money) by planning, organizing, directing and controlling for the purpose of producing outputs (goods and services) desired by customers so that organizational objectives are accomplished.
4. Restaurant: According to Obong (1993:27) place where meals can be bought and eaten. This definition excludes canteens and other road side eating places popularly known as ‘Mama Put’.
5. Animal Farms: According to Jakande (1990:45) business involving the rearing of animal (and birds) for meat and other dairy products. Raw materials for further processing could also be obtained here. Thus the farms include poultry, piggery, fishery etc.
This material content is developed to serve as a GUIDE for students to conduct academic research
PROBLEMS OF ESTABLISHING SMALL SCALE INDUSTRIES IN ANAMBRA STATE (A STUDY OF SOME SMALL SCALE INDUSTRIES IN THE STATE)
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