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Small and Medium Scale Enterprises.

A Solution for Reducing the Rate of Unemployment in Nigeria: A Case Study of Selected businesses in Sabon Gari Local Government Area of Kaduna State.

By

ABDULLAHI IBRAHIM (U08BA2006)

A Project Submitted to the Department of Business Administration, Faculty of Administration, Ahmadu Bello University Zaria In partial Fulfillment of the requirement for the Award of Bachelor of Science (B. Sc) Degree Business Administration (Marketing)

September, 2011.

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DECLARATION I declare that this research project titled Small and Medium Scale Enterprises: A Solution for Reducing the Rate of Unemployment in Nigeria: A Case Study of Selected businesses in Sabon Gari Local Government Area of Kaduna State. is my work. It is submitted in partial fulfillment of the requirement for the award of Bachelor of Science (B. Sc) Business Administration with option in Marketing of the Ahmadu Bello University. It has not being submitted for any degree or any examination in any other university. All references in this study have been appropriately and duly acknowledge.

_____________________ ABDULLAHI IBRAHIM

_________________ DATE

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CERTIFICATION This project titled Small and Medium Scale Enterprises: A Solution for Reducing the Rate of Unemployment in Nigeria: A Case Study of Selected businesses in Sabon Gari Local Government Area of Kaduna State meets the regulation governing the award of the Degree of Bachelor of Science (B. Sc) Business Administration with option in Marketing of Ahmadu Bello University, and is approved for its contribution to knowledge and literacy presentation.

____________________ Hajia. F. M. Abdullahi (Project Supervisor)

______________ Date

____________________ Mallam Aminu Salisu Gumi (Project Coordinator)

______________ Date

____________________ Dr. Bello Sabo (Head of Department)

______________ Date

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DEDICATION This research work is dedicated to All Mighty Allah for giving the strength as well as resources to start and finish this research work in particular and my entire study in general. Also my beloved mother Mrs. Z. O. Abdullahi, more so to my beloved wife Barrister Khadijah Suleiman for her support and love all through my year of study in A. B. U. Zaria. May Allah reward you all (Amin).

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ACKNOWLEDGEMENT All praise is due to Allah, May Allah's Peace and Blessings be upon His Final Messenger, his pure family, his noble Companions, and all those who follow them with righteousness until the Day of Judgment. My profound and inestimable gratitude first of all goes to Almighty Allah Subhanahu Wataala for bestowing me life and good health and guiding me through this crucial and fundamental stage in my life. I have to say at his juncture Alhamdulillah. My sincere appreciation goes to my parent Sheikh M. A. Abdullahi and Mrs. Z. O. Abdullahi for their support, may Allah (SWT) grant you all Aljanna tul Firdausi. To my aunties; Mrs. K. O. Bajeh; Hajara Edegbo; Maimuna; Khadijah; and Uncles Abdulazeez Salawu and Dr. Ahmed Rufai Abdullahi. I say thank you for being there. To my brothers: Engr. Saddiq Abdullahi, Capt Ismail Abdullahi, Yusuf Abdullahi, and Bashiru Abdullahi. My Cousins: Abdulkarim Abdullahi, Francis Bajeh, Lydia Bajeh and Grace Bajeh. My Sisters; Zainab Abdullahi, Hindatu Abdullahi, UmmulKhair Abdullahi and Late Fatima Abdullahi may her gentle soul rest in peace. I will not be doing justice to myself if I fail to acknowledge the effort of my humble, vibrant and eloquent supervisor Hajia F. M. Abdullahi for having time to go through my research work despite her tight schedule and engagement. To my lecturers; Mallam Shafa Yusuf, Zubairu Muhammed, Hajia Safiya, Saulawa Garba, Salisu Umar, Mallam masoud, Mallam Salisu Gummi. Doctors; Sabo Bello, Auwal Yahaya Ahmed, Bala Magaji, Abubakar Mukhtar, John Kizito Yere, A. J. C. Onu, Austin Agom. I say thank you all for making me who I am today May Allah reward you abundantly. I also owe deep sense of gratitude to my colleagues and my friends for their support in the pursuit of knowledge, who have despite my short comings stood by me and always being a friend in deed: Yabagi, Mohammed (FASA), Zakari (Coachi), Jalloh, Adam, Abdulrahman, Hamza, Philosopher, Anas, Sani Mato, Gimba, Bashiru, Auwal (Captain), Ibn Mudaththir, Imam Shuaib, Suleiman Abubakar, Aliyu Nntako, A. A. Kambaa, Asp. A. A. yaqub, Mallam Mijinyawa, Babson, Idris (Boyoo), Aliyu (Chairman), Kabiru (KB theory), Yusuf (Iron Beans), Ibrahim (Omare), Abdulkarim, Ibrahim (Wakeel), Dotun, I say thank you all and may the Almighty bless you. Abdullahi Ibrahim

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ABSTRACT In recent years, the plight of Nigerians have moved from bad to worst in the sense that the economy is not favorable the increasing population is not being catered for by creating jobs or job opportunities for the teaming and willing labor force. The rate of unemployment is at an alarming rate which saw to the establishment of different agencies by different administration simply to solve the problem of unemployment in Nigeria. The purpose of this project is to undertake a scientific study of small and medium scale enterprises as a viable alternative to reducing the rate of unemployment in Nigeria. The study has the objectives of looking at the level of awareness of the concept of SMEs, its impact, prospects, challenges as well as the willingness to establish, grow and expand the enterprises. In this study the method of data collection is basically primary source. Data was collected from the respondents through the use of structured questionnaires. Table and simple percentages, chi-square were used for data presentation and analysis respectively while same chi-square was employed in testing the hypothesis formulated. The findings reveal that there is significant relationship between small and medium scale enterprises and unemployment. Therefore, it is concluded that majority of the enterprises are under utilizing the available resources as well as they are handicapped based on insufficient finance. Therefore, based on the findings of the study, it is recommended that development can be achieve if there is a good working relationship between public private sector, thus the public private partnership will enhance speedy development of SMEs and thereby reducing the rate of unemployment in Nigeria.

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TABLE OF CONTENT Title page Declaration Certification Dedication Acknowledgement Abstract Table of content

Chapter One: Introduction 1.1 1.2 1.3 1.4 1.5 1.6 1.7 1.8 1.9 Background To The Study Statement Of The Problem Objectives Of The Study Research Questions Hypotheses Of The Study Significance Of The Study Scope Of The Study Limitations Of The Study Definition of Terms

Chapter Two: Literature Review 2.1 2.2 2.3 2.4 Introduction Concept of Small and Medium Scale Enterprises Importance of Small and Medium Scale Enterprises Financing and Source of Funds for Small and Medium Scale Enterprises 2.5 Prospects and Problems of Small and Medium Scale Enterprises 2.6 2.7 Concept of Unemployment Classification of Unemployment
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2.8 2.9

Causes of Unemployment The Relationship between Small and Medium Scale Enterprises and Unemployment.

Chapter Three: Research Methodology 3.1 3.2 3.3 3.4 3.5 3.6 Introduction Research Design Population of the Study Sample Size and Sampling Technique Data Collection Instrument Technique of data analyses

3.6.1 Chi-square 3.6.2 Justification of the technique used

Chapter Four: Data Presentation, Analysis and Interpretation. 4.1 4.2 4.3 4.4 Introduction Data Presentation and Analysis Test of Hypothesis Discussion of Findings

Chapter Five: Summary, Conclusion and Recommendation 5.1 5.2 5.3 Summary Conclusion Recommendation References Appendix
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Chapter One Introduction


1.1 Background To The Study: Unemployment is a social menace and as such a country like Nigeria is not left out in the list of countries battling to eradicate this socially unacceptable status of unemployment. However, various policies have been enacted by different presidents and heads of state of Nigeria from the military era to the present day democracy, all trying to eradicate unemployment. Gbosi (1997) defined unemployment as a situation in which people who are willing to work at the prevailing wage rate are unable to find jobs. More so the International Labor Organization (ILO) defines the unemployed as numbers of the economically active population who are without work but available for, and seeking for work, including people who have lost their jobs and those who have voluntarily left work (World Bank, 1998). Small and Medium Enterprises (SMEs) as defined by the National Council of Industries refer to business enterprises whose total costs excluding land is not more than two hundred million naira (N200, 000,000.00) only. For both developing and developed countries, small and medium scale firms play important roles in the process of industrialization and economic growth. Apart from increasing per capita income and output, SMEs create employment opportunities, enhance regional economic balance through industrial dispersal
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and generally promote effective resource utilization considered critical to engineering economic development and growth. However, the seminal role played by SMEs notwithstanding its development is everywhere constrained by inadequate funding and poor management. However, this study was conceived due to the rate at which the Nigerian populaces are qualified but do not find job to do, or the job is not befitting their standard, and the alternative way out is to commit crimes of various degree i.e. armed robbery, advanced fee fraud etc. therefore one may be tempted to ask why are the Nigerian graduate not finding jobs to do? Further more the need to explore untapped resources by establishing businesses that will be responsible for providing such services to those who want it, has necessitated the need to undertake this study to examine how setting up of Small and Medium Enterprises (SMEs) can serve as an alternative measure for reducing the level of unemployment in Nigeria, because it is a known fact that the rate of unemployment is growing at an alarming rate yearly. According to the Central Bank of Nigeria (2003) the national unemployment rate, rose from 4.3% in 1970 to 6.4 % in 1980. Furthermore, the Nigerian Government also placed an embargo on employment. Specifically total disengagement from the Federal Civil Service rose from 2,724 in 1980 to 6,294 in 1984 (Odusola, 2001). Owing to this, the national unemployment rate fluctuated around 6.0%, until 1987 when it rose to 7.1%. It is important to state here, that structural adjustment program (SAP) adopted in 1986, had serious implications on employment in
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Nigeria, as unemployment rate declined from 7.1% in 1987, to as low as 1.8% in 1995, after which it rose to 3.4% in 1996, and hovered between 3.4 and 4.7% between 1996 and 2000 (Douglason et al, 2006), and currently the unemployment rate in Nigeria stands at a scary figure of 19.7% (National Bureau of statistics, 2010)

1.2 Statement Of The Problem: Over the years, several attempts have been made by the government of Nigeria at one point or the other to reduce unemployment in Nigeria, these efforts saw to the establishment of National Directorate of Employment (NDE) in November 22, 1986, the National Economic Employment and Development Strategy (NEEDS) in March 2004 etc all to no avail. Thus, this study is aimed at examining the rate at which small and medium scale enterprises (SMEs) can serve as a viable alternative in reducing the rate of unemployment in Nigeria, because all the previous agencies established have not produced significant result till date.

1.3 Objectives Of The Study: The principal objectives of this study are: 1. To examine the level of awareness of the concept of small and medium scale enterprise (SMEs).

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2. To evaluate the impact of small and medium scale enterprise (SMEs) on the reduction of unemployment. 3. To assess the level of willingness to start up a small and medium scale enterprise (SMEs). 4. To recommend a way forward, if the outcome is positive, and if it is negative to suggest solutions on how the outcome/findings will be solved.

1.4 Research Questions: In this study, the researcher deems it necessary to address the research problems empirically and the following questions were raised. 1. Are individuals aware of the concept small and medium scale enterprises (SMEs)? 2. Are they willing to involve or start up small and medium scale enterprises (SMEs)? 3. Is the government granting loan to those who are willing to start up small and medium scale enterprises (SMEs)? 4. Does a small and medium scale enterprise (SMEs) have any impact on the reduction of unemployment in Nigeria?

1.5 Hypotheses Of The Study: Due to the research questions above, the following hypotheses are formulated. The hypothesis for this study is stated in a null form;
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H0: Small and medium scale enterprise (SMEs) has no significant effect on unemployment rate.

1.6 Significance Of The Study: 1. The issues of high rate of unemployment compared to other countries of the world is alarming, thus, this study will be relevant in tackling such problems faced in trying to reduce unemployment in Nigeria and as such if the recommendations are followed, it will fill a gap in the field of knowledge. 2. It will provide a blue print on how to reduce unemployment, based on the findings of the study.

1.7 Scope Of The Study: This research work is mainly based on examining whether small and medium scale enterprise (SMEs) is a viable option in reducing the rate in Nigeria, a study of sabon gari local government are of Kaduna state. Due to limited data, insufficient time and also financial constraints, it is impossible to extend this study to other local government areas of Nigeria, knowing fully well that a thorough research work of this nature requires a huge financial input, which cannot be carried out by a student of my status. For this reasons, the research work had to be restricted to sabon gari local government

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area of Kaduna state, where selected small and medium scale enterprises will be used for this study. More so, the researcher will also be examining the trend of activities of small and medium scale enterprises (SMEs) from the year 2000 to date. However, the researcher is hoping that the recommendation of this study will be utilized in other local government areas of Nigeria if the need arises, but this is not to say that the recommendation can be generalized.

1.8 Limitations Of The Study: This study has faced so many limitations such as;

Unwillingness to respond: during the study period, most of the respondents were not willing to respond, simply because of some reasons best known to them. But based on my guess, I think they do not want to divulge any information concerning their businesses simply because they do not know what the information requested will be used for.

Inaccessibility to respondent: when questionnaires were distributed to respective respondents, the researcher noticed that some of the enterprises visited had employees present, but in some the employees available at the said period were not in the capacity to answer the question on the questionnaire.

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Insufficient data: the study was faced with problem of insufficient data i.e. the data available were not up to date therefore the researcher had to carry out personal survey to update the data to an appreciable extent before using it for the study.

Low level of education: the researcher experience the problem of low level of education on the part of some of the respondents, thus making it uneasy for the respondents to answer some of the question on their own, thereby the respondent will either answer the question improperly or will refuse to answer the question.

Indifferent attitude towards research: some of the respondent never took the administered questionnaire seriously, thereby constituting one or more problem to the study i.e. untimely respond and return of the questionnaire as well as bad facial attitude towards the researcher when he wants to administer the questionnaire to the respondent.

1.9 Definition of Terms: Unemployment: a state of joblessness, which could be intentional or unintentional

Micro Enterprise: A firm, whose total cost including working capital but excluding cost of land is not more than ten million naira (N10,000,000)
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and/or with a labour size of not more than thirty (30) full-time workers and/or a turnover of less than two million naira (N2,000,000) only.

Small Enterprise: An enterprise whose total cost including working capital but excluding cost of land is between ten million naira (N10,000,000) and one hundred million naira (N100,000,000) and/or a workforce between eleven (11) and seventy (70) full-time staff and/or with a turnover of not more than ten million naira (N10,000,000) in a year.

Medium Enterprise: A company with total cost including working capital but excluding cost of land of more than one hundred million naira (N100, 000,000) but less than three hundred million naira (N300, 000,000) and/or a staff strength of between seventy-one (71) and two hundred (200) full-time workers and/or with an annual turnover of not more than twenty million naira (N20, 000,000) only.

Large Enterprise: Any enterprise whose total cost including working capital but excluding cost of land is above three hundred million naira (N300,000,000) and/or a labour force of over two hundred (200) workers and/or an annual turnover of more than twenty million naira (N20,000,000) only.

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NASME: Nigerian Association of Small and Medium Enterprises, which is an umbrella association of all SMEs

MAN: Manufacturers Association of Nigeria is the official association of manufacturing companies in Nigeria

DFIs: Development Finance Institutions are companies involved in project and development finance such as the Bank of Industry (BOI)

SMEs: Small and Medium Enterprises are those firms, which satisfy the definitions given above.

SMEDAN: Small and Medium Enterprises Development Agency of Nigeria

BOI: Bank of Industry, which provides medium to long-term loans to enterprises

CBN: Central Bank of Nigeria, the apex bank in Nigeria, which supervises other banks

NACRDB: Nigerian Agricultural Cooperative and Rural Development Bank

NEEDS: National Economic Empowerment and Development Strategy SEEDS: State Economic Empowerment and Development Strategy NDE: National Directorate of Employment
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MSME: Micro, Small and Medium Enterprises

NGO: Non-governmental Organization SRS: Simple Random Sampling

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Chapter Two Literature Review


2.1 Introduction: The term small and medium scale enterprises (SMEs) occurs commonly in the European Union and in international organizations, such as the World Bank, the United Nations and the world trade organization (WTO). The term small and medium business (SMBs) is also predominantly used in the USA. European Union Member States traditionally have their own definition of what constitutes an small and medium scale enterprises (SMEs), for example the traditional definition in Germany had a limit of 250 employees, while, for example, in Belgium it could have been 100. But now the European Union has started to standardize the concept. Its current definition categorizes companies with fewer than 10 employees as "micro", those with fewer than 50 employees as "small", and those with fewer than 250 as "medium". By contrast, in the United States, while small business is defined by the number of employees, it often refers to those with fewer than 100 employees, while medium-sized business often refers to those with fewer than 500 employees. In most economies, smaller enterprises are much greater in number. In the European Union, small and medium scale enterprises (SMEs) comprise approximately 99% of all firms and employ between them about 65 million people in many

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sectors, SMEs are also responsible for driving innovation and competition. Globally SMEs account for 99% of business numbers and 40% to 50% of GDP. In India, the Micro and Small Enterprises (MSEs) sector plays a pivotal role in the overall industrial economy of the country. It is estimated that in terms of value, the sector accounts for about 39% of the manufacturing output and around 33% of the total export of the country. Further, in recent years the MSE sector has consistently registered higher growth rate compared to the overall industrial sector. The major advantage of the sector is its employment potential at low capital cost. As per available statistics, this sector employs an estimated 31 million persons spread over 12.8 million enterprises and the labor intensity in the MSE sector is estimated to be almost 4 times higher than the large enterprises. In South Africa the term is SMME for Small, Medium and Micro Enterprises. Elsewhere in Africa, MSME is used for Micro, Small and Medium Enterprises. Industry in Canada defines a small business as one that has fewer than 100 employees (if the business is a goods-producing business) or fewer than 50 employees (if the business is a service-based business), and a medium-sized business as fewer than 500.

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2.2

Concept of Small and Medium Scale Enterprise: A small business is a business that is privately owned and operated, with

a small number of employees and relatively low volume of sales. Small businesses are normally privately owned corporations, partnerships, or sole proprietorships. The legal definition of "small" varies by country and by industry, ranging from fewer than 15 employees under the Australian Fair Work Act 2009, 50 employees in the European Union, and fewer than 500 employees to qualify for many U.S. Small Business Administration programs. Small businesses can also be classified according to other methods such as sales, assets, or net profits. Small businesses are common in many countries, depending on the economic system in operation. Typical examples include: convenience stores, other small shops (such as a bakery or delicatessen), hairdressers, tradesmen, lawyers, accountants, restaurants, guest houses, photographers, small-scale manufacturing, and online business, such as web design and programming, etc. There is no single, uniformly acceptable, definition of a small firm (Storey, 1994). Firms differ in their levels of capitalization, sales and employment. Hence, definitions which employ measures of size (number of

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employees, turnover, profitability, net worth, etc.) when applied to one sector could lead to all firms being classified as small, while the same size definition when applied to a different sector could lead to a different result. The first attempt to overcome this definition problem was by the Bolton Committee (1971) when they formulated an economic and a statistical definition. Under the economic definition, a firm is regarded as small if it meets the following three criteria: i. ii. It has a relatively small share of their market place; It is managed by owners or part owners in a personalized way, and not through the medium of a formalized management structure; iii. It is independent, in the sense of not forming part of a large enterprise. The Committee also devised a statistical definition to be used in three main areas: i. Quantifying the size of the small firm sector and its contribution to GDP, employment, exports etc.; ii. Comparing the extent to which the small firm sectors economic contribution has changed over time; iii. Applying the statistical definition in a cross country comparison of the small firms economic contribution. Thus, the Bolton Committee employed different definitions of the small firm to different sectors. Table 2 below indicates the various sectorial definitions:
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Table 2: The Bolton Committee Definitions of a small firm Sector Manufacturing Construction Mining & Quarrying Retailing Miscellaneous Services Motor Trades Wholesale Trades Road Transport Catering Definition 200 employees or less 25 employees or less 25 employees or less Turnover of 50,000 pounds or less Turnover of 50,000 pounds or less Turnover of 50,000 pounds or less Turnover of 100,000 pounds or less Turnover of 200,000 pounds or less Five Vehicles or less All excluding multiples and Brewery managed

houses Source: The Bolton Committee (1971) Criticism of the Bolton Committees Economic Definition A number of weaknesses can be identified with the Bolton Committees economic and `statistical definitions. First, the economic definition which states that a small business is managed by its owners or part owners in a personalized way, and not through the medium of a formal management
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structure, is incompatible with its statistical definition of small manufacturing firms which could have up to 200 employees. As firm size increases, owners no longer make principal decisions but devolve responsibility to a team of managers. For example, it is unlikely for a firm with hundred employees to be managed in a personalized way, suggesting that the `economic and `statistical definitions are incompatible. Another shortcoming of the Bolton Committees economic definition is that it considers small firms to be operating in a perfectly competitive market. However, the idea of perfect competition may not apply here; many small firms occupy niches and provide a highly specialized service or product in a geographically isolated area and do not perceive any clear competition (Wynarczyk et al, 1993; Storey, 1994). Alternatively, Wynarczyk et al (1993) identified the characteristics of the small firm other than size. They argued that there are three ways of differentiating between small and large firms. The small firm has to deal with: i. ii. iii. Uncertainty associated with being a price taker; Limited customer and product base; Uncertainty associated with greater diversity of objectives as compared with large firms. As Storey (1994) stated, there are three key distinguishing features between large and small firms. Firstly, the greater external uncertainty of the

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environment in which the small firm operates and the greater internal consistency of its motivations and actions. Secondly, they have a different role in innovation; small firms are able to produce something marginally different, in terms of product or service; this differs from the standardized product or service provided by large firms. A third area of distinction between small and large firms is the greater likelihood of evolution and change in the smaller firm; small firms which become large undergo a number of stage changes. Criticism of the Bolton Committees Statistical Definition: i. No single definition or criteria was used for smallness, (number of employees, turnover, ownership and assets were used instead) ii. Three different upper limits of turnover were specified for the different sectors and two different upper limits were identified for number of employees. This makes the definition complex to allow for cross country comparison. iii. Comparing monetary units over time requires construction of index numbers to take account of price changes. Moreover, currency fluctuations make international comparison more difficult. iv. The definition considered the small firm sector to be homogeneous; however, firms may grow from small to medium and in some cases to large.

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It was against this background that the European Commission (EC) coined the term Small and Medium Enterprises (SME). The SME sector is made up of three components: i. ii. iii. Firms with 0 to 9 employees Firm with 10 to 99 employees Firm with 100 to 499 employees Micro enterprises Small enterprises Medium enterprises.

Thus, the SME sector is comprised of enterprises (except agric, hunting, forestry and fishing) which employ less than 500 workers. In effect, the EC definitions are based solely on employment rather than a multiplicity of criteria. Secondly, the use of 100 employees as the small firms upper limit is more appropriate given the increase in productivity over the last two decades (Storey, 1994). Finally, the EC definition did not assume the SME group is homogenous, that is, the definition makes a distinction between micro, small, and mediumsized enterprises. However, the EC definition is too all-embracing for a number of countries. Researchers would have to use definitions for small firms which are more appropriate to their particular `target group (an operational definition). It must be emphasized that debates on definitions turn out to be sterile unless size is a factor which influences performance. For instance, the relationship between size and performance matters when assessing the impact of a credit program on a targeted group (Storey, 1994).
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Alternative Definitions: i. World Bank (1976), state that a firm with fixed assets (excluding land) less than US$ 250,000 in value is small scale enterprise. ii. Grindle et al (1989), opined that a small scale enterprise is a firm with less than or equal to 25 permanent members and with fixed assets (excluding land) worth up to US$ 50,000. iii. United State Agency for International Development (1990) views a firm as small scale enterprise with less than 50 employees and at least half the output is sold (also refer to Mead, 1994). iv. United Nations Industrial Development Organization definition for Developing Countries: - Large scale enterprise is a firm with 100 and above workers. - Medium scale enterprise is a firm with 20 - 99 workers. - Small scale enterprise is a firm with 5 - 19 workers, - Micro scale enterprise is a firm with less than 5 workers (Elaian, K. 1996), v. United Nations Industrial Development Organization definition for Industrialized Countries: - Large scale enterprise is a firm with 500 and above workers. - Medium scale enterprise is a firm with 100 - 499 workers. - Small scale enterprise is a firm with less than or equal to 99 workers, (Elaian, K. 1996),
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Further more, Steel and Webster (1990), Osei et al (1993) are of the opinion that in defining Small Scale Enterprises as it is obtainable in Ghana used an employment cut off point of 30 employees to indicate Small Scale Enterprises. However, the latter disaggregated small scale enterprises into 3 categories namely: - Small scale enterprise is a firm employing between 10 and 29 employees. - Very small scale enterprise is a firm employing between 6 - 9 people - Micro scale enterprise is a firm employing less than 6 people In the case of Malawi, the official definition of enterprise sizes dates back to 1992. The definition is based on three criteria, namely: i. The level of capital investment, ii. The number of employees iii. The rate of turnover. An enterprise is defined as small scale if it satisfies any two of the following three criteria, that is, it has a capital investment of US$2,000 - US$55,000, employing 5 - 20 people and with a turnover of up to US$110,000 (using 1992 official exchange rate). For manufacturing enterprises, capital investment is taken to mean the cost of plant and machinery, including working capital and the cost of land and buildings. It may be observed that since this official definition was given in 1992, the economic situation in the country has changed
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drastically, with the value of the kwacha falling from an official rate of MK3.60 to US$1 in 1992 to MK15.30 to US$1 in 1996 and to MK43.15 as of January 1999. The implication is that the existing official definition is out of date and needs to be revised. The legal definition of "small" varies by country and by industry. In the United States the Small Business Administration establishes small business size standards on an industry-by-industry basis, but generally specifies a small business as having fewer than 500 employees for manufacturing businesses and less than $7 million in annual receipts for most nonmanufacturing businesses. The definition can vary by circumstance for example, a small business having fewer than 25 full-time equivalent employees with average annual wages below $50,000 qualifies for a tax credit under the healthcare reform bill Patient Protection and Affordable Care Act, in the USA. In addition to number of employees, other methods used to classify small companies include annual sales (turnover), value of assets and net profit (balance sheet), alone or in a mixed definition. These criteria are followed by the European Union, for instance (headcount, turnover and balance sheet totals). Small businesses are usually not dominant in their field of operation.

2.3

Importance of Small and Medium Scale Enterprises

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A small business can be started at a very low cost and on a part-time basis. Small business is also well suited to internet marketing because it can easily serve specialized niches, something that would have been more difficult prior to the internet revolution which began in the late 1990s. Adapting to change is crucial in business and particularly small business; not being tied to any bureaucratic inertia, it is typically easier to respond to the marketplace quickly. Small business proprietors tend to be intimate with their customers and clients which results in greater accountability and maturity. Independence is another advantage of owning a small business. Freedom to operate independently is a reward for small business owners. In addition, many people desire to make their own decisions, take their own risks, and reap the rewards of their efforts. Small business owners have the satisfaction of making their own decisions within the constraints imposed by economic and other environmental factors. However, entrepreneurs have to work very long hours and understand that ultimately their customers are their bosses. Several organizations, in the Nigeria, also provide help for the small business sector, such as the Internal Revenue Service's, commercial banks. In developing countries, the role of SMEs is even more important since SMEs often offer the only realistic prospects for creating additional employment and thus reducing poverty and enhancing the quality of lives. A healthy SME sub-sector is a sine qua non for inclusive and socially sustainable
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development even though institutions that provide support services where available are often limited in capacity and coverage in developing economies. Basil (2005) Exports by SMEs usually range between 30 and 50 percent of total industrial exports in developed and developing countries. In tune with the latest developments in the world economy and the attendant globalization effects, the role of SMEs going forward is bound to be even greater and more pervasive, with a demonstrable impact on the emerging world trading order. Basil (2005) Furthermore, SMEs reduces the amount of jobless individual who might be tempted to committing one form of crime or another just to earn a living.

2.4

Financing and Source of Funds for Small and Medium Scale Enterprises In recognition of the crucial roles played by SMEs with respect to

economic growth and development, succeeding governments in Nigeria had various initiatives aimed at promoting the cause of SMEs in the country. The most tangible among the different incentive packages that varied with almost every change in government leadership was the focus on enhancing the financial opportunities for the SMEs. Some of the support institutions and opportunities created by the government to enable SMEs access funding in the past 30 years include:
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i. ii. iii. iv. v. vi.

Small Scale Industries Credit Scheme (SSICS) 1971 Nigerian Bank for Commerce and Industries (NBCI) 1973 Nigerian Industrial Development Bank (NIDB) 1964 SME Apex Unit of Central Bank (1989) National Economic Reconstruction Fund (NERFUND) 1989 The African Development Bank/ Export Stimulation Loan (ADB/ESL) 1989

vii. viii. ix. x. xi. xii. xiii. xiv. xv. xvi.

Nigerian Export Import Bank (NEXIM) National Directorate of Employment (NDE) 1986 Industrial Development Coordinating Centre (IDDC) Community Banks Peoples Bank Family Economic Advancement Program (FEAP) State Ministry of Industry SME Schemes Small and Medium Industries Equity Investment Scheme (SMIEIS) Bank of Industry (BOI) Small and Medium Enterprises Developing Agency of Nigeria (SMEDAN)

xvii.

Credit Guarantee Scheme for SMEs (underway)

The above well-intentioned institutions designed to provide succor to SMEs notwithstanding the sub-sector is yet to find its bearing in the murky waters of Nigerias business environment. These account for the governments recent
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introduction of the last three support schemes i.e. BOI, SMEDAN and the Credit Guarantee Scheme, discussions on which have reached an advanced stage and the Bankers Committees decision to institutionalize small and medium industries equity investments scheme (SMIEIS). It is expected that the Credit Guarantee Scheme would enhance and facilitate easy access to credits by the SMEs while SMIEIS would boost access to equity financing while SMEDAN would provide other needed non-financial support and leverage for the SMEs to thrive successfully. Basil (2005) Small businesses use several sources available for start-up capital:
i.

Self-financing by the owner through cash, equity loan on his or her home, and or other assets.

ii. iii. iv.


v. vi. vii.

Loans from friends or relatives Grants from private foundations Personal Savings Private stock issue Forming partnerships. Angel Investors Banks SME finance, including Collateral based lending and Venture capital, given sufficiently sound business venture plans

viii.
ix.

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Some small businesses are further financed through credit card debt - usually a poor choice, given that the interest rate on credit cards is often several times the rate that would be paid on a line of credit or bank loan. Many owners seek a bank loan in the name of their business, however banks will usually insist on a personal guarantee by the business owner. Wikipedia Encyclopedia (2011) More so, here are some other financing options available to small and medium scale enterprises as opined by Jim Ovia (2001) i. Banks and SME entrepreneurs particularly IT engineers to go into partnerships. Nigerian banks are prepared to disburse 10% of their Profit before Tax (PBT) by way of equity participation. ii. International Finance Committee World Bank is prepared to support SMEs in Nigeria. International Finance Committee had already million in its initiative to develop SMEs in Nigeria.

committed $10 iii.

African Development Bank (ADB) is in a good position to assist SMEs in Nigeria.

iv.

Various specialized banks set up by the government in the past to support SMEs have now been merged into one big financial institution Nigeria Agricultural Cooperative & Rural Development Bank [NACRDB].

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v.

A National Industrial Bank with proposed paid-up capital of N50 billion was also recently announced by the government.

vi.

Nigerian Export and Import Bank (NEXIM) also finance SMEs

2.5

Prospects and Problems of Small and Medium Scale Enterprises The SMEs operating in Nigeria are not shielded or immune from the

typical problems and constraints of SMEs in other developed countries. Almost every country assists her SMEs largely because of the crucial inherent role they play in the economic growth and development. The assistance is usually in the form of facilities and supportive services than on protection and subsidies. Other services provided by some governments include commercial finance, venture capital, information training and retraining, Research and Development (R&D) support, infrastructure and tax incentives. Some of these facilities are provided through local authorities and industry associations at times with the involvement of non-governmental organizations (NGOs). Small businesses often face a variety of problems related to their size. A frequent cause of bankruptcy is undercapitalization. This is often a result of poor planning rather than economic conditions - it is common rule of thumb that the entrepreneur should have access to a sum of money at least equal to the projected revenue for the first year of business in addition to his anticipated
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expenses. For example, if the prospective owner thinks that he will generate $100,000 in revenues in the first year with $150,000 in start-up expenses, then he should have no less than $250,000 available. Failure to provide this level of funding for the company could leave the owner liable for all of the company's debt should he end up in bankruptcy court, under the theory of undercapitalization. In addition to ensuring that the business has enough capital, the small business owner must also be mindful of contribution margin (sales minus variable costs). To break even, the business must be able to reach a level of sales where the contribution margin equals fixed costs. When they first start out, many small business owners under price their products to a point where even at their maximum capacity, it would be impossible to break even. Cost controls or price increases often resolve this problem. In the United States, some of the largest concerns of small business owners are insurance costs (such as liability and health), rising energy costs and taxes. Also in the United Kingdom and Australia, small business owners tend to be more concerned with excessive governmental red tape. Another problem for many small businesses is termed the

'Entrepreneurial Myth' or E-Myth. The mythic assumption is that an expert in a given technical field will also be expert at running that kind of business.

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Additional business management skills are needed to keep a business running smoothly. Certification and trust: Building trust with new customers can be a difficult task for a new and establishing business. Some organizations like the Better Business Bureau and the International Charter now offer Small Business Certification, which certifies the quality of the services and goods produced and can encourage new and larger customers. These services may require a few hours of work, but a certification may reassure potential customers. Business Networks and Advocacy Groups: Small businesses often join or come together to form organizations to advocate for their causes or to achieve economies of scale that larger businesses benefit from, such as the opportunity to buy cheaper health insurance in bulk. These organizations include local or regional groups such as Chambers of Commerce, as well as national or international industry-specific organizations. Such groups often serve a dual purpose, as business networks to provide marketing and connect members to potential sales leads and suppliers, and also as advocacy groups, bringing together many small businesses to provide a stronger voice in regional or national politics. Finding new customers is the major challenge for Small business owners. Small businesses typically find themselves strapped for time but in order to

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create a continual stream of new business, they must work on marketing their business every day. The overhead cost of operating SMEs, such as energy, transportation and delivery services etc, also pose difficulty for SMEs to survive in the competitive market environment. However, despite the problems discussed above, SMEs are exposed to numerous prospects that can be viewed from these point state below. Common marketing techniques for small business include networking, word of mouth, customer referrals, yellow pages directories, television, radio, outdoor (roadside billboards), print, email marketing, and internet, although electronic media like TV can be quite expensive and is normally intended to create awareness of a product or service. But many small business owners find internet marketing more affordable for example Google, Yahoo, eBay, Amazon etc. Successful online small business marketers are also adept at utilizing the most relevant keywords in their site content. Advertising on niche sites can also be effective, but with the long tail of the internet, it can be time intensive to advertise on enough sites to garner an effective reach. More so, creating a business Web site has become increasingly affordable with many do-it-yourself programs now available for beginners. A Web site can

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provide significant marketing exposure for small businesses when marketed through the Internet and other channels. Social media has proven to be very useful in gaining additional exposure for many small businesses. Many small business owners use Facebook and Twitter as a way to reach out to their loyal customers to give them news about specials of the day or special coupons and generate repeat business. The relational nature of social media, along with its immediacy and 24-hour presence lend intimacy to the relationship small businesses can have with their customers, while making it more efficient for them to communicate with greater numbers. Facebook ads are also a very cost-effective way for small businesses to reach a targeted audience with a very specific message. In addition to the social networking sites, blogs have become a highly effective way for small businesses to position themselves as experts on issues that are important to their customers. This can be done with a proprietary blog and/or by using a back link strategy wherein the marketer comments on other blogs and leaves a link to the small business' own Web site. A solid public relations strategy that utilizes speaking engagements, press releases, feature stories, events and sponsorships can also be a very costeffective way to build a loyal following for a small business.

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Franchise businesses: Franchising is a way for small business owners to benefit from the economies of scale of the big corporation (franchiser). McDonald's restaurants, TrueValue hardware stores, and NAPA Auto Parts stores are examples of a franchise. The small business owner can leverage a strong brand name and purchasing power of the larger company while keeping their own investment affordable. However, some franchisees conclude that they suffer the "worst of both worlds" feeling they are too restricted by corporate mandates and lack true independence. However, in some chains, such as the aforementioned TrueValue and NAPA, franchises may have their own name alongside the franchise's name. Wikipedia Encyclopedia (2011) 2.6 Concept of Unemployment The International Labor Organization (ILO) defines the unemployed as numbers of the economically active population who are without work but available for and seeking work, including people who have lost their jobs and those who have voluntarily left work (World Bank, 1998). Although there seems to be convergence on this concept, its applications have been bedeviled with series of problems across countries. First, most published unemployment rates are recorded open unemployment. People's attitude on this varies from country to country. While this may be high in developed countries and where government is committed to resolving unemployment problems, it is likely to be very low in countries with the opposite attributes.
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Furthermore, according to the ILO, youth unemployment rate has increased over time to reach an estimated 14.4% worldwide in 2003, leaving 88million youth unemployed. Okigbo (1991) also points out the problem arising from the concept of labor force. In most countries, particularly Nigeria, people below the age of 15years and those above the age of 55years who are actively engaged in economic activities are usually excluded from labor statistical surveys. All these factors have the tendency to result in underestimation of unemployment thereby making international comparison very difficult. Factors such as the preponderance of full housewives (but who are willing to be engaged in paid job) and unpaid family workers also contribute significantly to the underestimation of unemployment.

2.7

Classification of Unemployment Economist used to classify unemployment as frictional, structural,

cyclical or classical forms of unemployment. i. Frictional Unemployment: it is the irreducible minimum level of unemployment in a dynamic society. It includes those whose physical or mental state has made them to be unemployed i.e. it occurs when the mode of production changes for instance, more machinery may be

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introduced in

the industry to increase productivity. These may

replace labor and lead to retrenchment or downsizing of labor strength. ii. Structural Unemployment: refers to a state of joblessness arising from a mismatch of skills and job opportunities when the pattern of demand and production changes. For instance, a skilled welder may have worked for 25years in ship building but is made redundant at 50years when the industry contracts in the face of foreign competition. That worker

may have to retrain in a new skill which is more in demand in todays economy. But firms may be reluctant to take on and train an older

worker, such worker becomes a victim of structural unemployment. iii. Cyclical Unemployment: occurs during the depression or recession stage of the business or trade cycle. During a depression, demand is at low ebb. To accommodate such low demand, some firms may re-adjust their levels of production. This may lead to the laying-off of some workers, or the factors of production may be used below capacity. iv. Classical unemployment: describes the unemployment created when the wage is deliberately maintained above the level at which the labor supply and labor demand schedules intersect. It can be caused either by the exercise of trade union power or by minimum wage legislation which enforces a wage in excess of the equilibrium wage rate. (Anyanwuocha, 2006 and Begg, 2000)
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2.8

Causes of Unemployment:

Here are some possible causes of unemployment; i. Inadequate educational curricula and poor educational planning: the educational system as inherited from the colonial era was grammaroriented. Until recently, the school curricula emphasized the art subject. Again, the educational system is theoretically oriented. For this reason, the system of education does not equip school leavers with those practical skills required for earning a living. Many of them see education as a means of freeing themselves from working on the land. Therefore, they seek for white collar jobs in urban centers, knowing full well that jobs in these areas are limited. ii. Low level of education: many youths do not attend school beyond primary and secondary schools. This could be as a result of widespread poverty and the low value place on education by some people. These young school leavers enter the labor market to look for jobs, therefore there is a high percentage of young people who are unemployed because they do not possess the required skills. Since they are too young and illequipped to work, they remain unemployed.

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iii.

Differential wage-structure and greater attractiveness of urban: the higher wage structure and social amenities which are obtainable in urban centers act as pull-factors. Many people migrate from rural areas to the urban centers to look for jobs because they are attracted by the higher incomes and a more comfortable way of living due to the presence of electricity, pipe-borne water, cinemas, parks, hospitals etc. unfortunately, the job opportunities there are not enough to absorb all those who migrate to the towns. Therefore many of them remain unemployed.

iv.

Use of capital-intensive methods of production: the technique of production in modern industry which tends to emphasize a greater use of capital than of labor encourages labor unemployment. Many of the machines which are used in industry are imported and are do not require to many labor to operate, thus they are highly labor-saving, therefore making unskilled and semi-skilled labor redundant.

v.

Slow rate of economic growth: the economy of some African countries has been growing at a very slow rate compared with the rapidly increasing population. As a result, there are a large number of unemployed persons since insufficient job opportunities are generated in the economy.

vi.

Immobility of labor: occupational and geographical immobility of labor compound the problem of unemployment. Immobility of labor arises
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from factors such as tribalism and ethnic consciousness, the unattractiveness of rural areas due to a low wage structure, the inadequate economic and social infrastructure, trade union regulations etc. the result is that there is a scarcity of labor in some areas and serious unemployment in others. (Anyanwuocha, 2006)

2.9

The Relationship between Small and Medium Scale Enterprises and Unemployment. From the above discussion, we can say that small and medium scale

enterprises have a great relationship with unemployment because most small and medium scale enterprises are determined by the level of manpower they used or employ. Therefore the greater the number of small and medium scale enterprise the lesser the amount of unemployed in the economy and also the higher the revenue generated also the greater the utilization of factors of production in the economy.

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Chapter Three Research Methodology


3.1 Introduction: Research is basically the process of arriving at a dependable solution to problems through a planned and systematic process of collecting, recording, analyzing and interpreting the data to arrive at a solution. Research methodology on the other hand refers to the process of scientific enquiry used in a research process. More so, it means a systematic and objective investigation of a subject or problem in other to discover relevant information. This research work is expository in nature, which tells the relationship between small and medium scale enterprises alongside unemployment i.e. whether small and medium scale enterprises can serve as a viable alternative to reducing the rate of unemployment in Nigeria. Research methodology is of paramount importance in a research project like this, because it is the aspect of the research that provides the methods or procedure that the researcher employs in the course of the research for the objectives of the study to be achieved. 3.2 Research Design:

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In this research, the sourcing, recording, analyzing and interpreting are the basic areas identified by the researcher. Therefore, the research designs adopted by the researcher in tackling these areas of importance are as follows:
1.

Sourcing: In sourcing for data for the research work, questionnaire will be issued to elicit responses from the various respondents. The reasons are that; the questionnaire can carry a lot of questions at a particular time; also the questionnaire will allow the respondent to give answer to question at a convenient time and place thus ensuring utmost privacy.

2.

Recording: In recording the data for further analysis, the questionnaire issued will be the first method of recording the data, because the respondent will do that themselves before returning them to the researcher for further recording using the statistical package for social science software (SPSS) to record the data as deemed appropriate by the researcher.

3.

Analyzing: In analyzing the data already recorded, the researcher intends to use the statistical package for social science software (SPSS) to analyze the data, because it has the capacity of generating simple statistical results such as percentage, mean, mode, median etc and also complex statistical analysis like regression analysis, correlation analysis, chi-square analysis etc.

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4.

Interpreting: In interpreting the data, the outcome of the result generated by the statistical package for social science software (SPSS) will be what the researcher will largely depend on to interpret, thus the researcher will use tables, chart etc to represent the result for better understanding and clarity.

3.3

Population of the Study: The population of this study is the total number of small and medium

scale enterprises documented and pays revenue to sabon gari local government area council. And the reason is that, the local government will have the comprehensive list of businesses that are paying revenue to the local government revenue division, which will serve dual purposes for the research study, namely; provide this study the total population size; and will also be used as the sample frame where the population will be stratified and numbered, from where the sample size will be chosen to enable the total sample size to be a representative one. The total numbers of enterprises paying revenue to the council is 250 businesses and are grouped into the categories, namely: factories & industries

(18), printing press & art centres (25), trading enterprises (79), filling stations (34), fast foods outlets, bakeries & restaurants (10), hotels, guest inn & motels

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(10), fashion & tailoring centres (20), beauty center & barbing saloon (23), clinics & diagnostic centres (10) and patent medicine stores (21).

3.4

Sample Size and Sampling Technique: The sample size for this research is 52 small and medium scale

enterprises which is 20.8% of the total population. The sample size consist of randomly selected small and medium scale enterprises which have been stratified or grouped into ten categories and an adequate representative figure selected randomly with all elements having equally chance of being selected. A simple random sampling (SRS) was employed in the selection of the sample for the study. All the documented and active SMEs within sabon gari local government area were respectively used as the sampling frame which was stratified into eleven groups. Each member of all the groups was assigned a number: one (1) to eighteen (18) for factories & industries; one (1) to twentyfive (25) for printing press & art centres; one (1) to seventy-nine (79) for trading enterprises; one (1) to thirty-four (34) for Filling Stations; one (1) to ten (10) for Fast Foods outlets, Bakeries & Restaurants; one (1) to ten (10) for Hotels, Guest Inn & Motels; one (1) to twenty (20) for Fashion & Tailoring Centres; one (1) to twenty-three (23) for Beauty Center & Barbing Saloon; one (1) to ten (10) for Clinics & Diagnostic Centres; one (1) to twenty-one (21) for Patent Medicine Stores.
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For each of the ten groups, five numbers were put in a bag at a time and thoroughly shuffled. One element was randomly selected by picking one at a time without replacement, thus the researcher wants one sample to represent every five element in the population, which is shown below. S/n Type Of Enterprise 1. 2. 3. 4. 5. 6. 7. 8. 9. Factories & Industries Printing Press & Art Centres Trading Enterprises Filling Stations Fast Foods Outlets, Bakeries & Restaurants Hotels, Guest Inn & Motels Fashion & Tailoring Centres Beauty Center & Barbing Saloon Clinics & Diagnostic Centres No 18 25 79 34 10 10 20 23 10 21 250 Sample Size 4 5 16 7 2 2 4 5 2 5 52

10. Patent Medicine Stores Grand Total

The use of SRS method in the selection of participant SMEs used in this study was a sure way to reduce bias to the barest minimum. This approach was also used in order to ensure that the sample size used in the study was a true and fair representative of the population of SMEs in sabon gari local government area of Kaduna state.

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3.5

Data Collection Instrument: In a research of this nature, which involves the use of primary data, the

researcher deems it wise to use questionnaire. Here the questionnaire will be used to obtain information from respondents. Thus, the questionnaire is expected to show the perception of the respondent on the idea whether small and medium scale enterprises is a viable solution to reducing the rate of unemployment in Nigeria. Furthermore, the questionnaire is also going to provide the necessary information to test the research hypothesis, which will include close ended question to provide the necessary information for the various aspect of this research work in which the researcher intends to find solutions to. 3.6 Statistical tool used in testing the hypothesis

3.6.1 Chi-square It is a Latin word denoted by x2 and its used when it wished to measure the discrepancy existing between the observed and expected frequencies. To investigate agreement between the observed and expected frequencies, we compute the statistics. X2= (oi ei)2 ei Where o= observed frequency
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e= expected frequency The number of degree of freedom, v of this chi-square distribution is given by: v= (h - 1)(k - 1) if the expected frequency can be computed without having to estimate population. This technique is employed in testing the first hypotheses.

3.6.2 Justification of the technique used Chi-square was employed in this study because it is a widely used tool in data analysis and also because it used mainly to determine how theoretical distributions (such as the normal and binomial distributions) fits empirical distribution (that is those obtain from sample data). And the decision rule for this study will be; if chi-square calculated is less than the critical value we accept the null hypothesis otherwise we reject the hypothesis. Thus, the critical value is calculated as 1 0.05 = 0.95, where 0.05 is the expected level of error and the 0.95 is the expected level of perfection, and 1 is the constant. Thus using the chi-square table to determine the critical value after the questionnaire has been received and inputted into the SPSS for generation of the chi-square result.

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Chapter Four Data Presentation, Analysis and Interpretation.


4.1 Introduction: This chapter deals with the presentation and analysis of the data obtained from the structured questionnaire administered to the sample of the population. It will also test the hypothesis stated in chapter one using the statistical technique as mentioned in the preceding chapter as this will enable the researcher to be able to make constructive and logical conclusion.

4.2

Data Presentation and Analysis The data obtained from the structured questionnaire will be presented

using simple table and percentage. A total of 52 questionnaires were administered all the identified small and medium scale enterprises in the sample size during the period and the entire administered questionnaires were returned. The response rate achieved for the research was 100%, and below are the response to each question and analysis for the total outcome of the response derived from the questionnaire.

Question 1: What is the nature of your enterprise or business? Nature of Enterprises Response Percentages
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Partnership 21 Sole Proprietorship 17 Family Owned 9 Others 5 Total 52 Source: Administered Questionnaire

40.4% 32.7% 17.3% 9.6% 100%

The above table shows that 21 out of 52 respondents are partnership; 17 out of 52 respondents are sole proprietorship; 9 out of 52 respondents are family owned and 5 out of 52 respondents are other forms of business ventures. Therefore we can say that out of the entire distribution, all the various forms of business enterprise are fully represented and the opinion derived will be highly proportional and representative.

Question 2: What was the source of your business idea? Source of Your Business Idea Response Personal interest 27 Mass media 8 Seminar/Symposium 5 Government 5 Others 7 Total 52 Source: Administered Questionnaire Percentages 51.9% 15.4% 9.6% 9.6% 13.5% 100%

The above table indicates that 27 out of 52 respondents derived there source of business idea based on personal interest; 8 out of 52 respondents derived there source of business idea from the mass media; 5 out of 52 respondents derived there source of business idea from seminar or symposium; 5 out of 52 respondents derived there source of business idea from government

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i.e. government programs like National Directorate of Employment (NDE) and 7 out of 52 respondents derived there source of business idea from other means. Therefore we can say that most of the business enterprise came into existence based on personal interest and as such will ensure that all effort are put into such business to see to its success, while others came into existence through mass media, seminar and government respectively. However, it can be deduced that except personal interest, all other sources of business idea are not been fully utilized for SME development.

Question 3: For how long has your enterprise been in operations? Years of Operation Response Between 1-5 years 23 Between 5-10 years 19 Between 11-15 years 4 Between 16-20 years 2 Over 20 years 4 Total 52 Source: Administered Questionnaire Percentages 44.2% 36.5% 7.7% 3.8% 7.7% 100%

From the above table, it shows that 23 out of 52 respondents have being in operation between 1 5years; 19 out of 52 respondents have being in operation between 5 10years; 4 out of 52 respondents have being in operation between 11 15years; 2 out of 52 respondents have being in operation between 16 20years and 4 out of 52 respondents have being in operation for over 20years. Therefore between 1 10years 42 out of 52 respondents have being in existence, thus giving the enterprise the ample experience to survive in the ever
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changing and dynamic business world to solve the challenging issues of unemployment.

Question 4: How many people are employed by your enterprise? Number of Employees Response Less 5 9 Between 6 - 20 36 Between 21 - 50 6 Between 51 - 100 1 Above 100 0 Total 52 Source: Administered Questionnaire Percentages 17.3% 69.2% 11.5% 1.9% 0% 100.0%

From the above table, 9 out of 52 respondents employ less than 5 staff; 36 out of 52 respondents employ between 6 10 staff; 6 out of 52 respondents employ between 21 50 staff; 1 out of 52 respondents employ between 51 100 staff. However, from the distribution all the respondents employ between 1 100 staff respectively and most of the respondents are employing more staff.

Question 5: Do you intent to increase your staff strength? Intent to Increase Staff Strength Yes No Total Source: Administered Questionnaire Response 37 15 52 Percentages 71.2% 28.8% 100%

From the above table, 37 out of 52 respondents intend to increase their staff strength, while 15 out of 52 respondents do not intend to increase their staff strength. However, from the distribution 71.2% are willing to increase their
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staff strength to meet future demand and as such will lead to reduction of the unemployed in the labor market.

Question 6: What is your mode of operation? Mode of Operation Response Labour Intensive 10 Capital Intensive 12 Labour & Capital Intensive 30 Total 52 Source: Administered Questionnaire Percentages 19.2% 23.1% 57.7% 100%

From the above table, 10 out of 52 respondents are labour intensive mode of operation; 12 out of 52 respondents are capital intensive mode of operation and 30 out of 52 respondents are both capital and labour intensive mode of operation. Therefore, from the distribution we can deduce that 57.7% of the entire respondent adopt both labour and capital intensive mode of operation and as such will require more staff (skilled, semi skilled and unskilled) to meet it operational demand.

Question 7: How have you been financing the operations of the business (You can tick more than one please?) Mode Of Financing Personal Funds / Savings SMIEIS Funds Bank Loans Family Funds Friends Support Others Response 38 8 16 4 9 Representative Percentage 73.1% 15.4% 30.8% 7.7% 17.3%
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Source: Administered Questionnaire From the above table, it is a multiple choice question where the respondent can choose more than one option based on his/her disposition. Therefore, majority of the respondents choose personal funds/savings, family funds as the medium through which their businesses are financed, but the remaining respondent are either financing their business through bank loans, friends support or other means. However, we can deduce that all respondent are financing their business through one or more financing option, except through SMIEIS funds.

Question 8: What are the problems your business experience since existence? (You can tick more than one please). Problems your enterprise Response experience Financial 41 manpower 2 Infrastructure 26 Government regulation 4 High cost of operation 27 other 1 Source: Administered Questionnaire Representative Percentage 78.8% 3.8% 50% 7.7% 51.9% 1.9%

From the above table, it is a multiple choice question where the respondent can choose more than one option based on his/her disposition. Therefore, majority choose financial, infrastructure and high cost of operation as the problems they experience while running their business. And on the other

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hand the other respondents choose manpower, government regulation and other problems unlisted as the problems faced.

Question 9: Is financing really a setback to the growth of your business? Is finance a setback to your business Yes No Total Source: Administered Questionnaire Response 45 7 52 Percentages 86.5% 13.5% 100%

From the above table, 45 out of 52 respondents are experiencing financial setbacks which hamper the smooth progress of their enterprise, while 7 out of 52 respondents are not experiencing are financial setback. Therefore we can deduce that 86.5% of the entire respondents are experiencing financial setback to the growth of their enterprise which is as a result of inadequate capital to finance such enterprise as a going concern.

Question 10: Are you aware of government SME financing scheme? Are you aware of Government SME Response Financing Scheme Yes 31 No 21 Total 52 Source: Administered Questionnaire Percentages 59.6% 40.4% 100%

From the above table, 31 out of 52 respondents are aware of government SME financing scheme while 21 out of 52 respondents are unaware of government SME financing scheme. Therefore, we can conclude that 59.6%
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which is more than half of the respondent are aware of government financing scheme.

Question 11: Has your enterprise ever applied for loan from a bank or any financial institution? Has your enterprise ever applied for a loan Yes No Total Source: Administered Questionnaire Response 23 29 52 Percentages 44.2% 55.8% 100%

From the table above, 23 out of 52 respondents have applied for loan from bank or any other financial institution, while 29 out of 52 respondents have never applied for loan from a bank or any other financial institution. Therefore, we can deduce that majority of the respondent have never applied for loan from a bank or any other financial institution.

Question 12: If no, why? (You can tick more than one please?) If No, Why? Response You do not like bank loan 16 Interest rate too high 15 No collateral to pledge 8 Others 7 Source: Administered Questionnaire Representative Percentage 30.8% 28.8% 15.4% 13.5%

From the above table, it is also a multiple choice question where the respondent can choose more than one option based on his/her disposition. Therefore, out of 29 respondents that has never applied for loan, 16 respondents
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are of the opinion that they do not like loans that is why they never applied for one; 15 respondents are of the view that high rate of interest is the reason why they never applied for loan; 8 respondents opined that no collateral to pledge was the reason they never applied for loan and 7 respondents opted for other reasons not listed among the list of choice as the reason they did not apply for loan. Question 13: Have you ever been refused or denied to borrow money from a bank? Have you ever been denied loan Yes No Never applied at all Total Source: Administered Questionnaire Response 13 10 29 52 Percentages 25.0% 19.2% 55.8% 100%

From the above table, 13 out of 52 respondents have been refused or denied loan from bank; 10 out of 52 respondents have been granted or given loan from bank while, 29 out of 52 respondents have never applied for loan at all, which is equal to number of respondents that have never applied for loan at all.

Question 14: If yes, what was the main reason why your bankers or the financial institution refused offering you loan? Why were you denied loan To avoid bank problem No security to pledge Too small capital base Response 4 3 5 Representative Percentage 30.8% 23% 38.5%
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others 1 Total 13 Source: Administered Questionnaire

7.7% 100%

From the above table, 4 out of 13 respondents were refused loan on the ground that they want to avoid bank problems that arise from inability to repay back the loan or any other unforeseen circumstance that may arise from loan agreement; 3 out of 13 respondents were refused loan because they had no security to pledge before being granted the loan; 5 out of 13 respondents were refused simply because they have small capital base; and 1 out of 13 respondents was refused loan because of other reasons.

Question 15: Are you aware of the existence of other avenues of funding your business (e.g. Partnerships, Equipment leasing, Loans from Bank of Industry). Aware of other avenues of funding Yes No Total Source: Administered Questionnaire Response 42 10 52 Percentages 80.8% 19.2% 100%

From the above table, 42 out of 52 respondents are aware of other avenues of funding their enterprises; while 10 out of 52 respondents are not aware of other avenues of financing their enterprise. Therefore, we can say that majority of the respondents are aware of other avenues of financing their enterprise.

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Question 16: If given the opportunity, would you accept a joint ownership with person(s) or organizations that are willing to fund the business? Would you accept joint ownership Yes No Total Source: Administered Questionnaire Response 46 6 52 Percentages 88.5% 11.5% 100%

From the above table, 46 out of 52 respondents are willing to accept joint ownership with person(s) or organizations that are willing to fund their business, while 6 out of 52 respondents are not willing to accept joint ownership from willing person(s) or organization.

Question 17: Are you aware that the government (herein referred to as the public sector) can partner with you or other private organization to help grow your business? Aware of public private partnership Yes No Total Source: Administered Questionnaire Response 36 16 52 Percentages 69.2% 30.8% 100.0%

From the above table, 36 out of 52 respondents are aware of public private partnership, while 16 out of 52 respondents are not aware of public private partnership. Therefore, we can deduce that majority of the distribution are aware of public private partnership.

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Question 18: If yes, has there been any form of such partnership in the past. Has there been any form of such partnership? Yes No No response Total Source: Administered Questionnaire Response Percentages 10 26 16 52 19.2% 50.0% 30.8% 100.0%

From the above table, 10 out of 52 respondents have participated in such form partnership; 26 out of 52 respondents have never participated in such form of partnership; while 16 out of 52 respondents are not aware of such form of partnership therefore they neither participate nor did not participate.

Question 19: What role(s) do you think Public Private Partnership can bring to the development of SMEs in Nigeria? What role(s) can public private bring to SMEs in Nigeria? Access to credit Creating a legal frame work Improving physical infrastructure Supporting access to technology Facilitate access to business advisory services Training in entrepreneurship, skills & management Capacity building and industries strengthening Providing support through credit scheme Fostering linkage with large industries Other Total Source: Administered Questionnaire Response Percentages 5 5 12 4 3 9 4 5 2 3 52 9.6% 9.6% 23.1% 7.7% 5.8% 17.3% 7.7% 9.6% 3.8% 5.8% 100%

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From the table above, 5 out of 52 respondents are of the view that SMEs should have access to credit; 5 out of 52 respondents opined that creating a legal framework will bring development to SMEs in Nigeria; 12 out of 52 respondents are of the opinion that physical infrastructure should be improved; 4 out of 52 respondents are of the view that access to supporting technology will bring about development to SMEs in Nigeria; 3 out of 52 respondents are of the opinion that access to advisory services will foster rapid development of SMEs in Nigeria; 9 out of 52 respondents believes that entrepreneurship training, skills and management training will enhance development of SMEs in Nigeria; 4 out of 52 respondents that capacity building and strengthening of the industry will lead to SME development in Nigeria; 5 out of 52 respondents opined that provision of support through credit scheme will bring about SME development in Nigeria; 2 out of 52 respondents agrees with the fact that fostering linkages with large industries will enhance development of SME in Nigeria and 3 out of 52 respondents believe that other roles apart from the ones listed can be played by public private partnership to bring development of SME in Nigeria.

Question 20: Where do you visualize your business in 15yrs from now? Where do you visualize your business Industry Leader Industry Challenger Industry Follower Industry Nicher Total Source: Administered Questionnaire Response 12 24 14 2 52 Percentages 23.1% 46.2% 26.9% 3.8% 100%
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From the above table, 12 out of 52 respondents visualize becoming the industry leader; 24 out of 52 respondents also visualize becoming an industry challenger; 14 out of 52 respondents visualize becoming an industry follower while, 2 visualize becoming an industry nicher. Therefore, we can say that all the respondent have various visions they have set for themselves to be attained in the near future thus making them focus and determined to attain such vision in the near future.

4.3

Test of Hypothesis Nature of enterprise and Number of employees Cross tabulation Alternatives Partnership Sole proprietorship Family owned Others Total Count Expected Count Count Expected Count Count Expected Count Count Expected Count Count Expected Count < 5 1 3.6 3 2.9 2 1.6 3 0.9 9 9.0 Number of employees 6 - 20 21- 50 51-100 17 3 0 14.5 12 11.8 5 6.2 2 3.5 36 36.0 2.4 2 2.0 1 1.0 0 0.6 6 6.0 0.4 0 0.3 1 0.2 0 0.1 1 1.0

Total 21 21.0 17 17.0 9 9.0 5 5.0 52 52

Source: SPSS output

Nature of enterprise

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Chi-square test Degree of Asymp. Sig. Value freedom (2-sided) a Pearson Chi-Square 14.078 9 .120 Likelihood Ratio 12.175 9 .204 No. of Valid Cases 52 a. 13 cells (81.3%) have expected count less than 5. The minimum expected count is .10. Since chi square calculated is 14.078 which is less than the calculated critical value of 16.92. We accept the null hypothesis and conclude that Small and medium scale enterprise (SMEs) has no significant effect on unemployment rate in Sabon Gari local government area of Kaduna state..

4.4

Discussion of Findings In the light of the above presented data, here are some of the findings

discussed to the best of the researchers ability: i. The question about the nature of enterprise or business, the response shows that all the respondent are SMEs and are adequate for the study which can be seen from the sample size table in chapter three as well as the response from question one.
ii.

The response on what was the source of the business idea shows that most of the SMEs came into existence based on personal interest, thus
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showing the flair they have to invest and become productive, but it could be better if the other sources are developed to give such venture a bigger boost.
iii.

The question on how long has your enterprise been in operations reveals that majority of the enterprises have been in existence for more than five years, thus it can be interpreted that within such period they must have acquired a lot of business experience to survive and remain in the ever changing and dynamic business environment.

iv.

The question on how many people are employed by your enterprise shows that majority of the enterprises employ between 1 50 staff, therefore we can say that most of the SMEs are not a one man business and as such they have the potentials of absorbing willing labour force when the need arises.

v.

The question on whether they intend to increase their staff strength reveals that 71.2% of the respondents have the intention to increase their individual staff strength assuming the need arises, thus it can be interpreted as a viable alternative of absorbing the ever growing rate of unemployed labour force.

vi.

The question on what is the mode of operation shows that majority of the respondents are both adopt capital and labour intensive modes of operation, while the remaining are either capital or labour intensive modes of operation, therefore we can boldly say that all respondent are
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actually involved in productive venture(s) and as such will need skilled, semi skilled or/and unskilled manpower to carry out the operations for the enterprise.
vii.

The question on how have the enterprises been financing the operations of the business reveals that all the options are source of finance for SMEs except SMIEIS funds which not even one of the respondent acknowledge using it as a source of finance, therefore the government has to intensify effort in areas of publicity to stimulate patronage from willing investors to adopt such scheme as a means of financing SMEs.

viii.

The question on what are the problems your business experience since existence shows that all the possible dimension of problems that are likely to be experienced by enterprises during the course of operations is actually being experienced by enterprises.

ix.

The question on whether finance is really a setback to the growth of business reveals that 86.5% are actually facing financial predicament of different dimensions. Therefore, since finance is the life wire of any business the problem really need to be solved by providing suitable financial options that can ease the difficulty in accessing finance.

x.

The question whether the enterprises aware of government SME financing scheme shows that 59.6% of the total respondents are aware of government SME financing scheme, therefore we can deduce that the knowledge of existence of such scheme is simply a step in the right
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direction, because it will be assumed that interested investors will utilize such scheme to their benefit and also the economy in general.
xi.

The question on whether the enterprise has ever applied for loan from a bank or any financial institution bring to bear the fact that 55.8% has never applied for bank loan, while 44.2% did actually applied for a bank loan. Therefore we can say that despite the fact that finance is a setback to the growth businesses, yet they do not applied for loan to solve their problems for reasons which will be explained in the next findings.

xii.

The question on reasons why enterprises do not apply for loan reveals that 30.8% do not actually like loan based on personal reasons and convictions; furthermore, 28.8% did not apply for loan because the interest rate is too high; more so, 15.4% did not apply for loan on the grounds that they do not possess enough collateral to pledge before collecting and loan from any financial institution and finally 13.5% do not apply for loan for other reasons apart from the once mentioned. However, despite the financial constraint bedeviling businesses, majority do not believe that applying for loan will solve their financial predicaments.

xiii.

The question on whether they have ever been refused or denied to borrow money from a bank brings to limelight the fact that 25% of the respondents have actually been denied loans before, while 19.2% have not been denied loans before. But as for the remaining 55.8% of
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respondent, it actually represents the same percentage of enterprise that has never applied for bank loans before. Therefore, it is evident that were some did not want to apply for loans, others actually did apply for loans to solve their financial predicament.
xiv.

The question on the main reason why their bankers or the financial institution refused offering you loan indicated that 30.8% of the respondent are of the view that the reason why their bankers refused giving them loan is because to avoid problem which normally arise from inability to repay back the loan at the agreed time or period; more so 23% of the respondent say they do not have or possess adequate security to pledge before collecting such loan; furthermore, 38.5% opined that the reason why they were denied loan was because they did not have the required capital base for the loan they needed therefore they were denied the loan. And finally, 7.7% of the respondents say they were denied loan because of some other reasons not listed in the possible options.

xv.

The question on whether the enterprise are aware of the existence of other avenues of funding their business (e.g. Partnerships, Equipment leasing, Loans from Bank of Industry) demonstrate the fact that 80.8% of the respondents are actually aware of other avenues of funding their business, while on the other hand 19.2% of the respondents are not aware of other avenues of funding their business. This goes to say that a large percentage of the respondents are aware of other means of financing their business.
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xvi.

The question on if given the opportunity, would they accept a joint ownership with person(s) or organizations that are willing to fund their business reveals that 88.5% of the respondent are willing to accept joint ownership, and as such this goes to show the high level of willingness to grow, because when such proposals are accepted it will lead to increase in productivity, assuming all thing being equal.

xvii.

The question on if they are aware that the government (herein referred to as the public sector) can partner with them or other private organization to help grow their business also confirm the previous response on the willingness to partner with private organizations. And now this also shows the willingness to partner with the government to grow their various businesses. Therefore, from these outcomes we can say that there is a high degree of willingness on the part of the respondents to partner with suitable investors, because it is a known fact that no man is an island.

xviii.

The question on if yes, has there been any form of such partnership in the past indicates out of the respondent that are aware of such form of partnership 19.2% of the respondent have actually participated in such form of partnership, while 50% have not participated in such form of partnership. And on the other hand 30.8% represent those that are not aware at all therefore there was no response from them.

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xix.

The question on what are the possible role(s) they thought Public Private Partnership can bring to the development of SMEs in Nigeria reveals that a large proportion of the respondent believed that improving physical infrastructures will bring about development of SMEs in Nigeria, but notwithstanding all other options are also predicted to bring development to SMEs in Nigeria if the public private partnership goes through, because from the response to the question and suggested roles to be played by the public private partnership it means that all the suggested roles will bring development to SMEs in Nigeria.

xx.

The question on what is the vision or where do they visualize their businesses in 15yrs from now, shows that despite the prospect and constraint evident in the operation and management of the individual enterprises, they still do have vision set for themselves to be achieved within the projected period of 15years if all things being equal.

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Chapter Five Summary, Conclusion and Recommendation


5.1 Summary: This study work came to being as a result of the researcher interest in the current trend of unemployment, thus trying to carry out a study to examine the relationship between small and medium scale enterprises as a viable option in reducing the rate of unemployment in Sabon Gari local government area of Kaduna State. In chapter one, it brought to bear the trend of unemployment rate from 4.7% in 2000 to 19.7% in 2011, the statement of the problem examines attempts made by different administration in Nigeria to reduce the rate of unemployment to a manageable minimum. Furthermore, the objectives of the study is aimed conducting a scientific study to see the level of awareness about the concept of small and medium scale enterprise and to evaluate the impact of SMEs on unemployment. The research question tries to raise projective questions which will be answer in chapter four data analysis, presentation and interpretation. The scope of the study will mainly be based on examining the relationship between SMEs and unemployment in Sabon Gari local government area of Kaduna State which will be tested by the hypothesis put forward and tested using statistical tool.
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In chapter two, it digs deep to examine the technical meaning of SMEs and unemployment from different scholarly view point; the importance of SMEs to the economy i.e. contributing the GDP and adequate utilization of the abundant raw materials available in the country; the source of financing available to SMEs in Nigeria as well as financing schemes put in place by different administration to ameliorate the stress associated with sourcing for funds to carry out business investment; furthermore, it examines the general problem associated with SMEs as well as prospects that are evident therein; more so the classification of unemployment from economics view point as well as the causes of unemployment in the Nigerian context alongside the relationship between SMEs and unemployment. In chapter three, it explores different scientific methods to come up with an adequate design for the demands of the study. Firstly, sourcing of data for the study is carried out by administering a closed ended questionnaire to respondents to elicit response to serve as the primary data. Secondly, recording the data the administered questionnaire will serve as the medium through which the data will be recorded for further analysis and interpretation. Thirdly, analyzing and interpreting the data, simple percentages were generated using SPSS and also the SPSS was used to generate the Pearson chi square test for the hypothesis. Furthermore, the population for the study was gotten from the revenue department of Sabon Gari local government area which constitutes

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SMEs from the local government area, thus further subjected to simple random sample for the sample size for the study. In chapter four, the analyzed data will be presented in table alongside their respective percentages for easy understanding of each and every question on the questionnaire. Also, findings arrived at during the course of the research was discussed for better understanding of the interpreted data. In chapter five, summary of the entire research was reached, conclusion based on the researchers understanding of the findings as well as recommendations put forward as deemed appropriate.

5.2

Conclusion: Some of the conclusions reached after the entire study has been

conducted are highlighted below, that: i. Most of the enterprises are small scale enterprises and not both small and medium scale enterprises based on the definition of Storey 1994. ii. Apart from personal interest as a source of idea by which majority of the respondent identified as their source of business idea, the remaining source are not being utilized to the fullest.

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iii.

Majority of the enterprises are averagely young into the business, therefore they lack basic experience and resources to attack in more than one front i.e. diversification into other profitable venture alongside their current business.

iv.

On the average, most of the enterprise are not employing or absorbing the numerous labour force available comprising of skilled, semi skilled and unskilled as expected, simply because of financial and other predicament they are experiencing.

v.

Despite the under utilization of manpower resources, the enterprises are willing to increase their individual staff strength whenever the situation demands.

vi.

More so, majority of the enterprises are both capital and labour intensive, which will create an avenue to absorb the abundant manpower available in Nigeria.

vii.

Out of all the identified source of financing, small and medium industries equity investment scheme (SMIEIS) is the only under utilized source of financing business in Sabon Gari local government area of Kaduna State, and this is because they are aware of the scheme, but are not accessible because of the bottle necks involved in benefitting from such scheme.

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viii.

Finance, inadequate physical infrastructure and high cost of operation are the major problems facing smooth operation of business operations in Sabon Gari local government area.

ix.

Majority of the enterprises are not willing to apply for loans to solve their problems because they do not want to be involved in any crisis associated with loan repayment, as well as the high interest rate attached to loan and finally the insufficient collateral/security to pledge before benefitting from loans from financial institutions.

x.

The enterprises used for the study runs an open door policy for public private partnership to enhance their ability to overcome their operational challenges and benefit from the awaiting prospects.

xi.

Based on individual opinion of the enterprises, they believe that public private partnership can play these roles to bring about development to SMEs in Nigeria, namely:
-

Creating a legal frame work to regulate entry and exit of competitors and investors.

- Improving physical infrastructure such frequent energy supply, provision portable water etc.
-

Supporting access to technology. Facilitate access to business advisory services and consultancy.
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Training in entrepreneurship skills, management, capacity building and industries strengthening

Providing support through credit scheme without stringent bottle necks.

Fostering linkage with large industries i.e. vertical and horizontal integration where they can either serve as suppliers of raw material or demand for finished (market for finished goods).

xii.

Finally, majority of the enterprises are highly visionary, goes to say that with such vision in place the flair for success will be stimulated.

5.3

Recommendation: Based on the above findings and conclusions reached, it is necessary to

make some recommendations for consideration by stakeholders such as the government, foreign and domestic investors, financial institutions and corporate managers. Public private partnership should be strengthened to achieve success in areas such as: i. Provision of soft loans and finance devoid of stringent requirement to interested applicants.
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ii.

Training in entrepreneurship skills, management, capacity building and industries strengthening.

iii.

Improving physical infrastructure such frequent and cheap energy supply, provision portable water, construction and rehabilitation of roads to link industries to markets.

iv.

Organize seminars, symposiums as well as research and development to come up with new information, simply to enlightened potential investors of new ideas, or faster and cheaper way of doing things.

v.

Establish ethical code of conduct to guide industry practice to avoid low quality or sub standard practice among competitors.

vi.

Organize seminars, symposium as well as research and development to enlightened potential investors of new ideas, or faster and cheaper way of doing things.

vii.

The government should establish fiscal incentives and support such as tax rebate for SMEs which have demonstrated capabilities in local sourcing of raw materials, value addition to commodities for export as well as other business ethics and good corporate governance which government may wish to promote.

viii.

Government should come up with a new pragmatic and realistic industrial policy that will address the current globalization challenges as well as the
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emergent domestic challenges and problems in order to make the Nigerian SMEs globally competitive. ix. The government should set up an inter-ministerial body to coordinate all matters relating to SMEs. This body should comprise all relevant Ministries (Finance, Industry, National Planning, Commerce, Science & Technology, CBN, NASME, MAN, NACCIMA, NASSI, BOI and Committee of NAS) and be chaired by SMEDAN. x. Policy makers should endeavor to understand the nature, problems and needs of SMEs before enunciating policies for the sub-sector. In this regard, policy makers should consult with relevant stakeholders before enacting such policies that affect them. xi. Above all, the government should have the political will to effectively and efficiently implement the above recommended measures in order to achieve the desired results for as long as the status quo remains we cannot achieve or expect any improvement in the crucial SME sector. If we want a change in the status quo as it relates to our SMEs, we must change the way and manner we manage affairs relating to SMEs.
xii.

Finally, the government should establish a conducive economic environment to enhance a hitch free business operation i.e. the force of demand and supply should interact positively e.g. reduce and discourage

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importation and encourage purchase as well as mass patronage of domestic products and/or services. Thus, this will go a long way in boosting increase in GDP, standard of living as well as foreign exchange rate.

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References: Anyanwuocha C. (2006) Fundamentals of Economics: Precious publishers, Onitsha. Basil A. N. O (2005) Small and Medium Enterprises (SMEs) In Nigeria: Problems and Prospects: St. Clements University. Begg et al (2000), Economics, Mcgraw Hills: United Kingdom. Bolton J.E (1971), Report of the Committee of Inquiry on Small Firms, United kingdom Central Bank of Nigeria (2004). Progress Report on SMIEIS. Accessible from http:\\www.cenbank.org Central Bank of Nigeria (2001), First Annual Monetary Policy Conference on Growing the Nigerian Economy. Central Bank of Nigeria (2005) Microfinance Policy, Regulatory and Supervisory framework for Nigeria, Abuja, Nigeria. Cochran, W.G. (1963). Sampling Technique, (2nd ed) New York: john wiley and sons, inc. Douglason, G.U and Gbosi, A (2006) The Dynamics of productivity and unemployment: Implications for employment generation in Nigeria 2006. Annual conference, Ibadan, Nigeria.

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Elaian K (1996), `Employment Implications of Small Scale Industries in Developing Countries: Evidence from Jordan, Science, Technology & Development. European Commission (2003). Recommendation 2003/361/EC: SME Definition".http://ec.europa.eu/enterprise/enterprise_policy/sme_definiti/i ndex_en.htm Gbosi, A.N. (2006) Modern Labour Economics and Policy Analysis. Abakaliki, Pack Publishers Federal Office of Statistics (1998) Review of the Nigerian Economy 1997, Lagos. International labour organization (1996) World Employment.

www.ilo.org/public/nglish bureau/inf/pkits. International Labour Organization (ILO (1996); Meeting the Challenges of Rising Unemployment and Underemployment. Report submitted by the ILO's Employment Policy Strategy Formulation Mission to Nigeria. International labour organization (2000) World Employment reports 1998 1999 employability in the global economy: Geneva. Jim O. (2001) Financing Nigerias digital revelation via SMEs: Paper presentation in Lagos during Zenith bank seminar.

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Mead D.C and Liedholm C. (1998) The dynamics of micro and small enterprises in developing countries: world bank development summit: Geneva. Ministry of Agro & Rural Industries". Msme.gov.in. (2007).

http://msme.gov.in/msme_aboutus.htm. Retrieved 2010-12-09 National Bureau of Statistics (2005) The Nigerian statistical fact sheets on Economic and Social Development, FOS, Nigeria. Odusola, A.F. (2001) Nigerias unemployment problem in the 80s and 90s: Implication for policy directions in the 21st century. NCEMA Policy Seminar Series. Ibadan, Nigeria. Odusola, A.F. (1997); "Poverty in Nigeria: An Eclectic Appraisal", in Poverty Alleviation in Nigeria, Annual Conference Proceeding of the Nigerian Economic Society. Okigbo, P.N.C. (1986); "An Address Delivered During Productivity for Self Reliance and Excellence", Proceedings of the 1st National Productivity Day Celebration, National Productivity Centre, Lagos. Okigbo, P.N.C. (1986); "Theoretical and Methodological Issues Relating to Unemployment in Nigeria", in Unemployment and Underemployment in Nigeria, Annual Conference Proceedings of the Nigerian Economic Society, Kaduna State,

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Osei B, Baah-Nuakoh A, Tutu K.A, & Sowa N.K (1993), `Impact of Structural Adjustment on Small-Scale Enterprises in Ghana, in Helmsing A.H.J and Kolstee T. H (eds), Structural Adjustment, Financial Policy and Assistance Programmes in Africa, IT Publications. Osuala E.C. (2007), Fundamentals of Research Methodology (5th Ed.), Africana first publishers: Onitsha. Steel W.F (1977), Small Scale Employment and Production in Developing Countries: Evidence from Ghana, Praeger, New York, USA. Storey D (1994), Understanding the Small Business Sector, Routledge: United Kingdom The World Bank Group (2001), Small and Medium Enterprise Department, Country Mapping, Nigeria Webster L (1990), `Ghanas Small Enterprise Sector: `Survey of Adjustment Response & Constraints, World Bank Industry and Energy Dept, Washington D.C Wynarczyk P, Watson R, Storey D.J, Short H & Keasey K(1993), The Managerial Labour Market in Small & Medium Sized Enterprises, Routledge, United Kingdom. World Bank, (2001). World Development Report 2001: Washington, Oxford University Press for the World Bank.

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Appendix: DEPARTMENT OF BUSINESS ADMINISTRATION FACULTY OF ADMINISTRATION AHMADU BELLO UNIVERSITY, ZARIA

Dear Respondents,

QUESTIONNAIRE FOR SMALL AND MEDIUM SCALE ENTERPRISES: A SOLUTION FOR REDUCING THE LEVEL OF UNEMPLOYMENT IN NIGERIA. I am a final year student of the above institution currently conducting a study on small and medium scale enterprises: a solution for reducing the level of unemployment in Nigeria. It is in view of the above that i request you to fill the attached questionnaire. The study is purely for academic purpose and your answers/responses will be most appreciated, all information will be treated as highly confidential. Thanks.

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Please tick the appropriate box and comment where necessary. In order to ensure confidentiality, please do not put down your name on the questionnaire, but please answer the questions as honestly and objectively as possible.

1. What is the nature of Enterprise/Business: Please tick as appropriate Partnership [ ] Others [ ]


2.

Sole proprietor [ ]

family owned [ ]

What was the source of idea of your business? (You can tick more than one please). Personal interest [ ] mass media [ others[ ] ]

seminar/symposia [ ] government programs [ ]


3.

For how long has your enterprise been in operations: please tick as appropriate: less than five (5) years [ ] between 11 and 15 years [ ] years [ ] between 5 and 10 years [ ] over 20

between 16 and 20 years [ ]

4.

How many people are employed by your enterprise: less than 5 [ ] between 6 and 20 [ ] ] between 100 above [ ] between 21 and 50 [ ] between 51 and 100 [

5.

Do you intent to increase your staff strength. Yes [ ]

No [ ] capital

6. What is your mode of operation? Labor intensive [ ] intensive [ ] both capital & labor intensive [ ]

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7. How have you been financing the operations of the business: tick as appropriate: (You can tick more than one please). Personal funds / savings [ ] Bank loans [ ] Friends support [ ]
8.

SMIEIS funds [ ] family funds [ ] others [ ]

What are the problems your business experience since existence? (You can tick more than one please). Financial [ ] infrastructure [ ] government regulations [ ] [ ] others[ ] manpower [ ]

high cost of operation

9. Is financing really a setback to the growth of your business? Yes [ ] No [ ]


10. Are 11. Has

you aware of government SME financing scheme? Yes [ ]

No [ ]

your enterprise ever applied for loan from a bank or any financial

institution? Yes [ ] No [ ]
12. If

no, why? (You can tick more than one please). Interest Rate too high [ ] others[ ]

You do not like Bank loan [ ] No collateral to pledge [ ]

13.Have you ever been refused or denied to borrow money from a bank? Yes [
14. If

No[ ]

yes, what was the main reason why your bankers or the financial

institution refused offering you loan? (You can tick more than one please).
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To avoid bank problem [ ] Too small capital base [ ]

No security to pledge [ ] others [ ]

15.Are you aware of the existence of other avenues of funding your business (e.g. Partnerships, Equipment leasing, Loans from Bank of Industry). Yes [ ] No [ ]

16.If given the opportunity, would you accept a joint ownership with person(s) or organizations that are willing to fund the business? Yes ] No [ ] [

17.Are you aware that the government (herein referred to as the public sector) can partner with you or other private organization to help grow your business? Yes [ ] No [ ]

18.If yes, has there been any form of such partnership in the past. Yes [ ] No [ ]

19.What roles do you think Public Private Partnership can bring to the development of SMEs in Nigeria.
i. ii. iii. iv. v. vi.

Access to credit Creating a legal frame work Improving physical infrastructure Supporting access to technology Facilitate access to business advisory services Training in entrepreneurship, skills and management building and industries strengthening [

[ [ [ [ [ [ ]

] ] ] ] ] ]

vii. Capacity

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viii. ix. x.

Providing support through credit scheme

[ [ [

] ] ]

Fostering linkage with large industries Others

20.Where do you visualize your business in 15yrs from now? Industry leader[ ] industry challenger [ ] nicher [ ] industry follower [ ] Industry

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