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PROBLEMS AND PROSPECT OF ESTABLISHMENT OF SMALL SCALE INDUSTRIES IN ENUGU STATE (A CASE STUDY OF PATONY BLOCK INDUSTRY PRESIDENTIAL ROAD)

 CHAPTER ONE      

1.1            THE GENERAL BACKGROUND OF THE STUDY

The survival and stability of any economy be it in the developed or unroler developed countries requires the involvement of private individuals (entrepreneurs) in the production of some goods and services.  In the developed countries of the world, the success of the small-scale business firms have contributed a lot towards the economic stability and development of such countries.

It is believed that for a country to be developed, great proportion of the labour force must be engaged in the private sector.  This factor has necessitated the setting up of companies such as manufacturing, construction, financial institution transportation and other services companies by private individuals to mobilize the idea of industrialization.

These companies set up by private individuals at a very small level is called small-scale industries.

Nigeria’s desire to concentrate on developing the small indigenous firm sector has always been buttressed by and reflected in a wide range of economic policies.  Infact the present consciousness on the part of every segment of the society including the government for small/medium industrial growth, cannot be a surprise, and delay in appreciating this sector as an catalyst is frustrating.  It could be understood from economic history that many advanced countries of the world, which have attained the height of industrialization, started as mere small-scale firm, which later metamorphosed into giant corporations.  In the past, industrial development processes were as slow and painful and the further advancement in technology in developed countries resulted from the survival of cottage firms, which were nurtured, pampered and breastfed to grow up as big industrial corporations of today.

Developing countries as a whole have now realized that they lack much behind than the developed countries not only in industrial base but also in material standard of living.  As a result these countries now seem to have hastened the pole of their industrial developmental process in order to increase their living standard and thus reduce the present rate of unemployment.

If critically viewed, all their development efforts were centered towards the establishment of industries (small-scale) which could provide employment to the teaming population, provide earning to the country through the export profile, enhance the standard of living of the citizenry, and in turn could result to the provision of infrastructural facilities.  The government has started to appreciate this, emphasis by its policy incentive of establishing the National Economic Reconstruction Fund (NERFUND) the NIDE, the NACE, IDC, ITT, NBCI all geared towards assisting small firm in form of managerial and financial assistance.  

1.2            PROBLEMS ASSOCIATED WITH THE SUBJECT MATTER

The emphasis which the government has placed on small-scale business sub-section of the economy has proved ineffective and inefficient.

This emphasis and efforts are in form of privileges and policies from the government.  Example of such programmes includes the established of the National Economic and Reconstruction Fund (NERFUND), the National Directorate of employment (NDE), the Mass Mobilization for Self-reliance and Economic Reconstruction (MAMSER), the credit industries and others.

Inspite of all these programmes, it has been observed that many small-scale industries fail, than to succeed in their business.  It has also been observed that many small-scale businesses in Nigeria either remains perpetually small or die off completely die to lack of financial, qualitative personnel and managerial programmes etc.

It is expected that if these small-scale businesses grows into medium and large-scale business, Nigeria will become an industrialized nation overnight.  Then one would ask why do these small-scale business always remain small year to year continually?

This can be as a result of the following problems or factors.

Inadequate management ability:    Lack of management ability manifests in improper planning, lack of knowledge of where and how to source funds, myopic marketing activities.  Many small businessmen cannot take records of their business transactions.  This results in high rate of theft in their organizations, difficulty in pinpointing who defaulted etc. accounting for a high rate of failure among small business.

Inadequate financing:  Many small-scale industrialists rely on their personal saving, getting raw materials on credit or borrowing from friends and relations.  These sources of funds may not give enough money.  Some industrialists may not be aware of the facilities available in financial institutions and government agencies.  Those who are aware are always afraid to utilize the facilitates either because of the collateral requirements or just unnecessary fear.  This makes them not to advance in business or even maintain the status quo.  The result is winding up and seizing to be an employer of labour.

Lack of technical know-how: Many small business operators lack conceptual, human and design skills but the one that hits them most is technical skill.  They lack the appropriate technology thereby delaying in inventions.  These results is their product being branded inferior, or called Nigerian made, and these makes the small-scale operators to undercut prices and engage in deceitful advertising so as to dispose their products.

Poor competitive position:     Effective competition will result if there is a quality product in properly positioned market segmentation with a right price.  Many small-scale industries are for profit maximization this will lead stream to set the price of their products high and give less attention to other aspect of competition.  This will lead to a poor competitive position.

Easy liquidation: Crises or depression often send small business to liquidation.  Just as it is easy to set up, so it is easy to go out of operation.  In many situations, the capital which can be transferred to other industries will not be left.  This will make the small business owner to start fresh hunting for funds, skills and helps, which may but easily be available.

1.3            PROBLEMS THAT THE STUDY WILL BE CONCERNED WITH

In Nigeria as well as other developing nations, organization, business enterprises especially those owned and managed by private individuals fail to meet up or perform up to standard owing to a lot of reasons.  These reasons could be due to, it’s location taxation and finance.

Location:   This is the actual sitting of an industry is a particular areas.  Factory location is an important issue to be considered as it helps to determine the success or failure of any industry.

In other to establish a small-scale industry in Enugu state great importance should be given to the issue of location to ascertain if it is a site, if it is mar to the raw materials and customers as these will increase the rate of sales and bring about reduction in cost of production and increase in profit.

In the case of PATONY BLOCK INDUSTRY that is located along presidential road.  The company is in a site but a lot of financial difficulties were encountered in an attempt to secure the land.  It cost a lot of money to buy that price of land because it is in a site, and if not for the family members contribution’s the proprietors would find it difficult to secure that portion of land.  In the were there are no family members or where there family members but who are unwilling to assist, this become a very big problem towards the establishment a small-scale industry.

PATONY BLOCK INDUSTRY is situated near to the customers because a lot of people are building house within and outside the area, but it is not near to the source of raw materials.  This makes the company pay high so as to convey their raw materials etc.  Comments and sands to the companies presses and this affected the level of profit negatively.

Taxation:   This has being one of the problems hindering the establishment of small-scale industry in Enugu State.  Taxes paid in some local government areas are very high that small-scale operators are discouraged from sitting their industries there or even afraid of establishing small-scale business at all.  The tax levied on PATONY BLOCK INDUSTRY is not encouraging it almost left the proprietors with nothing after paying the tax and workers salary.  But if reduction is the tax payable to this local government or by giving tax holidays to the operators of small-scale business, many people will like to undertake the establishment of small-scale enterprises.

Inadequate infrastructural facilities:        Some areas are the best position of sitting a small-scale industry but the road or transportation not work to such areas are very bad and those discourages the establishment of small-scale industry in Enugu State.

The essence of this write up, is to ascertain the problems.  Hindering the establishment of small-scale business in Enugu State.  It is hoped that the findings and suggestions would enable the government to create an encouraging environment for the establishment of small-scale industries in Enugu State.

1.4            THE IMPORTANCE OF STUDYING THE AREA

The study of the problems and prospect of establishing small-scale industries in Enugu State would be of importance in various ways.

The study will enable the government to create and initiates polices that will encourage private individuals to establish small-scale industries in Enugu State and nation wide.

The study will enhance the promotion of industrial development through industrial disposal in the country.

The study of the problems and prospects of establishing small-scale industries in Enugu State will help to identify the problems created by the government especially through the policy of high taxation, which constantly discourages private individual from engaging in the establishment of small-scale industries.

The study of the problems and prospect of establishing small-scale industry in Enugu State will expose the problems or obstacles likely to encountered by prospecting small-scale business men and will enable them to come up with solutions that will enable them to tackle these problems before going into the small-scale business.

The study of the problems and prospect of establishing small-scale industry in Enugu state (PATONY BLOCK INDUSTRY) will enhance the skill and ability of business management scholar towards research work.

The study enhances the provision of infrastructured facilities by both the government and private sectors or individuals to help the small-scale industries are the production and distribution of the products.

1.5            DEFINITION OF IMPORTANT TERMS

 Some of the following terms are defined below so as to enable readers find the project easily understandable.  Some of the terms are management jargons whose real meaning might not gutter correctly from the dictionary.

Patony block industry: Patrick and Anthony’s Block Industry Ltd.

Business:                       Any legal economic activity oriented towards production of goods and services at a profit for their satisfaction of human wants.

Small-scale industry:    A manufacturing establishment employing less than ten (10) people whose investment in machinery and equipment do not exceed N600,000.

Problems:   This is referred to as constraints, pitfalls, lapses and short falls.

Management:  This is the application of both human and material resources to achieve objective in a most economical way.

Production:  This is the creation of goods and services or creation of utilities. 

Stability:   Being unable to change or firm

Entrepreneur:  Is one who organized, manages and assumes the risks of a business firm.

Buttressed:   Something supportive

NERFUND:     National Economic Reconstruction Fund

NDE:  National Directorate of Employment

MAMSER:   Mass Mobilization for Self Reliance and Economic Reconstruction

Taxation:      Those are money levied on individuals, good or companies by the government

Location:   This is the actual place or area where something or an industry is sifted.

Catalyst:    Somebody or something that helps bring about a change

Industrialization:          This is a nation capacity to transform how raw materials into finished goods.

REFERENCES

Ani N. Agbo .G. Nwandu .E. (2002) Small Business Entrepreneurship

Arnold .W. (1957)         Small Manufacturing Enterprises Harvard Business Review

XX N0. 6 Nov/Dec. 1985.

Erinma C. Nwandu, Ani Nnenna B. Agbo Ojemba B. (2002-200)   Principles of Management Vol. 1.

Omole Y.M (1988)        Private Entrepreneurship as a Motive Force of

Economic Development Vol. 4 No. 242 Tuesday August 16.

Agbo G.O. (200)  Small-Scale Business Management Iyke Ventures Production.

Ani B.N and Nwandu E.C. (2001)    Business Management an Introductory Text.

National Directorate of Employment (NDE) and Entrepreneurship (1978) in 1978 budget.

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