Content                                                           Page

Title                                                                 i

Certification                                                     ii

Dedication                                                       iii

Acknowledgement                                            iv

Abstract                                                           v-vi

Table of Content                                              vii-viii




1.1   Background of the Study                                         1-9

1.2   Statement of Problem                                              9-10

1.3   Objective of the Study                                              10

1.4   Research Question                                                   10-11

1.5   Research Hypothesis                                                       11-12

1.6   Significance of the Study                                         12

1.7   Scope of the Study                                                   12

1.8   Limitation of the Study                                            13

REFERENCES                                                                         14


CHAPTER TWO LITERATURE REVIEW                                           15-32



RESEARCH METHODOLOGY                                   

Population Size of the Study                                    37

  • Sample Sized                                            33
  • Sources of Data                                            33
  • Research Instrument                                            34
  • Data Collection Procedure                                            35
  • Techniques of Data                                            35-36




  • Research Findings                                            37
  • Analysis of Research Questions                                            37
  • Text of Hypotheses                                                 38-60



  • Discussion of Results                                            62-65
  • Summary                                            65-66
  • Suggestions                                            66-67

BIBLIOGRAPHY                                                              70

APPENDICES                                                                  70-76





Some time ago, Ablert Hirschman (1958) said that development is like a jigsaw puzzle, it is easier to fit in a particular piece when the adjoining pieces are already in place; the pieces that are hard to find are those with only one neighbour in place. This clever analogy evokes two very important economic principles that both researchers and policy makers are rediscovering as Nigeria moves from the decade of adjustment to a new period of reform and growth. The first one is that during the early phases of development, when an economy is no more than a collection of fragmented markers and regions, the establishment of government institutions, the construction of infrastructure, and the direct participation of the government in some areas of the economy are not only desirable but indispensable preconditions for the growth process.

The second principle is more in the line with the recent theories of endogenous economic growth (see Scott 1991),

Romer 1989; Lucas 1988; and Uzawa 1965). It reflects the motion that the opening-up of investment opportunities through changes in the environment where individuals work, save, and invest, both creates and reveals new investment opportunities. In Hirschman’s example, once the difficult parts of the puzzle have been solved, the remaining pieces begin to fall into place almost automatically. What this means for the role of the government in economic development is that after an initial period of protection and government intervention, growth no longer responds as strongly to further involvement as it did during the very first stages of industrialization. Furthermore, this analogy conveys the motion that once the basic institutional framework has been implemented, the public will be better served by indirect support of economic activity through deregulation, privatization, trade liberalization and a competitive environment than by direct government participation in production activities.

Today, government participation in economic activity is very different from a decade ago. Growth policies are geared toward creating a propitious climate for the participation of small scale industries of subsides and nationalization, the emphasis is on the elimination of institutional constraints on competition, the creation of new markets, and the generation of opportunities for all embers of the population.

The government growth and economic reform policies may not achieve sustainable results without rural development. There is high concentration of large, medium and even small scale industrials in the urban areas of the      country because of availability of markets for their products, infrastructures and social amenities. Various administrations came with one program or the other intended to liberate the rural dwellers from perennial poverty, but unfortunately, some of these programmes failed to achieve the expected results. Examples of such programs are, Directorate of Foods Roads and Rural Infrastructures (DFRRI), MAMSER, the Better Life Programme for Rural Dwellers etc.

The shift of emphasis to grassroots development is a matter of necessity at the present stage of our development; and small-scale industries have been identified as the catalyst towards rural economic emancipation. It is well known that at least 75 percent of the country’s resource endowment abounds in the rural areas. Thus development projects and programmes cannot achieve only appreciable improvement or impact until they focus on these areas. In effect, it is imperative that we left up the rural low-income segment of the society of Nigeria will undergo the ideal economic transformation.

The on-going reform agenda that has been carefully packaged as the National Economic Empowerment and Development strategy (Needs) is to reposition Nigeria for stability, growth and development: The reform agenda affects every sector of our society. To the states, it is “State Economic Empowerment and Development Strategy (Seeds), whereas the local government develops their own as “Local Empowerment and Development Strategy (Leeds). It is however expected that “Leeds” will create enabling background and facilities that will encourage small-scale industries in the rural areas.

During the period 1960-1972, agriculture was the mainstay of the Nigerian economy, contributing about 54.0% share of real GDP (table 1). This is invariably a contribution from rural areas of the country to our aggregate economy. Inspite of political upheavals, culminating in the civil war between 1967-1970. During the period, the economy as a whole witnessed a steady growth rate of about 11.97%, low inflation, relatively healthy balance of payments, moderate public sector investments and an emerging industrial sector, particularly the oil and gas industry. It was during the early 1970s and 1980 that the oil sector permanently displaced agriculture, accounting for about 24% of real GDP during the period between 1973 and 1985.

If this country must achieve a sustainable economy we must go back aggressively to agriculture. In order to achieve this, rural development projects should be modified to provoke actions necessary to improve rural life. For example, provision of modern farm equipments, tools pesticides and soil supplements and educating the people on the usage to achieve optimal results at subsidized costs if not free. Provision of electricity, rural waters supply, good communication network and roads will lead to proliferation of small scale industries in the rural areas, especially those that source their raw materials from agricultural produce. In a conducive environment where palm produce abound, palm kernel oil processing industries, vegetable oil industries, soap industry, cosmetics industries and poultry farms and poultry feed processing plants will undoubtedly thrive efficiently and effectively.

The basic structure of the economy is a hindrance to accelerated growth. Ours is an economy that is based on primary commodities traded on the international markets, and with little value added. Our law value added means we are, on balance, import dependent. This double-edged disadvantage makes us vulnerable indeed because we only earn what the market pays for primary commodities, and have to pay prices determined by exporting countries. We then have no control on our margin stream. We need to restructure the economy towards more value added products, and the presence of productive small-scale industries in our rural areas is the key.

Another underlying hindrance is our development model, which has neglected the development of the human capital through high quality education, health and social security. No wonder there is such a death of managerial, executive and leadership capacity everywhere. Institutions are run down, and due process swept aside. Instead we have installed mediocrity, and come to accept the dictum of the Nigeria factor to represent everything substandard and shoddy. Our young graduates should be sound enough to be self-employed through commencement or establishment of small-scale industries at grassroot level. Their end products should also be of high quality capable of competing favourable at international markets. When this happens, the standard of living if our rural populace will increase and rate of development will also rise dramatically. When the small-scale industries maximize their earnings, it exerts a multiplier effect on the immediate environment and overall economy.

We have recently heard that Nigeria had adopted an objective to earn $106 from cassava exports within five years. We will of course soon see a flurry of activities to encourage cassava production; seminars and conferences will be held since somebody needs the contract to organize the conference, which will be, tagged “international conference on cassava” and some influential person will develop the great idea to ensure that they can get rich without doing much. Thank God for the introduction of due press. Nevertheless, if government must achieve this targeted objective, the farmers at the rural areas must be encourage through subsidization of their overhead costs or mandating the Community Banks to grant credit facility to enable them expand production, cassava tuber is 80% water, and the crop has to be dehydrated before export since no one is willing to pay for cassava water. This means that government should also encourage cassava processing industries with locally fabricated machines to be sited at strategic places in our rural areas.

Perhaps the factor most consistently present in the East Asian economies was sound and disciplined macro economic policy framework, characterized by fiscal discipline, strong investment performance- especially in the area of human capital, small scale industries targeted at aggressive export development. Their outward orientation and its success in penetrating international markets are well documented. The region has made remarkable progress in expanding trade, particularly in manufactured exports and small-scale industries being active players.

Different government regime in Nigeria has initiated laudable programme aimed at rural development, but the impact of these programmes are not significant in those areas. The researcher have notice constant entry and exit rise and crumbing of small scale industries and low standard of learning in our rural areas and sets out to identify the causes of the ugly phenomenon in view of highlighting possible solutions.


Available statistics indicate that about 75% of our populations live in rural areas. These are predominantly present famers whose modes of agricultural production are relatively still primitive. One of the causes of backwardness in rural areas is the inadequacy of investment funds to finance small-scale industries.