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THE FAILURE OF SMALL-SCALE BUSINESS IN NIGERIA: CAUSES AND SOLUTIONS (A STUDY OF SELECTED COMPANIES IN ENUGU, STATE)

Business Administration & Management Project Topics

CHAPTER ONE

INTRODUCTION

 

BACKGROUND OF THE STUDY

For many years now, most organizations especially those in Enugu State may have been subjected to incompetence, unprofitability and unproductivity following the inabilities of the managements of such enterprises to determine the causes of the failure of such enterprises.

 

It was Iwejuo (2002:18) that maintains that it is difficult to define a small business. This is because there is no one definition on what constitute a small business. However, small scale business can be defined by the criteria of project cost capital turnover per employee, asset value and sales volume. Anyanwu (1998:21) “The new industrial policy of Nigeria defined the small scale business as those with total investment of between one hundred thousand naira and two million excluding land but including working capital” Anyanwu reveals that “Small-Scale Industries Scheme” (SSIS) defined small scale business as” one with an initial capital of less than sixty thousand naira and a a work force of fifty working or fewer). Iwu (2004:61) maintains that “there are a lot of constraints to the survival of small scale business in Nigeria. According to him, the constraints include among others the absence or inadequate of credit for working capital; lack of credit for purchase of capital equipment; infrastructure inadequacy and environment; managerial problems, the state of domestic market and the propensity to consume foreign good, adequate information supply and absence of business plan.”

 

According to him, despite the new initiatives and repeated attempts by both the government and the private sector to promote the activities of small scale enterprise in Nigeria, they continue to be faced with numerous problems, some of which include: policy inconsistency, unstable macro-economic environment, very poor and even non-existent infrastructure, government lawreancracy which increase cost of operation, lack of short term capital, limited and unavailable data and lack of managerial facilities and enterprise support services. It was Nwosu (2003:11) that made constitution as regards the strategic policy measures to solve problem of small scale businesses. He cited the industrial policy in Nigeria (1989:5 – 6) as maintaining that the government should see to it that enabling business environment with all the support services is created not only in urban areas also in rural areas. The administration of the existing macro-credit schemes should be over hauled. There should be a deliberate policy to protect small scale business from extensive completion from foreign firms, among them.

 

This research work on: The Failure of Small-Scale Business in Nigeria: Its causes and Solutions with a study of selected companies in Enugu State are conducted to prefer solutions by way of recommendations, to the problems of small scale businesses.

 

STATEMENT OF THE PROBLEM

 

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