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Factors Inhibiting The Operation Of Small Scale Industries In Onitsha South Local Government Area Of Anambra State

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ABSTRACT

This study was carried out to investigate the factors inhibiting the operation of small scale industries in Onitsha South Local Government Area of Anambra State. The study adopted a descriptive survey design. The population of the study comprised of 150 small-scale industry owners in Onitsha South Local Government Area of Anambra State while the sample of the study was 60 small scale. Three research questions were raised to guide the study. The instrument used for data collection was a structured questionnaire which was developed by the researcher and validated by two experts; one in Measurement and Evaluation and one in Accounting Education Department of Federal College of Education (Tech) Asaba. To ensure that the instrument is valid, a pilot study was carried out on ten (10) small scale industry owners in Idemmili South Local Government Area of Anambra State. Data was collected and analyzed using Pearson product moment correlation to estimate the reliability 60 copies of the validated questionnaires were administered to the small scale industry owners in Aniocha South and 56 questionnaires returned and analyzed. Based on the analysis, the study found that government policy on taxation and spending affect the operation of small scale industries; government policy on granting loans to small scale industries hinders access to financing; bank policies and multiple tax affect the operation of small scale industries. On the basis of the findings, the researcher recommended among others that small scale industries should ensure that they have the needed facilities to improve their access to finance, government and banks should make policies that will encourage financial institutions to finance small scale industries.

CHAPTER ONE

INTRODUCTION

Background to the Study  

Industrial development involves development of a technical arrangement that moves an economy from the traditional method of production to a more complex system of mass manufacturing of variety of goods and services involving technology and management techniques. Industrialization tends to propel growth and achievement of structural transformation and diversification of economy. It provides employment for a substantial proportion of the industrial establishment.

The Nigeria Bank was established to provide among others financial services to the indigenous business community, especially small scale industries. The recommendation of the financial system review committee of 1976 government made bank the apex financial institution for small-scale business (Joseph, 2017). The bank obtains fund from the federal government to assist small business and the loan granted are relating on soft terms. During the 1970s and 1980 banks promoted soft loans and advisory services of operational and liquidity problems attributed to reduced government funding and poor loans repayment by small scale industries.

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Small scale industries (SSI) are those industries in which manufacturing, providing services, productions are done on a small scale or micro scale. Small scale industries play an important role in social and economic development of Nigeria (Fabayo,2015). These industries do a one-time investment in machinery, plants, and industries which could be on an ownership basis, hire purchase or lease basis. The small business sector is recognized as an integral component of economic development and a crucial element in the effort to lift countries out of poverty.  Small- Scale industries are driving force for economic growth, job creation, and poverty reduction in developing countries. They have been the means through which accelerated economic growth and rapid industrialization have been achieved. Furthermore, small scale business has been recognized as a feeder service to large- scale industries.

The Central Bank of Nigeria defines a small-scale industry as one that has an annual turnover not exceeding N500, 000.  The World Bank on the other hand says that small scale industry is one with total capital outlay of N100000 to N2 million (Excluding land) (Akabueze, 2015).

The importance of small-scale industries to the survival of a nation cannot be overemphasized. It provides employment for the populace thereby reducing the rate of unemployment in the country. Small scale industries depend on funds to effectively operate. When the funds seem to be unavailable, it affects the effectiveness of the industries. The role small and medium scale industries play in a developing economy is so vast and enormous that they cannot ordinarily be relegated to the background. They have contributed greatly to the gross domestic product of the county over the years. To build a truly indigenized economy, Nigeria will learn to rely on her industries (Onugu, 2016).. The government have actually realized the importance of those forms of business industries by previous policies being made but the implementation of these polices is a thing of great concern (Joseph, 2017).

Due to the importance of these small and medium scale industries in developing nations, viable avenues for financing these industries therefore have to be a priority to keep them productive all time to prevent them from being insolvent and subsequent wining up.

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While the contributions of small businesses to development are generally acknowledged, entrepreneurs in this sector face many obstacles that limit their long-term survival and development.  Scholars have indicated that starting a business is a risky venture and warn that the chances of small-business owners making it past the five-year mark are very rear. Some researches into small-business development have also shown that the rate of failure of small scale businesses in developing countries is higher than in the developed world.  Akabueze, (2015) stated that it would seem reasonable to expect that small businesses would grow and flourish, but the rate of business failure continues to increase because of the obstacles affecting business performance which include: lack of financial resources, lack of management experience, poor location, laws and regulations, general economic conditions, as well as critical factors such as poor infrastructure, corruption, low demand for products and services, and poverty. Others include: shortage of raw materials, multiple taxation, inadequate production facilities, problem to inappropriate time or delay in budget implementation as factor constraining investment and trade decision making, obtaining finance, inadequate competent personnel, inability to control costs and problems of dumping of cheap foreign products and others.

Statement of the Problem

The role of Small Scale industries cannot be overemphasized because it contributes immensely to national growth and development. While the contributions of small businesses to development are generally acknowledged, entrepreneurs in this sector face many obstacles that limit their long-term survival and development. Some of the difficulties or factors affecting the operation of small-scale industries are the government policies and bank policies. Small-scale businesses find it difficult to obtain loan from commercial and microfinance banks which has drastically reduced their impact on providing employment in the country.

Many small scale industries are struggling to pay their workers, pay taxes and increase their production capacity. Some even had to sack some of their workers because they can no longer pay salaries rendering those workers jobless thereby increasing the rate of unemployment in the country.  Hence the need to ascertain the factors inhibiting the operation of small scale industries in Onitsha South Local Government Area of Anambra State.

Purpose of the Study

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The main purpose of this study is to ascertain the factors inhibiting the operation of small scale industries in Onitsha South Local Government Area of Anambra State. Specifically, the study is designed to find out:

  1. The effect of government policies on the operation of Small Scale Industries in Onitsha South.
  2. The effect of bank policies on the operation of Small Scale Industries in Onitsha South.
  3. The effect of multiple taxation on the operation of Small Scale Industries in Onitsha South.

Research Questions

To effectively carry out the study, the following research questions were raised:

  1. How does government policies affect the operation of Small Scale Industries in Onitsha South?
  2. How does bank policies affect the operation of Small Scale Industries in Onitsha South?
  3. How does multiple taxation affect the operation of Small Scale Industries in Onitsha South?

Significance of the Study

The study could be useful to the small-scale business owners, the government, banks and field of business education.

The study could assist the small-scale business owners to know the factors that hinder the operation of their industries and look for ways to improve on them by working with both the government and private sectors.

The government could also be a beneficiary of this study because it could help to point out the factors that inhibit the operation of small scale industries and find possible solutions by making policies that will favour the small-scale industry owners. Microfinance and commercial banks could benefit a great deal from this study because it would help to bring to their notice the way their policies stand as challenges to effective operation of small scale business and the way forward. Finally, the study of this nature could go a long way in adding to the existing literature in the field of business education which coud also serve as a reference material to researchers and scholars alike.

Scope of the Study

This is delimited to the factors inhibiting the operation of small scale industries in Onitsha South Local Government Area of Anambra State. With particular emphasis on the effect of government policy, bank policies and multiple taxation on the operation of small scale industries.


Pages:  50

Category: Project

Format:  Word & PDF               

Chapters: 1-5                                          

Source: Imsuinfo

Material contains Table of Content, Abstract and References.

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