The advantages claimed for SMEs are various, including: the encouragement of entrepreneurship; the greater likelihood that SMEs will utilise labour intensive technologies and thus have an immediate impact on employment generation; they can usually be established rapidly and put into operation to produce quick returns. SME development can encourage the process of both inter- and intra-regional decentralisation; and, they may well become a countervailing force against the economic power of larger enterprises.
More generally the development of SMEs is seen as accelerating the achievement of wider economic and socio-economic objectives, including poverty alleviation. Staley and Morse (1965) identify a ‘developmental approach’ to SME promotion which has as its objective the creation of ‘economically viable enterprises which can stand on their own feet without perpetual subsidy and can make a positive contribution to the growth of real income and therefore to better living levels’.
This approach emphasises the importance of efficiency in new SMEs. Small producers must be encouraged to adopt new methods, move into new lines of production and in the long-run, wherever feasible, they should be encouraged to become medium- or even large-scale producers. The presidential Initiative on Cassava Production and Export has increased the awareness amongst Nigerians of the industrial crop, popularly referred to as the ‘new black gold’.
Started in July 2004, the initiative seeks to generate $5 billion in export revenue. Fortunately, Nigeria, according to the Food and Agricultural Organisation, FAO, in its 2004 report, is currently the largest producer of cassava in the world at 34 million tons yearly, but with a poor yield of an average of 10 tons per hectare over an estimated cultivated land size of three million hectares.
Nigeria is closely followed by Brazil and Thailand, which have a capacity to produce 24 million tons and 20 million tons and a yield of 13. 6 tons per hectare and 19. 4 tons per hectare respectively. Unfortunately, experts at the International Institute for Tropical Agriculture, IITA, Ibadan, Oyo State, believe that up to half of the harvested cassava is wasted by production and post-harvest inefficiencies while the rest is consumed as food.
Brazil and Thailand, which rarely consume the cassava products directly, have fully developed the cassava industry for the export market. | | Nigeria should not focus on the exportation of cassava but develop the enormous local and regional markets for cassava that exist in the country, West African sub-region and Africa as a whole rather than start exporting the industrial raw material to Europe. Nigerians should be encouraged to add value and process them for industrial application.
The main thrust of this research work shall focus on the development of small and medium scale enterprises in the cassava processing industry justifying the need for agro-processing industries that convert cassava fresh tubers into primary cassava-based commodities that are tradable in domestic and international markets. STATEMENT OF THE RESEARCH PROBLEM The Small Scale Industry is acknowledged to have huge potential for employment generation and wealth creation in any economy. Yet in Nigeria, the sector has stagnated and remains relatively small in terms of its contribution to GDP or to gainful employment.
Activity mix in the sector is also quite limited – dominated by import dependent processes and factors. Although there is no reliable data, imprecise indicators show that capacity utilization in the sector has improved perceptibly in the period since 1999, but the sector is still faced with a number of constraints with lack of credit availability as the principal constraint. Credit is the largest element of risk in the books of most banks and failures in the management of credit risk have led to the weakening individual banks and in some cases the banking system as a whole, have contributed, to many episodes of financial instability.
OBJECTIVES OF THE STUDY The main purpose of this study is to identify and consequently analyze the most effective and efficient way through which small scale enterprises could be financed and promoted, thereby taking into consideration various conditions such as economic, political, social, psychological e. t. c under which small-scale enterprises are encouraged to operate with particular reference to the cassava processing industry in Nigeria. In so doing, the researcher intends giving an in-depth information and analysis on the various strategies through which small-scale enterprises can be developed and encouraged.
In view of the above, the researcher intends to find out the following: (i) The role played by government towards promotion and development of small-scale enterprises in Nigeria. (ii) To identify the economic potential of small-scale enterprises in the cassava processing industry. (iii) To identify the constraints confronting the development of small-scale enterprises in the cassava processing industry in Nigeria. (iv) To examine the financial support given to SMEs in Nigeria. RESEARCH QUESTIONS The study would examine the following questions: 1.
What role does the government play in the promotion and development of small-scale enterprises in the cassava processing industry in Nigeria? 2. What impact do small and medium scale enterprises make to Nigeria’s economic growth? 3. What are the constraints confronting the development of small-scale enterprises in the cassava processing industry in Nigeria? 4. What is the trend of the financial support given to SMEs in Nigeria? RESEARCH METHODOLOGY AND SOURCES OF DATA The two main research methods to be used are survey research and content analysis.
Survey research method is used to study variables and their relationship as related to human observation and opinions about their experience as it concerns the subject matter of study. Interview schedules shall be applied to some operators while the questionnaire schedule shall be applied to some small-scale entrepreneurs. The data, which would be collected from the questionnaire, will be analysed using the simple percentage method and chi-square, goodness of fit. This will make the analysis of the data more concise and simple. SCOPE AND LIMITATIONS OF STUDY This research covers the area of promoting small and medium scale enterprises n the cassava processing industry, paying attention to the role of the government and other external factors that can affect positively the development of small and medium scale enterprises in Nigeria. The research intends to study the essential problems encountered by small and medium scale operators in the cassava processing industry and suggest ways by which they can be adequately and efficiently financed and promoted. SIGNIFICANCE OF THE STUDY Small and medium scale enterprises in Africa rely largely on own savings, not only to grow but also to innovate.
Firms often need real services support and formal finance assistance, failing which under-investment in long term capabilities (training and R & D) may result, (Oyelaran, 2003). Besides finance, there are critical elements (including: knowledge, skills and experience of staff; capacity and quality of internal facilities; information and knowledge of market; intellectual and managerial leadership; external infrastructure and the incentive system at the micro and macro levels) that are lacking within technology support institutions themselves.
These undermine the effectiveness of their support to SMEs. This study is significant because it would help to evaluate the operations of a vital segment of the industrial sector – small and medium scale industries, which have been identified as having very high potential in promoting economic growth and development. The evaluation shall be done with special focus on the small and medium operators in the cassava processing industry in Nigeria thereby adding to the existing literature on the subject matter.
OUTLINE OF CHAPTERS In Chapter one, which is the introductory part; the background of the study, the statement of the research problem, the objectives of the study and the methodology to be adopted shall be discussed. Chapter two will deal with the literature review. The methodology analysis and theoretical framework shall be examined in chapter three.
Data presentation, analysis and interpretation will be covered in chapter four while the concluding part of the research work will be chapter five where in a nutshell the summary, the conclusion and the recommendations would be discussed. REFERENCES Staley E. and Morse R. (1965) Modern Small-Scale Industry for Developing Countries. London: McGraw-Hill Publishing. Oyelaran O. (2003) Financing and Development of Small-sale industries in Nigeria. Central Bank of Nigeria Economic and Financial Review. 24(4), December.