THE NIGERIAN MEDIUM SCALE BUSINESSES: ISSUES, CHALLENGES AND PROSPECTS

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  • November 5, 2021
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CHAPTER ONE

INTRODUCTION

1.1       Background to the Study

The role of medium scale business in developing countries, Nigeria in particular is progressively becoming significant. Significant in the sense that all available resources in any given situation in the economic well-being of a nation must be developed for industrialization and ultimately consumption through the small and medium scale businesses. Hence, the impact and potential contribution of small and medium scale businesses on a broad and diverse base as well as their accelerated effect in achieving macro economic objectives pertaining full employment, income distribution and the development of local technology, make the existence most inevitable. Therefore, the importance of medium scale business in particular to the general economic development of any nation especially a developing one like Nigeria cannot be over emphasized. Medium scale businesses have been recognized as indispensable components of natural development in both developed and developing economies. This subsector of the economy is globally acknowledged to contribute substantially in enhancing employment creation or generation, poverty alleviation, equitable distribution of resources, income redistribution, technical and technological innovation, entrepreneurial skills development, more uniform industrial and economic region- moreover, they have been touted strategic in ensuring food security and encouraging rapid industrialization and reversal of rural-urban migration. Although medium scale businesses are seen as veritable engines of economic development, the growth and development of medium scale business in Nigeria have been slow and in some cases even stunted, due to a number of problems and challenges confronting this all-important sub-sector of the economy. Some of the problems highlighted in the body of literature as being responsible for the slow growth and development of the medium scale business include: deplorable infrastructural facilities funding and financing challenges; inadequate managerial and entrepreneurial skills; corruption and lack of transparency arising from government regulation and regulators etc. It had been argued that the most disturbing among these challenging is funding, but concedes that most new small business enterprises are not attractive prospects for banks as they want to minimize their risk profile. Medium scale businesses in Africa have therefore been found to rely largely on own savings, not only to grow, but also to innovate, whereas firms often need real services support and formal finance assistance, failing which under investment in long term capabilities (Training and R & D) may result on the other hand, medium scale businesses in Nigeria had been blamed for poor performance on management practices, poor access to finds, low equity participation from stakeholders, poor infrastructural facilities, shortage of skilled manpower, multiplicity of regulating agencies and the over-bearing operating environment, societal and attitudinal problems, little access to markets and lack of access to information. In spite of these problems and challenges, Government and other financial institutions had held out programmes for the prospects of medium scale businesses in Nigeria. The current economic reform process ongoing in Nigeria aimed at reducing poverty, unemployment and strengthening of basic institutions and sub-sector of the economy target at improving and enhancing the capacity of medium scale businesses as instrument of economic growth and development. A lot has been said and written about medium scale businesses the world over. It has also formed the subject of discussion in so many seminars and workshops both locally and internationally. In the same token, government at various level (Local, State and federal levels) have in one way or the other focused on the medium scale businesses. While some governments had formulated policies aimed at facilitating, empowering the growth, development and performance of the medium scale businesses to grow through soft loans and other fiscal incentives. International agencies and organizations (World Bank), United Nations Industrial Development Organisation (UNIDO), International Finance Corporation (IFC), United Kingdom, Department for International Development (DFID), European Investment Bank (EIB) etc are not only keenly interested in making medium scale businesses robust and vibrant in them. Locally, the several non governmental organizations such as fate foundation, Support and Training Entrepreneurship Programme (STEP), the Nigeria Investment Promotion Commission (NIPC), the Association of Nigeria Development Finance Institution (ANDFI), as well as Individual Development Finance Institution (IDFI) have been promoting the growth of medium scale businesses in Nigeria through advocacy and capacity building imitative and have continued to canvass for better support structures for operator in the medium scale businesses sub-sector. However, this project work examines the respective strengths and drawbacks associated with the historical trends and efforts at developing medium scale businesses in Nigeria. It identifies and analyses the opportunities provided for the promotion of medium scale businesses in Nigeria.    Here, this study titled “medium scale businesses in Nigeria, the problems and prospects” cannot come at a better time.

Categories: ENTREPRENEURSHIP