Small and Medium Scale Enterprise

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  • Topic: Millennium Development Goals, Development, World Bank Group
  • Pages : 18 (6077 words )
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  • Published : July 2, 2012
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SMALL AND MEDIUM SCALE ENTERPRISES IN NIGERIA: THE PROBLEMS AND PROSPECTS. By Abiodun Fatai1 Department of Political Science, Faculty of Social Sciences Lagos State University, Ojo, Lagos Nigeria.

Small and medium scale enterprises have long believed to be catalysts for economic growth and national development both in developed and developing countries. In Nigeria where private sector is not well developed SME is assumed to play the role of employment generation, facilitator of economic recovery and national development. The paper examined small and medium scale enterprises in Nigeria and in relation to those challenges which affects SMEs from developing capacity to realizing its full potentials as well the prospect for improvement and development for employment generation, economic growth and national development. It is suggested therefore that invigorating SMEs with strengthened commitment to economic reform would offer a turning point in facilitating the recovery of Nigeria economy and national development.


Fatai teaches in the Dept of Political Science, Lagos State University Lagos Nigeria, he is also a PhD student in University of Ibadan, Ibadan Nigeria. 1

INTRODUCTION The performance and effectiveness of small and medium scale enterprises as an instrument of economic growth and development in Nigeria has long been under scrutiny. This intense scrutiny has been against the backdrop of the low performance and inefficiency that characterized small and medium scale enterprises particularly in assessing its role on economic growth and development. Despite government institutional and policies support to enhancing the capacity of small and medium scale enterprises, small and medium scale enterprises has fallen short of expectations. This has generated serious concern and sceptism on whether SME can bring about economic growth and national developments in Nigeria. The concern is even more disturbing when comparing SME in Nigeria with other countries particularly where SME has become harbinger of economic reconstruction and transformation. (Ihua; 2009)In the case of Nigeria, small and medium scale enterprises have performed at very abysmal level. This low performance has further exacerbated poverty, hunger unemployment and low standard of living of people in a country whose economics is ailing. The current problems of hunger poverty and unemployment have undermined the capacity of the economy and small and medium scale enterprises are seen as mechanism for intervention to addressing these long term problem of the economy. Unfortunately, SME have not been able to propel economic growth and development which are quintessence of mitigating the effect of Poverty, hunger, unemployment, and low standard of living on the economy. The challenge of addressing the problem of hunger, poverty and unemployment is even more worrisome when considering the actualization of the millennium development goals by the country 2015. If Nigeria is to achieve the millennium development goals by 2015, one of the sure ways is to enhance the capacity of its SMEs. The 2

core issues identified by the millennium development goal such as hunger, poverty, literacy, maternal and mortality rate would not be achieved unless the problems of SMEs are clearly tacked. The challenges and the problem of small and medium scale enterprises are tied to some economic variables and the challenges that generally characterized the nation’s economy. Some of the challenges and problems include high level of unemployment, high poverty incidence, and low industrialization capacity, lack of finance, inconsistent government policies and inadequate infrastructure and insecurity of the business climate among others. Nevertheless, the internal characteristics of small and medium scale enterprises too have also interact with some economic variables to undermine the capacity of the economy. Issues of low level of entrepreneurial skills, poor management...
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